An example of where a Responsible Authority would seek to enter into an Affordable Housing Agreement would be as part of a rezoning proposal or a permit application or a variation to a permit for a significant development.
Agreements can be used if a Responsible Authority is disposing of its land or making it available for the purpose of facilitating affordable housing.
A Responsible Authority should not use an Affordable Housing Agreement as a proxy for undertaking the necessary strategic planning work to determine where and how affordable housing should be facilitated through the planning scheme.
A Responsible Authority wants to respond to the demand for affordable housing in its municipality and to consider whether planning mechanisms or any other responses are an appropriate way to facilitate affordable housing.
The social planning and strategic planning staff create a working group (and/or engage a consultant) to gather information on housing demand, household income levels, projected population growth, and projected housing supply.
The working group develops a Draft Affordable Housing Policy. Following the appropriate level of community engagement, the Responsible Authority adopts an Affordable Housing Policy which sets out how the Responsible Authority will facilitate the provision of affordable housing.
The policy identifies the planning mechanisms that could help facilitate the provision of affordable housing and the Responsible Authority agrees to include those elements in its overall Housing Strategy.
Through a Planning Scheme amendment, the Responsible Authority seeks to reference/incorporate the Housing Strategy into the Planning Scheme. Council staff use the Housing Strategy and the Affordable Housing Policy as a basis for any discussions on Affordable Housing Agreements.
A landowner with a large land holding wants the planning scheme to be amended to rezone their land from industrial to residential. They engage a planning consultant and the consultant organises to meet with strategic planning staff at the Council.
In the initial meeting, the Council’s strategic planning staff discuss the information they would be seeking before approving a planning scheme amendment. They provide:
- an overview of the key strategic land use considerations for the site
- the provision of affordable housing and
- the planning consultant with links to relevant Council policies and strategies.
The planning consultant begins preparing information on what they hope to achieve through a planning scheme amendment and the strategic justification for it. In parallel, Council staff begin discussions with the landowner and the planning consultant to facilitate a voluntary Affordable Housing Agreement.
Council staff discuss the potential for a voluntary Affordable Housing Agreement with the Councillors, and seek guidance on whether there are any incentives or contributions the Council is willing to make to facilitate a viable Affordable Housing Agreement.
Together the landowner and the Council reach a voluntary Affordable Housing Agreement that sets out that a small percentage (three per cent) of future dwellings on the site will be contributed at no cost to a registered housing agency for the purpose of providing rental accommodation to very low and low-income households. The Affordable Housing Agreement also sets out that another small percentage (two per cent) of dwellings will be available for sale to eligible households by way of a shared equity scheme.
The Affordable Housing Agreement also sets out that Council will assess the land occupied by any affordable housing dwellings at a valuation of zero dollars when calculating the Public Open Space requirement.
The affordable housing is secured through a section 173, either prior to or after authorisation for the Planning Scheme Amendment.
A landowner wants to redevelop a site near a Major Activity Centre and engages a planning consultant. The landowner and planning consultant organise a pre-application meeting with the statutory planning staff at the Council.
At the pre-application meeting the Council staff provide an overview of the key statutory planning considerations for the site, including the provision of affordable housing and the planning consultant with links to relevant Council policies and strategies.
Prior to and following lodgement of the planning permit application, the statutory planning staff work with the planning consultant and developer and agree to a voluntary Affordable Housing Agreement.
The Affordable Housing Agreement sets out that the landowner will provide a cash contribution to the value of three per cent of the finished development as a contribution towards the provision of affordable housing.
The landowner and Council staff agree that the Affordable Housing Agreement will be secured through a condition on a notice of decision (or permit) that will require the landowner to enter into a section 173 for the provision of affordable housing in accordance with the details set out in the voluntary Affordable Housing Agreement.
Frequently Asked Questions
To help facilitate an Affordable Housing Agreement, a Responsible Authority may consider concessions or incentives such as:
- Floor area uplift
- A truncated planning timeframe
- Reduced developer contribution
- Reduction of other planning requirements e.g. carparking, public open space contribution, community infrastructure contribution
- Rate reduction or exemption for the affordable housing dwellings
- Other contributions by the Responsible Authority e.g. land or money
A Responsible Authority can seek to include a condition on a planning permit for the provision of affordable housing. As for any condition on a permit, the responsible authority should have evidence to support the requirements and must be able to defend the condition in VCAT if the applicant appeals the conditions.
Throughout the planning permit process, planning staff should have explored and gained agreement with the applicant, on what would or wouldn’t be included in an Affordable Housing Agreement secured by way of a planning permit condition for a section 173 agreement.
Depending on the arrangements, the requirement for the provision of affordable housing can significantly change the viability of a development. Any requirements should be identified early and clearly and worked through with the applicant.