Developers claim win with Minns government’s affordable housing reform

The Minns government will allow proposed affordable housing quotas to be scaled back to 10 per cent for smaller new apartment projects, under a suite of concessions won by developers.

Planning Minister Paul Scully and Housing Minister Rose Jackson released the revised policy on Thursday after months of consultation with stakeholders and councils, which will also lower the capital threshold for eligible projects in regional NSW to $30 million, and allow build-to-rent developments in commercial zones.

The Minns government has announced changes to its affordable housing policy.Credit: Nic Walker

In June, the government announced the affordable housing scheme giving developments worth more than $75 million access to a 30 per cent height and floor space bonus if 15 per cent was set aside for affordable housing, which is leased at a discounted rate and managed by registered community housing providers.

Such developments would be fast-tracked through the planning system as “state significant” projects.

However, Scully was forced back into consultation after developers criticised the draft proposal for failing to provide enough incentives necessary to build more affordable homes.

They also expressed concerns about a lack of scaleability in the requirements dissuading potential investors and councils, potentially scuttling projects using local rules about solar access and overshadowing.

Planning Minister Paul Scully.Credit: Dion Georgopoulos

Following six months of talks, the Minns government will now allow the affordable housing component to be scaled down – to a minimum of 10 per cent – if developments cannot reach the full 30 per cent height bonus due to local controls and other factors.

The bonus will also apply to the entirety of a development, not just the residential part, which the government said would encourage more affordable housing on each site and encourage the uptake of the scheme in well-located areas.

While these developments will still need to comply with local environmental plans (LEPs), a note released alongside the policy said the need for solar access was to be balanced with the need for more affordable housing, and a reasonable amount of overshadowing should be permitted.

Tom Forrest, head of the developer lobby group Urban Taskforce, said the government had made important changes that would deliver more affordable homes. “We’re broadly very happy, they’ve clearly listened,” he said. “But there are still some important tweaks to be made.”

Forrest was still concerned the state scheme came on top of local government affordable housing contributions. These vary from council to council, but usually compel developers to quarantine a portion of the building as affordable housing or make a cash contribution.

“It’s what we call a double stack on the affordable housing obligation. It’s on top of a system that has already failed,” Forrest said. But he said the government had promised to closely monitor the program’s feasibility and outcomes, and make further changes if necessary.

Scully said the long consultation process had been necessary to get the policy right. “While we want to maximise the amount of social and affordable housing in new developments, developers also need incentives to include these homes in future projects.”

Cathy Callaghan, senior policy officer at housing justice group Shelter NSW, said the revised scheme would still only be used by developers if it made commercial sense by bringing down the relative cost of land.

“We don’t hate it,” she said. “It’s probably going to make sense for big developers in the eastern suburbs, but it’s not going to stack up in Penrith.”

Callaghan said it was disappointing the government did not make it mandatory for any affordable homes created through the scheme to be managed by a not-for-profit, rather than any community housing provider, which can include private developers.

The bonus scheme was ultimately secondary to the much more significant changes to housing density around transport hubs which the government announced last week, Callaghan said.

Urban Development Institute of Australia chief executive Steve Mann heralded the amendments as a “better policy” that would enable the scheme to apply to more development sites, in a note to the industry body’s members.

Property Council of Australia NSW executive director Katie Stevenson backed in the changes, saying it was apparent the government had listened to industry concerns, particularly the scaleability of the affordable housing component.

“Industry will welcome the adoption of our recommendation of a pro rata approach, which scales the affordable housing requirement based on achievable FSR and height bonuses,” she said.

But she echoed Forrest’s concerns local affordable housing contribution schemes would still apply under this proposal, saying its inclusion could put the success of the policy at risk “making the very homes we are trying to deliver unviable and unable to be built”.

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