Developers offered tax breaks to provide more affordable housing

Treasurer Cameron Dick has announced a series of tax concessions for developers who incorporate affordable housing into build-to-rent projects.

The Queensland government already has affordable housing targets on state-owned land at key Brisbane sites but has come under pressure to facilitate similar schemes in the private sector.

Ahead of the resumption of housing talks on Tuesday, Dick said the government wanted to “make it more commercially attractive for property developers to construct build-to-rent projects”.

The incentives on offer include a 50 per cent discount on land tax payable for up to 20 years, and a full exemption from several foreign investment taxes.

“Developments that meet a set of criteria, including providing at least 10 per cent of rental homes as affordable housing, will be able to enjoy a number of concessions,” Dick told parliament.

Housing researchers say inclusionary zoning, where legislation mandates or creates incentives for developers to include a proportion of affordable housing within a project, is an effective, long-term strategy.

Queensland Premier Annastacia Palaszczuk and Planning Minister Steven Miles are investigating legislation to ask developers to provide a proportion of affordable housing in developments.

The government on Monday confirmed it had set affordable housing targets at several above-ground Cross River Rail and Olympics sites:

• Roma Street Rail Station: minimum of 10 per cent social or affordable homes.
• Woolloongabba: minimum of 15 per cent social or affordable homes.
• Northshore Hamilton: 5 per cent affordable to rent by households on medium income.
• Bowen Hills: 5 per cent mix of public housing, social housing or affordable housing.

Premier Annastacia Palaszczuk last week flagged annual rent caps and expanding build-to-rent schemes as worth investigating.

The government is now studying inclusionary zoning schemes in NSW, the ACT, South Australia, Europe and Britain.

“Inclusionary zoning can be an effective tool if it is done right,” said Michael Fotheringham, the managing director of the Australian Housing and Urban Research Institute.

He said inclusionary zoning was not a quick-fix solution but “an ingredient in the broader mix of housing supply policies”.

“We need to be thinking that in seven, eight, nine years this will start to increase our supply of affordable housing,” he said.

“But it is not going to house people this week.”

Inclusionary zoning in Sydney was responsible for 859 affordable rental dwellings by July 2020 for low to moderate income households, with a further 135 dwellings in the pipeline.

In a 2005 inclusionary zoning scheme in South Australia, the state government mandates 15 per cent of all new dwellings built in development projects are “affordable”, meaning they can be rented or paid with 30 per cent of weekly income.

About 5500 properties have been provided by July 2022, towards a goal of 38,700 affordable properties by 2040.

Inclusionary zoning is not legislated in Queensland but is included in the Queensland Housing Strategy 2017-27 as an option for state government-owned land.

A plan – contested by Brisbane City Council – would ensure 15 per cent of housing above the new Gabba Cross River Rail station was affordable housing.

In December 2022, the government promised to “investigate and consult extensively on introducing inclusionary requirements to increase the supply of social and affordable housing”.

The Department of State Development and Planning said research to “broaden” inclusionary zoning was continuing.

Fotheringham, a member of Queensland’s Housing Supply Expert Panel, said the policy worked most effectively when it was mandated by a state government, not by individual councils.

He said the biggest hurdles were assumptions made by developers when they bought land before it was developed, saying a lead time of “three years, five years” was needed.

“If you ‘change the rules’ then their current pipeline of development is set up with the wrong set of assumptions.”