Landcom's Cudgegong Road Station South artist impression

Landcom’s proposal to designate 5-10 per cent of housing around its Tallawong metro station project as affordable rental for a minimum period of 10 years has been welcomed by industry leaders but labelled a “missed opportunity” to be more ambitious on delivering affordable housing on government land.

The NSW Department of Planning and Environment this month put on exhibition Landcom’s proposal to have 1100 housing units built around the site of the new metro station at Rouse Hill – part of a larger plan to build 11,000 new dwellings around the Metro Northwest project.

As part of the plan Landcom is proposing that 5-10 per cent of housing be set aside as affordable, in line with its recently announced Housing Affordability and Diversity Policy, but rather than requiring the affordable housing be delivered in perpetuity, Landcom is referencing the State Environmental Planning Policy (Affordable Rental Housing) 2009 (AHSEPP) as its definition of affordable housing, which requires housing to remain as affordable for a minimum of 10 years.

A social needs and impact assessment report delivered as part of the submission stated that Landcom’s plan was also in line with the Greater Sydney Commission’s (GSC) proposed inclusionary zoning targets, which have yet to be adopted by government.

“While not a requirement for this development, the proposal will provide five to 10 per cent of new dwellings in the development as affordable housing, in line with the GSC’s objective,” the report says. “It is intended that, at a minimum, a community housing provider will manage the affordable housing for a period of 10 years.”

It is understood, however, that the Greater Sydney Commission policy, when enacted, will require housing to be delivered in perpetuity.

A huge missed opportunity

City Futures Research Centre director Bill Randolph told The Fifth Estate that while 5-10 per cent affordable housing was better than nothing, having a 10-year minimum period, rather than ensuring the housing be designated affordable rental in perpetuity, was disappointing.

“What happens to the tenants after 10 years?” he said. “Someone has to rehouse them. [The plan] will have no impact at all long-term.”

He said developers would be “really happy to deliver this” as it was simply a case of “deferred profit-taking”.

Being state-owned land, Professor Randolph said the government could have been much more ambitious.

“That’s a big disappointment. If it’s their land and there’s nothing on it, they could have placed 20 per cent [affordable rental housing] on it with no difficulty. It’s a huge missed opportunity.”

He said developers would have incorporated the costs of providing the affordable housing into the price they were prepared to pay for the land.

It could be, though, that Landcom is hamstrung by government wanting to maximise the price obtained for the land to fill its coffers. Landcom chief executive John Brogden hinted at this in a recent interview with The Fifth Estate:

An even bigger question is that as land has been shown to be the most expensive component of housing cost in places like Sydney, why government-owned land can’t be provided to affordable housing developers as a contribution to solving the problem. Instead most government agencies with surplus land want commercial rates of return.

Brogden admits it won’t be easy.

The long-standing policy on providing dividends to the state government remains. How much or the level of this is unclear – not that it’s a secret, Brogden said, it’s just something that needs clarifying. Certainly the days of a dividend holiday when Landcom was merged with the new entity UrbanGrowth NSW are over.

“We all know that the greatest problem is the land cost and that’s the big open question.”

Chasing our tails

Shelter NSW senior policy officer Ned Cutcher said the affordable housing contribution was a “sugar hit” to a sector that needed “strong, sustained growth”.

This was particularly important, he said, as affordable housing delivered with support from the federal government’s National Rental Affordability Scheme (NRAS) began to reach the 10-year limit after which properties could revert to market housing.

“The first part of NRAS is about to be dropping off soon,” Mr Cutcher said.

“We’re going to end up in a situation where we’re chasing our tails. We don’t have a sustainable growth model here, and we have a lot of growth to do.”

Community housing provider Evolve Housing recently completed a development in partnership with Landcom where 50 per cent of housing was delivered as affordable under the AHSEPP.

Evolve chief executive Andrea Galloway told The Fifth Estate that the provider would endeavour to have those units remain affordable after the 10-year period, though the project also received federal support from the now-defunct NRAS.

When that funding runs dry, she said there would need to be government support to help “fill the gap” between what it costs to manage the units and what can be gained from rental income.

“The issue is who funds it.”

She said Landcom was to be congratulated for pushing for affordable housing, however across government more broadly there was “no real focus” on affordable housing.

Landcom plan welcomed in some quarters

The plan, however, was welcomed by the Community Housing Industry Association (CHIA) NSW.

While the association has advocated for a target of 30 per cent affordable housing on public-owned land in the past, CHIA NSW head of policy and communications Deborah Georgiou told The Fifth Estate the proposal was welcome news.

“With housing affordability a top issue, CHIA NSW welcomes any initiatives intended to boost the supply of social and affordable housing,” Ms Georgiou said.

Urban Taskforce chief executive Chris Johnson also welcomed the proposal, in particular the 10-year period.

“It is good to see that Landcom’s approach to providing affordable housing is based on NSW Government’s Affordable Rental Housing SEPP of 2009 that provides the affordable housing for a 10-year period,” Mr Johnson said.

“The Urban Taskforce has promoted the use of the Affordable Rental Housing SEPP approach with reasonable uplift to fund the affordable component. In the Landcom proposal there is no uplift as the cost will be reflected in the value of the land and the normal SEPP requirement of 20 per cent affordable units has been reduced to five per cent.

“This is a reasonable economic approach to the delivery of affordable housing and signals government support for a 10-year rental approach.”

Professor Randolph said the government would need to aim much higher in future, particularly around development on the Metro Southwest, with many areas having a huge need for affordable housing, and requiring the redevelopment of existing housing.

“Landcom and the Department [of Planning and Environment] are going to have to lift their game [on affordable housing] around the metro development,” he said.

“They’re not going to get away with it redeveloping Campsie and Lakemba, which are going to require a very different approach.”

A spokeswoman for Landcom said it was possible the expressions of interest submissions could contain more affordable housing than the minimum stipulated.