Could affordable housing become an inner city reality?

With the price of homes and apartments soaring to astronomical heights, and demand far outstripping development, affordable housing has become one of the most significant issues facing Sydneysiders in recent years. Everyone, from the Federal Treasurer to the NSW Premier, has identified affordable housing as a critical problem demanding attention from all levels of government.

In November 2016, the Greater Sydney Commission released the draft Central District Plan, which encourages local councils to develop targets and actions for the provision of affordable housing through the planning framework, and estimates that some 4,000 to 8,000 affordable housing dwellings need to be provided annually in Greater Sydney to meet the needs of very low and low income groups.

Now, two local councils that are home to some of the most expensive real estate in Australia, are taking steps towards formulating proposals to facilitate the effective delivery of new affordable housing.

Woollahra Municipal Council’s Affordable Housing Policy

The local council that represents some of Sydney’s most exclusive postcodes has given the green light to the formulation of an affordable housing policy, seeking to encourage those who provide essential services, including teachers, nurses and child care workers, to be a part of the community outside of working hours.

On 13 March 2017, councillors at Woollahra Municipal Council resolved that staff prepare a report on measures that can be adopted by the council, both in planning instruments and in the use of their property portfolio, to increase affordable housing stock in a coordinated and strategic manner across the Woollahra local government area (LGA).

Councillors accepted that the extraordinary cost of housing in the Woollahra LGA, and the very limited amount of existing social and affordable housing, greatly limits the ability of people on average weekly earnings, or any income level below that, to reside in the area.

The City of Sydney’s Planning Proposal and Affordable Housing Program

Under a proposal approved by the City of Sydney Council on Monday 27 March 2017, a number of changes will be made to the existing affordable housing provisions in the Sydney Local Environmental Plan 2012 (Sydney LEP).

The Planning Proposal: Affordable Housing Review (Proposal) follows the release of the draft Central District Plan and a review of affordable housing needs and supply in the City of Sydney LGA. The key objective of the Proposal is to increase the amount of affordable housing by:

  • expanding contribution requirements for affordable housing when land is being developed; and
  • streamlining the current processes and practices of the City of Sydney Council to facilitate the delivery of affordable housing.

At present, the City of Sydney’s affordable housing policy only operates in three pockets: Ultimo/Pyrmont, Green Square and the South Employment Lands in Alexandria and Rosebury. The Proposal looks to expand the policy to include other land in the LGA where Council is the consent authority (Residual Land), but excludes the Sydney CBD and land controlled by the NSW Government.

Developers will now be required to make a contribution on new building projects on Residual Land – either a monetary payment to a community housing provider or an in-kind dedication of finished affordable rental housing dwellings in their development. Once included in the Sydney LEP, the contribution requirement will be applied through conditions on future development consents. It is estimated that the expansion of the affordable housing policy to the Residual Land will result in approximately 590 affordable housing dwellings, an increase of over 40 percent.

The Proposal will also amend the Sydney LEP to provide a framework to identify sites that benefit from changes to the Council’s planning controls, such as height rezoning or floor spaces increases. The development of these sites will be subject to a supplementary affordable housing contribution, proportionate with the increase in the development capacity provided for in the associated local environment plan amendment. This will give effect to the intent of the draft Central District Plan, to provide affordable housing where there is an increase in development capacity.

Additionally, the proposed minimum size of any affordable housing dwelling to be dedicated to the Council will be reduced from 50 square metres to 35 square metres, and have a maximum dwelling size of 90 square metres. This amendment reflects the minimum studio dwelling size under the Apartment Design Guide, whilst ensuring housing floor area resulting from the contribution scheme can accommodate families.

Developers and associated lobby groups have raised concerns that the proposed contributions could undermine the economic viability of developments and create negative flow-on effects that will discourage development across the LGA. Although independent economic advice on development viability concluded that there would be an impact in the short term, the contributions under the Proposal are to be phased in over a four year period to allow for market adjustment.

Implementation of the Proposal remains contingent on gateway determination by the Greater Sydney Commission, and any conditions imposed for public authority consultation and public exhibition.

This post was prepared by Melinda Norquay with the assistance of Michael Winram.

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