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5 June 2018

Affordable Housing Update - Amendments to the Planning and Environment Act

Following the 2017 passing of the Housing Affordability and Other Matters Bill 2017 (previously) the Planning and Environment Act 1987 (the Act) was amended on 1 June 2018, representing the State Government’s first step in actively encouraging the private sector to deliver affordable housing through the planning system.

The amendments include:

  • Addition of objective “to facilitate the provision of affordable housing in Victoria” to Part 1 of the Act.
  • Definition of affordable housing added – “… housing, including social housing, that is appropriate for the housing needs of very low, low, and moderate-income households”.
  • Section 173 agreements identified as a mechanism for voluntary affordable housing agreements “…a Responsible Authority may enter into an agreement with an owner of land for the development or provision of land in relation to affordable housing”.

The salary range for each household category (very low, low and moderate) has been published in the Government Gazette and roughly equate to 50% or less of median income, 50-80% of median income and 80-120% of median income, respectively. Two different ranges have been provided, one for Greater Melbourne and one for the rest of Victoria.

Whilst changes to the Act help to demystify the voluntary provision of affordable housing and will assist developers and Responsible Authorities in their negotiations, the Act does not actually specify what the cost of the housing should be for these household categories. We note that it is generally accepted that, to avoid housing stress, housing costs should not exceed 30% of household income.

To support these changes, DELWP have published Guidance for seeking and negotiating affordable housing agreements which includes, among other things, a sample Section 173 Agreement and examples of scenarios where this method may be appropriate.

Councils are increasingly seeking to strongly encourage or even require affordable housing in new developments (City of Melbourne’s West Melbourne Structure Plan and Fishermans Bend discretionary requirements, and Glen Eira’s Carnegie, Elsternwick and Bentleigh Structure Plans).  

The voluntary provision of affordable housing can be a strong negotiation tool with recent agreements including in the Queen Victoria Market Munro Precinct where PDG are providing 15% affordable housing (being 56 apartments out of the total 360).

Whilst the provision of affordable housing remains voluntary* throughout Victoria we are pleased to see it legitimised as an objective within the Act. It is anticipated that the amendments to the Act will see more Councils suggesting that developers include affordable housing within new developments, and we hope to see more developers take this up.

*Noting that Hobson’s Bay Amendment C88 for Altona Precinct 15 has been submitted to the Minister for approval with a mandatory 5% affordable housing requirement with affordable in that case to be a 25 per cent discount off the market value.

The full amendment can be viewed here.

If you would like to find out more please get in touch with Mia Zar or your existing contact at Ratio. 

Author: Mia Zar, Senior Planner

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