Sydney should take lessons from global cities that have achieved success in creating affordable housing and provide adequate incentives to accelerate its progress, according to Jason Twill, innovation fellow at the University of Technology Sydney’s School of Architecture.
“Australia is behind,” says Twill, who is also director of Urban Apostles, a start-up real estate development and consulting service. “If you look across world cities, each are responding to the same issue.”
He advocates looking at examples in high-density centres such as New York City and London and learning from their experiences.
“Leap frog the errors and maintain viability.”
“Innovative people are finding ways to live in cities of their choice,” Twill says. “It’s the place of developers to facilitate these models.
“This disruptive impact is born from an immune response to disease – affordability. Like Airbnb and Uber, it’s come in as a juggernaut.”
Innovative financing models
Twill says our financing models and tax structures need to evolve to enable new housing models to flourish.
In the US the federal Housing Finance Agency offers tax-exempt financing to multi-family rental developments in which at least 20 per cent of the units are set aside for low-income residents – so-called “80/20” projects. According to the Federal Tax Code, 20 per cent of the units must be set aside for households with incomes at 50 per cent or less of the local area median income (AMI). Alternatively, 40 per cent or more of a project’s units (25 per cent in New York City) must be affordable to households whose income is 60 per cent or less than the local AMI.
“The capital market can be rethought through at tax structure and we can unlock potential for this sort of model to proliferate in Australia,” Twill says.
Tax breaks for affordable housing
Another scheme is New York’s controversial 421-a tax exemption, which gives residential developers property tax exemptions if they build affordable housing units. It was recently overhauled to provide wage requirements for construction workers and now provides property tax exemption for up to 25 years for multiple residential developments containing affordable housing, which is rent stabilised for 35 years.
Twill believes tax incentive and subsidies will have more success in driving affordable housing than regulations. For example, if you want to add more height to a residential development in Brooklyn you can achieve that by providing 20 per cent affordable housing.
“You can’t have a stick without carrots,” he says. “If you Google ‘housing projects’ in New York you get a ‘buffet’ of options – access to programs, partnerships with housing agencies … It’s easy to fall into the landscape. If you did the same search in Sydney, you wouldn’t find that support.”
“Structured tax deals soften the blows. [The developers] still maintain profitability because of these mechanisms.”
Twill is not a fan of “mega towers”. He favours medium-rise developments, such as is seen with the Nightingale Model, which has a “sweet spot” of 30 to 40 units. However, it’s difficult for these innovative developers to compete for land when other developers are going for eight or 10 extra storeys.
“There’s not enough rigidity or stringency on capping density,” he says. “Going up against 10 more floors is a different landscape.
“We need a blanket moratorium on height to level the playing field. Looseness on height restrictions out of the CBD of Melbourne, Sydney, Brisbane and Perth is driving the affordability crisis.”
Inclusionary zoning is positive
We need mixed communities and inclusionary zoning is a good way of achieving it, according to Twill, who is a big fan of the NSW government’s new housing policy. New housing developments on rezoned land will be required to dedicate 5-10 per cent of floor space to homes for people on low incomes.
Retain ownership of public land
When governments embark on large urban regeneration projects, Twill believes public land should not be sold off to developers. Rather the government should maintain ownership and use tools such as ground rental leasing to retain some control over development. For example, Battery Park City in NYC was developed with a 99-year land lease and the developer’s income is perpetual over time.
Twill advocates patient, or long-term, capital for affordable housing, where investors make a financial investment with no expectation of turning a quick profit.
“It’s a different philosophy of development,” he says. Investors are patient in the short term, anticipating more substantial returns down the track.
Shared economy meets place making
Twill’s new venture, Urban Apostles, aims to combine the potential of the shared economy with the art of place making. It gained inspiration from his research into the future of urban housing where he consulted high school students about what they wanted from a prospective urban lifestyle. Their ideal community included 100 per cent car share, 100 per cent bike share, 30 per cent of food grown on site and a shared laundry. They also want to travel the world and, when not in residence, sell their water and energy credits to other households in the building.
“It’s about developing a more sustainable consumption model,” Twill says.
According to a Skidmore, Owings & Merrill study forecasting urban housing trends, residential buildings of the future should be dedicating 40 per cent of floor area to shared amenities to drive social connection and affordable housing models. These areas might include rooftop entertaining areas, tool banks, communal laundries and car-share arrangements.
Twill believes we need to drive the emergence of deliberate housing, where architects engage with the purchaser from day one to create a different design future.
“Deep community engagement is about making sure developments are respectful and contextually appropriate,” he says. “Very specific responses result in interesting trade-offs.”
For example, residents of The Commons in Melbourne decided to forgo luxuries such as airconditioning and car spaces for quality apartments within a connected community.
“We don’t need two or three bathrooms or fancy granite benches,” Twill says. This style of “eco industrial chic” is now very much in demand.
Houses are not commodities
We need a paradigm shift, Twill says. We need to create the homes for the city we want in the future.
“All these boxes are not products,” he says. “These are homes. When you start thinking commodity, you lose the art and craft of city making.
“What do we want Sydney to be like? What is the architectural language and vernacular? What skyline do we want?”
Affordability crisis will drive exodus
Twill says young professionals are leaving big cities such as New York because of the crippling cost of housing and are finding a discovering a cheaper cost of living in smaller cities such as Seattle.
“Vancouver is slipping; people can’t afford to live there,” he says. “The same could happen here in Sydney with people relocating to Newcastle or Wollongong, or Melbourne to Geelong.”
Alarmingly, Twill predicts that people will move out of Australia altogether. “Young Australians already have global migratory aspirations,” he says. “The more acute the affordability crisis becomes the more exporting of talent will happen.”