A leader in the New South Wales property industry has warned against any adoption of mandatory rules for developers which include affordable housing in new developments, arguing that such moves would add to the cost of other houses provided on new apartments and suggest that affordable housing challenges could be better addressed through incentives for developers.
In response to media reports which suggest that the Greater Sydney Commission is set to recommend inclusionary zoning policies in a number of draft district plans set to be introduced shortly, Urban Taskforce Australia Chief Executive Officer Chris Johnson has hit out at the mooted plan.
Johnson said feedback from his organisation’s members suggests that a number of developments in Sydney may not be viable if the plan goes ahead, and that this will hurt rather than hinder development of the kind of new dwelling supply which is needed in order to address housing affordability.
Instead, he says that 40,000 new affordable homes could be built if developers were instead given an incentive whereby any project which provided 20 percent of units as affordable dwellings were given a bonus of 20 percent extra floor space on the development approval.
“With inclusionary zoning the developer gives ten percent of their apartments to the local council or to a community housing provider,” Johnson told Sourceable. “There is no extra floor space allocated, so the other ninety percent of the units will have to carry the cost of the ten percent given away.”
“This is likely to push the cost of those units up by at least ten percent, so making them even more unaffordable, or the project just won’t proceed.”
Johnson’s comments follow media reports that six draft district plans soon to be released by the Greater Sydney Commission were likely to stipulate that whenever land is rezoned for higher density, five to ten percent of the extra floor space will be slated for low income housing to be managed by community providers.
The rules would apply to both government and privately owned land, Fairfax Media reported late last month.
A spokesperson for the Commission did not confirm or deny the report but rather said that the Commission together with the planning department was looking at a range of options to address housing affordability which ‘includes targets for affordable housing for low and very low income households’.
Whilst generally opposed by property industry lobby groups, the concept of inclusionary zoning generally finds support among welfare groups and some academics.
Last month, Council for the Homeless chief executive officer Jenny Smith said her organisation supported the concept despite stressing that this was only one part of the answer toward the affordable housing puzzle.
According to Smith, the current approach of relying on the market to deliver a suitable quantity of affordable housing is inadequate as many of those on lower incomes are unattractive as consumers from the viewpoint of developers.
Smith says inclusionary zoning brings with it the benefits of ensuring that the nation’s affordable housing supply will be topped up whenever new development takes place, creating more affordable housing which was in good proximity to transport links and employment opportunities and promoting a greater mix of social and economic diversity by having people of different strengths living together.
University of New South Wales Associate Professor Bill Randolph, meanwhile, said an inclusionary zoning policy would help to ensure that a portion of any part of new housing supply which comes online will be affordable.
Contrary to Johnson’s suggestion about density bonuses for developers, Randolph says these could end up creating a ‘Dutch auction’ system and generating friction among community members who may resent having to ‘pay’ for affordable housing with greater density.