Overview

Key Messages:
  • The planning system has a role in facilitating affordable housing.

  • From 1 June 2018, the Planning and Environment Act 1987 includes a new objective “to facilitate the provision of affordable housing in Victoria”.

  • Legislative changes clarify that Responsible Authorities can enter into an agreement with landowners and others under section 173 of the Planning and Environment Act 1987 for the provision of affordable housing as part of a development.

  • "Affordable housing” is defined in the Planning and Environment Act 1987.

The role of planning

Homes for Victorians: Affordability, access and choice (March 2017) and Plan Melbourne 2017-2050 (March 2017) recognise the critical need to increase the supply of affordable housing.

Both strategies found that the planning system alone cannot address all issues relating to the affordability of housing, but acknowledged that there is a role for the planning system to facilitate the supply of affordable housing.

Objective of the changes

The objective of the recent changes to the Planning and Environment Act 1987 (the Act) is to facilitate the supply of affordable housing through the planning system.

The changes to the Act are also intended to provide a framework that allows for innovative approaches to the delivery of affordable housing and flexibility for parties when reaching an affordable housing agreement.

Section 173 agreements for affordable housing

One mechanism to facilitate the supply of affordable housing is through a voluntary agreement between a Responsible Authority (generally a local council) and a landowner to deliver affordable housing as part of new developments.

Such agreements are generally referred to as section 173 agreements. The power to enter into the agreement arises under section 173 of the Act.

Amendments to the Planning and Environment Act 1987

Three important changes have been made to the Act that came into effect on 1 June 2018. Those changes were:

  • Adding a new objective to the Act “to facilitate the provision of affordable housing in Victoria”.
  • Providing a definition of affordable housing – “affordable housing is housing, including social housing, that is appropriate for the housing needs of very low, low, and moderate-income households”.
  • Affirming the use of section 173 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”.

Frequently Asked Questions

One of the mechanisms available to a Responsible Authority, such as a council, to facilitate affordable housing in a new residential development is through negotiating an Affordable Housing Agreement with the landowner. Unfortunately, over the past few years, many attempts to negotiate agreements have not resulted in the delivery of affordable housing.

Including an objective in the Planning and Environment Act 1987 to “facilitate the provision of affordable housing" has removed a significant hurdle for Responsible Authorities that are seeking to facilitate affordable housing in their municipality through planning mechanisms.

As for any objective in the Act, a Responsible Authority must undertake the appropriate strategic land use research and municipal policy development in relation to affordable housing. The changes to the Act do not remove the need for a strategic basis for a position by the Responsible Authority.

It is important to note that because any section 173 agreement is entered into voluntarily, councils and landowners have always been able to enter into a section 173 agreement for a range of outcomes, including affordable housing.

This change to the Act just clarifies that a section 173 is a legal mechanism that can be used in appropriate circumstances to deliver affordable housing in a new development.

The overall process for developing an Affordable Housing Agreement and securing it by way of a section 173 is similar to the process for developing any section 173. The difference is that Affordable Housing is a fairly new area of specialisation in the planning sector in Victoria

An example agreement has been developed to help facilitate the successful negotiation of agreements to provide affordable housing as part of a development.

Please include a reference to ‘affordable housing’ in the title of the section 173 agreement to assist DELWP to monitor affordable housing agreements.

More information on the general guidance on use of a section 173

If you have any questions or need further information contact the Affordable Housing team.

Page last updated: 16/10/2018