Developers building in inner Sydney suburbs such as Potts Point, Darlinghurst and Erskineville will be forced to contribute to building affordable housing across the city, under a new proposal by the City of Sydney to tackle the lack of homes for low-income workers.
The proposal recommends expanding the council's current affordable housing policy, which operates only in pockets of the city, across the whole council area – a move which would boost the number of low-income homes by 40 per cent, but likely anger developers.
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Having children delayed for a house
Parents are putting off having children to get into the housing market according to Scott Morrison who has also offered an insight into his plans for negative gearing in the budget.
Under the policy, developers would be required to make a contribution – either a monetary payment to a community housing provider or an in-kind contribution of finished homes in their development for affordable homes – on new building projects across the city.
The levy would be phased in over four years and would create 600 affordable homes to be rented at below-market rates to low-income workers, according to the council's projections.
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Lord mayor Clover Moore, whose independent team has a majority of seats on council, is expected to approve the new strategy.
"Our experience in Green Square and Pyrmont shows affordable housing levies are an economically feasible way to deliver affordable housing without affecting the viability of development," Cr Moore said.
Currently, the city's affordable housing schemes are limited to three areas – Ultimo/Pyrmont, Green Square, and the Southern Employment Lands in Alexandria and Rosebery – and are expected to build 1300 homes.
The CBD would be excluded from the policy, as would land controlled by the state government.
In addition to this policy expansion, the council also wants to impose a separate "supplementary affordable housing contribution" on developers whose projects have benefited through changes to the council's planning controls, such as height rezoning or floor space increases.
Known as the "value added method", developers will be required to contribute 50 per cent of any increase in land value back to the council on these buildings.
Labor councillor Linda Scott, who supported the proposal, said the community needed to see some benefit from the "enormous windfalls" developers secured through land rezonings.
"This proposal allows for some of the financial benefits to be reinvested into a public good."
Liberal councillor Craig Chung said the city needed to focus on fostering better relations with the developers who would ultimately be building the homes.
"The changes to the affordable housing policy goes some way towards achieving more affordable housing, but it is unfortunately tarnished by the Clover Moore political team's blanket opposition to development in general."
The proposal will be considered at the council's planning committee on Monday, before going to a vote of councillors on March 27.
Its implementation, however, will be contingent upon approval from the Department of Planning.
The new approach follows a review of the city's existing housing affordability strategy, which is struggling to reach the goal of providing 11,000 homes for low-income workers by 2030.
The policy is expected to anger developers and associated lobby groups, which oppose such levies on the grounds they undermine the viability of developments and have flow-on negative economic consequences by discouraging building across the city.
The council sought independent economic advice on this issue. It concluded that although there would be an impact to development viability in the short term, the levy could be introduced over four years "to allow for market adjustment".
Woollahra Council, which represents some of Sydney's most expensive postcodes, also took its first steps towards formulating an affordable housing policy on Monday.
In a move described by Greens local government spokesperson David Shoebridge as a "key mood change", the eastern suburbs council agreed to explore the option of using its own property portfolio, as well as changing its planning controls, in a bid to provide housing for local workers who can't afford to live in the area.