Business Daily Media

England expects 40% of new housing developments will be affordable, why can't Australia?

  • Written by Nicole Gurran, Professor of Urban and Regional Planning, University of Sydney
England expects 40% of new housing developments will be affordable, why can't Australia?

Australia has record levels of supply[1] of new properties but despite various government interventions, housing still remains unaffordable for many.

Our study[2] found the government could use more direct methods to deliver homes for people on low and moderate incomes, while leveraging the market. These methods, widespread across the United Kingdom and in major cities of the United States, are known as “inclusionary planning”.

This includes requiring developers to make a financial contribution towards affordable housing, or to dedicate completed dwellings, as part of the development approval process.

Read more: Three charts on: poorer Australians bearing the brunt of rising housing costs[3]

We studied the outcomes of inclusionary planning programs in parts of the United States and the United Kingdom, and more recent approaches in South Australia and New South Wales.

What techniques can ensure affordable housing in the mix

“Inclusionary zoning”, a common type of inclusionary planning, was first developed in the United States to counteract land use rules which excluded the lower end of the property market. For example, where rules would only permit large homes on single allotments.

Some states in the US have also adopted “anti-snob” laws[4]. Under these laws, developers whose schemes include affordable housing can bypass local zoning controls, if an area has insufficient affordable housing for those on low and moderate incomes.

More recently, inclusionary planning programs are being used in many US cities in a bid to ensure that transport and infrastructure investment does not price out or displace lower income renters.

Read more: Room sharing is the new flat sharing[5]

There are now more than 500 inclusionary planning schemes operating in municipalities across the US. Some require developers to include affordable housing as part of development in a particular zone (usually a fixed percentage of units or floor space).

For example inclusionary planning programs[6] in the city of San Francisco, California (population of around 830,000) generate around 150–250 affordable units per year (around 12% of the city’s total supply).

Other schemes allow variations to planning rules in return for affordable housing. These variations might permit additional density in certain areas or waive certain requirements that would normally apply or expedite the development assessment process.

Other schemes require financial contributions from developers to offset the impact of a project on affordable housing demand or supply.

These programs provide a way for governments to ensure affordable housing for lower income residents even in rapidly gentrifying neighbourhoods.

How this plays out in England and Scotland

In England and Scotland, the supply of affordable housing is negotiated through the planning process. The general expectation is that 20 to 40% of new housing developments will be affordable. But proportions of affordable housing are allowed to vary on a case by case basis in light of the housing market and the costs of undertaking the development.

The main methods for this in England are section 106 agreements[7]. These agreements, which come under the Town and Country Planning Act 1990, specify the amount and type of affordable housing to be provided as part of a development.

Section 106 agreements have steadily gained traction since the 1990s. Between 2005–16, 83,790 affordable dwellings were secured through these agreements in England. This included 9,640 new dwellings in 2015–16.

Section 106 agreements have resulted in different types of affordable housing, including social housing, discounted home ownership, share equity schemes and affordable rental housing (offered at 20% less rent than for comparable properties in the same local housing market).

Our study found that when inclusionary planning model requirements are predictable and applied in a consistent way, developers accept them because they can factor costs into the price paid for land.

We also found most models work in conjunction with other government funding or subsidies, extending the value of this funding by reducing the cost of land for social or affordable housing.

What usually happens in Australia

Only the South Australia and New South Wales governments have similar types of planning schemes in Australia, although there are signs that other states may follow.

The SA government’s inclusionary planning target[8], announced in 2005, aims for 15% of significant new housing developments to be affordable.

By 2016 more than 2,000 affordable homes had been built and a further 3,476 homes committed. This amounts to about 17% of new housing supply in South Australia.

In NSW, inclusionary planning schemes only deliver affordable rental housing.

In the mid 1990s an inclusionary zoning scheme pilot was introduced to Pyrmont and Ultimo. This scheme was then extended to Green Square[9].

These schemes require that developers dedicate 0.8 to 3% of the floor area of developments for affordable housing, or that a monetary contribution be made in lieu of direct affordable housing provision.

However, to date, the NSW state government and many in the development sector have favoured voluntary mechanisms (such as density bonuses for providing affordable housing) over mandatory ones to supply affordable rental housing.

