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17 October 2017

Housing Affordability Changes to the Planning and Environment Act

The Housing Affordability and Other Matters Bill 2017 passed through Parliament on 20 September 2017.

The Bill is intended in part to introduce a framework into the planning system to allow for the provision of affordable housing via voluntary arrangements with the private sector.

The key changes implemented via the Bill include:

  • The introduction of a new objective into the Planning and Environment Act 1987 (the Act) seeking ‘to facilitate the provision of affordable housing in Victoria.

  • The inclusion within the Act of a definition of affordable housing defined as ‘housing, including social housing, that is appropriate for the housing needs of any of the following
    - Very low income households.
    - Low income households.
    - Moderate income households.

  • A new section in the Act that enables the Governor in Council to make an order published in the Government Gazette which may specify the above income ranges based on Australian Bureau of Statistics data.

  • A new section in the Act that requires consideration to be given to a Notice in the Government Gazette when considering what constitutes ‘appropriate for the housing needs.’

  • A new section in the Act to outline that a Responsible Authority may enter into a Section 173 agreement for the provision of affordable housing.

Currently there is no formal process for the provision of affordable housing within the planning framework.

The changes are intended to provide the legislative foundation to facilitate the provision of affordable housing via the private sector and to provide certainty in relation to how affordable housing can be provided.

Whilst the intent of the legislation is to provide more affordable housing, there are still a few outstanding questions in relation to whether the intent of the legislation will be realised.

The changes to the Act do not mandate the need to publish in the Government Gazette the range of incomes that would constitute very low, low and moderate income households. These income thresholds will also vary each year.

Unless this information is provided it is likely that the private sector will be reluctant to consider the inclusion of housing without understanding the end sale price for the product. Without certainty in project feasibility there will be an inevitable reluctance to include a component of affordable housing in development. The inclusion of moderate income households in the definition might also result in the private sector catering more to this income group (ie for instance a greater sale price), in comparison with a very low income household.

The realisation of the legislation will likely also hinge on the information provided by the Minister in the Government Gazette in relation to what constitutes ‘appropriate housing needs’ for the varying household income levels.

What constitutes appropriate housing needs will no doubt be highly variable depending on the income group, dwelling size, internal amenity, maintenance and location.

The ability to provide a more affordable product may also require a relaxation, for instance, of the new apartment standards for this type of housing in apartment developments to minimise construction cost.

Given the proposed voluntary nature of the process at this stage it is unclear if any incentives might be provided to the private sector to encourage the provision of affordable housing as part of development. For instance, such an incentive may entail an increased building height to offset the reduction in yield.

Unless incentives are offered or there are wholesale changes to state and local policy to strongly encourage the provision of affordable housing for very low to moderate income households it is uncertain whether the legislative change will result in an increase in affordable housing supply through the private sector. It is understood that the Department (DELWP) is considering the development of implementation tools to support the legislative change.

Whilst we understand that the changes are intended to put in place a framework for ‘voluntary’ agreements, it remains to be seen if Council’s will now require permit applicants to enter into agreements for the provision of affordable housing.

We plan to keep you updated on the ongoing implementation of this new legislation and the effectiveness of its intent. 

Written by: Travis Finlayson - Senior Associate: Planning


Recent ratio: Projects

  • Hopetown Parade, Box Hill - Five Storey Apartment Building: Contact Blanche Manuel 
  • Bridge Road, Richmond - Residential Apartments: Contact Robbie McKenzie
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  • 70-72 Cottrell Street Werribee – 7-Storey Mixed Use Development: Contact Travis Finlayson
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