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NSW’s new planning policy allowing developers to build higher, bigger buildings in return for more affordable housing units is officially in effect.
The updates to the State Environmental Planning Policy (SEPP) reward developers prepared to commit 15 per cent of the gross floor area of new builds to affordable housing. They can now access a 30 per cent floor space ratio bonus and additional height of up to 30 per cent, so long as they commit to making the necessary floor space available to a community housing provider for 15 years.
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NSW Premier Chris Minns announced his intention to introduce the rewards for developers in June 2023, before returning to the consultation phase after backlash from the industry.
Opponents branded the initial plans “impractical and unfeasible”. Many objected to the fact that the plan did not allow for scalability – the 15 per cent affordable housing share could not be adjusted if developers used only a small portion of their additional density and height.
As a result, the policy has been changed so that if the full 30 per cent bonus can’t be accessed – because of limits like height restrictions on the land or flight path impingement for example – the bonus percentage for the amount of affordable housing can now be reduced.
In practice, this means that if only 20 per cent of the bonus can be accessed due to site restrictions, then the number of affordable homes can be reduced to 10 per cent. The amount of affordable housing cannot be reduced to less than 10 per cent, however.
Objections have been raised regarding the fact that developers will be on the hook for local council-imposed affordable housing requirements, bringing the proportion of affordable units up to 25 per cent in some cases. In this instance, the state government did not budge, upholding local environment plan provisions in addition to the state requirements if the density and height bonuses are to be accessed.
Amendments have also been made to ensure the bonuses are available to build-to-rent developments, which were previously excluded, even when the development takes place in commercial zones where development would have been prohibited under the local environmental plan.
Minister for Planning and Public Spaces Paul Scully commented that industry feedback has been essential in ensuring that the changes will be fit for purpose and assured stakeholders that the measures will remain under review to make sure they’re achieving the intended outcomes.
“The provision of affordable housing is a shared responsibility, which is why the changes we have made from the consultation have tried to achieve balance, to get the best outcome for all rather than any single group,” Mr Scully said.
By and large, the updated reforms are welcomed by industry advocates such as the Property Council of Australia and Urban Taskforce.
The Property Council’s NSW executive director Katie Stevenson called the updates “common sense changes to ensure the social and affordable housing bonus scheme delivers for the community”.
“The NSW government has worked in good faith with the Property Council and other stakeholders to get keys in doors as soon as possible for those in our community struggling to find a home they can afford,” Ms Stevenson commented.
Though she opined that the “stacking” of state and local government affordable housing requirements will risk the scheme’s efficacy.
“The Property Council has provided consistent feedback that stacking local and state affordable housing contributions will put the success of this bonus scheme at risk by making the very homes we are trying to deliver unviable and unable to be built,” Ms Stevenson said.
“Not removing the local requirements could lead to a proliferation of new affordable housing contribution plans within council areas that don’t wish to see an increase in the height and density of dwellings.”
Tom Forrest, chief executive of the Urban Taskforce, said the new policy is “not perfect”, but that the Minns government has taken “a big step forward to support additional housing supply”.
“2023 has seen giant leaps forward on planning policy after years of going backwards. The government is to be congratulated. It will take years to pull ourselves out of the planning quagmire left by the former government,” Mr Forrest commented.
“There is more to be done, but we are now heading in the right direction.”
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