A new regulation has been gazetted under the cover of Christmas last week which will see any development which involves improvements to “affordable housing” slugged with an affordable housing levy.

Affordable Housing is defined for the purpose of this tax as being any home where the rent is below the “median rent” for all home in an Local Government Area (the mid-point on the scale of rent from $0 per week to the highest rental in the LGA).

This “levy” (tax) is a legacy from an old policy and has fallen into dis-use due to its complexity and lack of applicability.  But under the stewardship of the Housing Diversity State Environmental Planning Policy on Housing Diversity, it has risen like Lazarus to slow down anyone prepared to invest at this most difficult of economic times.

“This means that if you own any building in a lower rent suburb, which has a high average property (and rental) value, you will be taxed extra for improving the quality of that building!”, Mr Forrest said.

“This is effectively a tax on improvements to a suburb’s amenity.  It effectively represents a “maintain the slums policy” and must be condemned.

“Why would any Government tax someone extra for wanting to invest in a property to create more homes and improved amenity?

“DPIE, having sacked almost all of their economists, still has not got its head around the policy basics: more homes and more supply will result in downward pressure on prices.  Extra taxes will be passed on by developers to new home buyers”, Mr Forrest said.

The NSW Productivity Commissioner recognised this in the recent Infrastructure Contributions Review Report where he questioned the principle of using fees and charges on developers to pay for affordable housing.  The NSW Productivity Commission Report stated:

“It is not clear that housing is being made more affordable as a result of these [affordable housing] schemes, as … the creation of a small quantity of ‘affordable housing’, may be at the cost of making other housing more expensive.”

Source: NSW Productivity Commission, Review of Infrastructure Contributions in New South Wales – Final Report, November 2020, p 82.

“There have been a lot of improvements in NSW Planning in the last 12 months, but it will be a long time before this leopard has stripes!” Mr Forrest said.