For our study, we estimated the volume of affordable housing delivered through voluntary planning agreements and state policy giving a density bonus for affordable housing inclusion by examining individual development approval records.

We found that voluntary measures have so far delivered about 1,300 dwellings or between 0.5 to 1% of Sydney’s housing supply between 2009 and 2017.

How viable is inclusionary planning?

We found that voluntary planning incentives can encourage affordable housing, but as part of incremental residential development, within the existing planning framework.

However, affordable housing should be mandated when land is rezoned for residential development, when planning rules are varied for particular projects, or following major infrastructure investment.

Inclusionary planning can’t replace government funding in providing housing for those on the lowest incomes. However, inclusionary planning schemes can reduce land costs and ensure that affordable homes are well located near jobs and services.

References

  1. ^ record levels of supply (www.ahuri.edu.au)
  2. ^ Our study (www.ahuri.edu.au)
  3. ^ Three charts on: poorer Australians bearing the brunt of rising housing costs (theconversation.com)
  4. ^ “anti-snob” laws (www.mass.gov)
  5. ^ Room sharing is the new flat sharing (theconversation.com)
  6. ^ inclusionary planning programs (sfmohcd.org)
  7. ^ section 106 agreements (www.local.gov.uk)
  8. ^ inclusionary planning target (www.sa.gov.au)
  9. ^ Green Square (www.cityofsydney.nsw.gov.au)

Authors: Nicole Gurran, Professor of Urban and Regional Planning, University of Sydney

Read more http://theconversation.com/england-expects-40-of-new-housing-developments-will-be-affordable-why-cant-australia-94581

Business Today

Hunt and Brew launches Australia-first cold brew coffee

Australian boutique coffee maker Hunt and Brew has announced it will be sourcing the beans for its new “Australia” cold brew coffee from far north Queensland in a move that will make the company one of the largest buyers of ...

What you need to know about the Defense Production Act – the 1950s law Biden invoked to try to end the baby formula shortage

Biden invoked the Defense Production Act to help end the shortage of baby formula. AP Photo/David J. PhillipU.S. President Joe Biden on May 18, 2022, announced he is invoking the Defense Production Act to help end the shortage of ...

Baby formula industry was primed for disaster long before key factory closed down

Cities are trying to address the baby formula shortage with community drives.AP Photo/David J. PhillipThe conditions that led to a shortage of baby formula were set in motion long before the February 2022 closure of the Similac fa...

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual workspace more comfortable. Employees are ...

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’s sovereign capabilities toward in-space...

Deliver business benefits through operational excellence

As Australian businesses emerge from the pandemic lockdowns and draw up plans for growth, increasing numbers are adopting a strategy of operational excellence. Operational excellence involves everyone in an organisation and f...

Business Daily Media Business Development

Hunt and Brew launches Australia-first cold brew coffee

Australian boutique coffee maker Hunt and Brew has announced it will be sourcing the beans for its new “Australia” cold brew coffee from far north Queensland in a move that will make t...

NewsServices.com - avatar NewsServices.com

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual wo...

David Piggott, Managing Director ANZ at Jabra - avatar David Piggott, Managing Director ANZ at Jabra

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’...

Business Daily Media - avatar Business Daily Media

India's employee hostels are often like prisons – but young women garment workers don't always see it that way

Kavitha, 18, earns a living at a clothing factory in the southern Indian state of Tamil Nadu. Like many of her colleagues, she lives in accommodation provided by the factory, where she share...

Andrew Crane, Professor of Business and Society, University of Bath - avatar Andrew Crane, Professor of Business and Society, University of Bath

Shortage of workers threatens UK recovery – here’s why and what to do about it

For the first time since records began, there are more job vacancies in the UK than unemployed people, according to the latest monthly labour market figures. This has been driven mainly by a...

Donald Houston, Professor of Economic Geography, University of Portsmouth - avatar Donald Houston, Professor of Economic Geography, University of Portsmouth

A central bank digital euro could save the eurozone – here's how

Blockchain bailout?4K_HeavenThe European Central Bank and its counterparts in the UK, US, China and India are exploring a new form of state-backed money built on similar online ledger techno...

Guido Cozzi, Professor of Macroeconomics, University of St.Gallen - avatar Guido Cozzi, Professor of Macroeconomics, University of St.Gallen



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion