Affordable housing too steep for developers

Council is calling for a new tax to fund its widely publicised Affordable Housing Targets for 2030, despite fears it could dissuade developers and increase housing costs.

“Our concern is that this isn’t going to lead to more cheaper houses, in fact it’s going to make homes more expensive as the tax is passed onto consumers” said a spokesperson from Urban Taskforce, the union representing property developers.

To fund the construction of 8612 affordable dwellings across the City of Sydney, Council wants a levy of $185.77 per meter square to be applied to all new development, and an in-kind contribution rate of four per cent of Gross Floor Area, as outlined in the recent report City of Sydney Draft Affordable Rental Housing Strategy 2009 – 2014.

The new homes will be reserved for people on very low to moderate incomes, and will make up 7.5 per cent of Sydney’s housing stock by 2030.

Housing costs continue to rise throughout the city, with rents increasing by four per cent last quarter, despite the economic downturn.

“Even when it was clear that we were heading for a recession, rents continued to rise because of a chronic short supply of housing in the city. The solution to make housing more affordable is to enable more houses to be built and reduce the complex development proposal process,” said the Urban Taskforce representative.

The possibility of increasing developable space in return for affordable housing contributions was discussed in rental strategy report, but concern for overcrowding made the idea of so called ‘Density Bonus Schemes’ secondary to the proposed levy.

Greens Councillors are encouraging developers to accept the concept as an integral part of Sydney’s future social policy.

“The Urban Taskforce is not interested in providing the genuinely affordable housing that city workers need, if it reduces their profits. The unregulated market-based system that the Urban Taskforce promotes so fiercely is what has made Sydney so unaffordable.” said Sylvia Hale MLC, NSW Greens spokesperson on Housing.

“The affordable housing levy is used successfully in many overseas cities in both Europe and the US. It will help maintain diversity and an available workforce in the city,” said Greens Councillor Irene Doutney.

Global cities like London, where 50% of all new development will soon be affordable housing, have informed the debate.

An affordable housing levy is currently applied to new development in Pyrmont, Ultimo and Green Square only, under NSW Department of Planning regulation.

Council is resolving to work with the Department of Planning, and try to convince them to allow affordable housing levies to be applied to more areas in the city beyond Green Square, Ultimo and Pyrmont.

The Department of Planning refused to comment on the issue, stating that their position was still under development.