Developers being forced to build affordable housing could ease rental market
Carrie-Ann Huddleston is happy with her affordable rental. (ABC News: Abubakr Sajid)
Carrie-Ann Huddleston cried tears of joy when she showed her family through her new affordable housing unit.
"The relief has been amazing," she said.
"I do feel like I've won the lotto, that's how I feel."
Like plenty of single women in their 50s, life's twists and turns had seen Ms Huddleston priced out of the skyrocketing Sydney rental market.
She found herself bouncing between the homes of family and friends.
"It has been so hard, and confronting and it's just the reality," she said.
"For a one-bedroom in this area, [you'd be] usually looking at $700 to $750, and that's just out of reach now."
Carrie-Ann Huddleston went from living at family and friends' properties to having her own affordable rental. ( ABC News: Abubakr Sajid)
Ms Huddleston's new home is in the Boronia Apartments block in the inner Sydney suburb of Waterloo, a brand-new building where rents are capped at 30 per cent of the renter's gross income.
Most affordable housing in Australia is for rent, not purchase, and is managed by community housing providers to implement rent caps.
The cap is designed to help people on low and medium wages, including those in care professions and older single women, be able to afford to live in one of the most expensive cities in the world.
Australian schemes have 'failed to deliver'
The apartment block was built by CityWest, an affordable housing provider that has been partly bankrolled by a mandatory affordable housing contribution scheme that the City of Sydney charged developers to build in the UItimo and Pyrmont areas.
Mandatory affordable housing contribution schemes might help renters secure properties. (ABC News: Liam Patrick)
Under the scheme, developers could provide the contribution by making a proportion of the homes in their new development affordable or as an equivalent monetary contribution to fund affordable housing projects within the local government area.
Such schemes are uncommon in Australia, where most states rely instead on incentive programs that offer developers bonus floor space, extra storeys or fast-tracked development processes in exchange for helping to deliver affordable housing.
But affordable housing experts have called for that to change.
Community Housing Australia interim CEO Alex Raphael said incentive schemes had failed to deliver enough affordable housing, and mandatory affordable housing contributions should be imposed on new developments instead.
Alex Raphael says schemes should be targeting new developments. (ABC News: Toby Hunt)
"The range needs to sit somewhere between 5 per cent and 20 per cent and that depends on a whole range of things, including on what the uplift from rezoning is," she said.
"They can be flexible, they can be site dependent, but they need to be mandatory for them to work."
University of Sydney's Urban and Regional Planning professor Nicole Gurran agreed.
"The research shows that incentive schemes only work in certain markets, and they are a very haphazard way of delivering affordable housing," she said.
Effective Australian models 'do exist'
Ms Gurran points to the UK as an example of the benefits of compulsory affordable housing contributions made by developers, often referred to as mandatory inclusionary zoning.
"In a very high value part of central London it will be 50 per cent. In another part of London it won't be anywhere near that," she said.
"In the 2023–2024 financial year, in just one year, they eclipsed Australia's five-year target for new affordable housing and 44 per cent of that was delivered through the planning system."
Nicole Gurran says there are examples of compulsory affordable housing contributions elsewhere in Australia and around the world. (ABC News: Liam Patrick)
She said the City of Sydney and South Australia had also used mandatory quotas effectively.
"So the models do exist, but we haven't really committed to them," Ms Gurran said.
"The one reform that would make a big difference in terms of delivering affordable housing hasn't seemed to be on the table."
Pushback against compulsory contribution
Plenty of developers and their industry bodies, however, baulk at the idea of a mandatory scheme.
Urban Development Institute of Australia NSW CEO Stuart Ayres said imposing a compulsory contribution risked making projects unviable, which was problematic for wider housing supply.
"When you increase the price of a product, particularly an apartment building that's already constrained by feasibility ... then more than likely a mandatory position is going to make that product unfeasible and therefore the housing project or apartment won't even start," Mr Ayres said.
He said even a low mandatory scheme, like the 2 per cent affordable housing quota the NSW government introduced in its Transport Orientated Development (TOD) zones around train stations, was potentially problematic.
"TODs in New South Wales aren't moving at the speed the government had hoped," he said.
"So there probably is still a bit of a question mark about whether those affordable housing mandatory settings are impacting the feasibility in those sites ... but it is more likely to be successful in very high-density developments."
Stuart Ayres has looked to London for inspiration. (AAP: Bianca De Marchi)
Mr Ayres pointed to London, where a 35 per cent affordable housing quota on new developments is temporarily being wound back to 20 per cent, after the number of new residential buildings being constructed in the city stalled.
"That's why we've seen those outcomes in London where the prices just got too high and so the project doesn't even start. The solution we are looking for is more supply, not less housing," he said.
Ms Gurran said affordable housing policies did not discourage development when properly designed.
"In fact, they do the opposite and that has been the experience in the United Kingdom," she said.
"The system in place in the UK does allow policymakers to respond to changes in market conditions and that is very much embedded in the program."