Affordable Housing Agreement

Key Messages:
  • A section 173 agreement is a legal document and in most instances will be prepared by legal representatives.
  • It is key to the Planning and Environment Act that agreements for affordable housing be entered into voluntarily. There are a range of criteria as set out below that can be used to establish the voluntary nature of an agreement.
  • Preparing and negotiating an Affordable Housing Agreement will require input from a range of experts including strategic and statutory planning staff, an affordable housing subject-matter-expert, and legal services.
  • An Affordable Housing Agreement can set out whether the provision of affordable housing is delivered through a contribution of dwellings gifted or sold at a discount, land or a cash contribution.
  • Please include a reference to ‘affordable housing’ in the title of the section 173 agreement as it will assist the Department of Environment, Land, Water and Planning to monitor affordable housing agreements.

The landowner and Responsible Authority may enter into a legal agreement for the provision of an affordable housing outcome.This Agreement is expected to be a section 173 agreement.

Each site, development, permit variation, permit application and rezoning is unique and so each Affordable Housing Agreement will have a unique set of requirements. The agreement sets conditions that apply to the use of the land. A section 173 agreement is a legal document and in most instances will be prepared by legal representatives.

An Example Affordable Housing Agreement using section 173 has been developed that can be used to help facilitate negotiations.

Please include a reference to ‘affordable housing’ in the title of the section 173 agreement as it will assist the Department of Environment, Land, Water and Planning to monitor affordable housing agreements.

Prior to finalising a permit condition, evidence that the agreement for the provision of affordable housing has been reached voluntarily by all parties should be documented. It is suggested to include confirmation:

  • That the Responsible Authority and the landowner agree to the proposed outcome.
  • There is sufficient evidence provided that the affordable housing outcome will be delivered.
  • That the affordable housing outcome proposed is in accordance with the enabling requirements of the Planning and Environment Act 1987 and is clearly articulated, such as:
    • the percentage of floor area or dwellings or land to be provided
    • the type of affordable housing the dwellings will be utilised for and the proposed end recipient who will own and/or manage the dwellings.
  • That the affordable housing generated will be made available to eligible households with appropriate regard to affordability.
  • As to the delivery arrangement, such as whether the dwellings are to be built and gifted to the end recipient, sold to the end recipient at a discounted rate, or delivered through an otherwise agreed delivery arrangement.
  • Agreed expectations regarding expected third party investor requirements and the basis, including any supporting evidence, on which these assumptions have been made.
  • How the value that is created by the application of a negotiated planning agreement will be appropriately held and secured.
  • Any other assumptions that underpin the Affordable Housing Agreement.

The percentage, type and household targeting (allocation policy) that results from a voluntarily entered agreement is ultimately subject to agreement by the Responsible Authority and the landowner, and should have regard to this Guidance and:

  • The value to be delivered, drawing from the value created by the planning process or other mechanism, and the way that value can then be shared between the responsible authority and the landowner.
  • The requirements of the end recipient to ensure eligible households access and benefit.
  • The capacity of the end recipient, or other third-party investor, to contribute financially to enhance the baseline affordable housing outcome being negotiated as a result of the value proposition.
  • The priorities of each party to the negotiation in relation to the percentage of affordable housing that is achieved and the allocation of the housing to different income groups, with reference to the financial capacity of an end recipient.