• Proposed planning incentives for affordable housing in NSW can work with the right settings
• Report recommends longer term structural reform through consistent inclusionary zoning, phased in over time, similar to the superannuation guarantee 

A new report commissioned by leading community housing provider SGCH explores planning levers to deliver affordable housing. 

Creating great places for everyone can strengthen communities, economies and projects. Great developers know that affordable housing adds to the diversity that makes great places work for everyone, creating greater value. They are also open to working with community housing providers like SGCH where a consistent and predictable policy environment enables them to be fairly compensated for the risks they take.

The report puts the NSW Government’s proposed planning bonus – a 30 per cent uplift on new projects with 15 per cent dedicated to affordable dwellings – through its paces, engaging respected change management agency Astrolabe Group to determine next steps to unlock the potential of the planning system in enabling enduring and sustainable supply.

“We strongly support the intent of the proposed policy, but recognise that the detail is crucial to the success of stimulating the delivery of affordable housing,’’ SGCH Group CEO Scott Langford said.

“What we need is a structural reform to create a housing superannuation for our cities – getting the policy settings in place now will make sure Sydney, and all major cities, have the housing they need, for who needs it well into the future.

“To deliver the scale of affordable housing needed to make our economy and community work it has to be encoded in the DNA of our cities through planning and then allowing partnerships that bring together capital and capability to deliver affordable housing.’’

The developers who contributed to SGCH’s modelling would readily partner with a CHP to deliver the scheme. But each also expressed the view that it would not make economic sense for them to take up the planning bonus proposal in its current form on most projects.  

For this reason, SGCH proposes a longer-term shift with the introduction of mandatory inclusionary zoning on big developments – a superannuation for cities.

Affordable housing mandates can work for developers, SGCH says

Developers don’t like uncertainty, but given time, they can adjust to affordable housing mandates, community housing CEO Scott Langford says.

Original modelling shows that an initial inclusionary zoning target of 5 per cent could be set for private developments after a 3-5 year preparation time and then, like the superannuation guarantee, raised over time after that.

Read the full report in the Australian Financial Review here.

Developments would be required to include a proportion of affordable housing. Astrolabe’s modelling suggests this could start around 5% and increase gradually over time, allowing the market to adjust, like the nation’s superannuation scheme, the report found.

It would come into effect three years from now to encode affordable housing into the DNA of our growing city. 

The report also found that where new rezoning creates uplift, inclusionary zoning should be more ambitious and target 15% affordable housing assuming the zoning uplift makes this feasible.

On government land SGCH supports the NSW Government’s ambition to include 30% affordable housing noting they must value the land accordingly to make projects feasible.

“We must address the housing crisis now, but great legacies are created with forward planning and are introduced gradually.’’ Mr Langford said. 

“Just as the superannuation guarantee was introduced gradually, the market’s ability to absorb and deliver mandatory inclusionary zoning will need to factor in construction costs, land prices, government fees and charges, federal government policies, growth in real wages and interest rates. Land owners and developers should not be lumped with unexpected costs of inclusionary zoning in a way that makes projects unfeasible.  

“But if we set the target early and have incremental change, the market is more likely to be able to absorb the policy obligations and deliver great projects.”

The NSW Government’s 30/15 policy is a good down payment on affordable housing if the settings are right, but a superannuation for cities scheme – with affordable housing in the DNA – needs inclusionary zoning.

About SGCH

• SGCH has been a leading not-for-profit community housing provider since 1985 with experience in developing and managing sustainable, safe and affordable homes and connecting people to opportunity. 
• Recognised as one of the largest community housing providers in Australia, SGCH houses around 11,500 people in over 7,000 homes across the Sydney Metropolitan Region.
• SGCH is delivering Australia’s largest non-government development pipeline of social and affordable housing, with almost 1000 dwellings delivered since 2015. 

Media contact

Adrian Nesbitt 0414 321 407 | adrian.nesbitt@sgch.com.au