Guideline for Developing an Affordable Housing Contribution Scheme

Guideline for

eveloping an

Affordable Housing

Contribution Scheme

February 2019

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

February 2019

Disclaimer

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Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Contents

1. Introduction 5

How does SEPP 70 work? 6

2. How to prepare an affordable housing contribution scheme 12

2.1 How to prepare an affordable housing contribution scheme 13

2. 2 Key concepts in the development of an affordable housing contribution scheme 20

3. Process for including or referring to an affordable housing contribution scheme through an

amendment to a local environmental plan 25

3.1 The process for requiring affordable housing contributions 25

4. Monitoring and review of development contributions collected under affordable housing

contribution schemes 29

Appendix 1 – Definitions 30

Appendix 2 – How to determine a viable affordable housing contribution rate 33

Appendix 3 – Template for affordable housing contributions schemes 36

Section 1 –Strategic context and background 36

Section 2 – Affordable housing contributions 38

Section 3 – Administration and implementation 40

Appendix A – Local housing needs assessment 41

Appendix B – Viability assessment 41

Appendix C - Information Sources 41

Appendix 4 – Information Sources 43

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

1. Introduction

This document is a guideline for councils to

help them prepare affordable housing

contribution schemes and thereby fulfil the

requirements of Section 7.32(3)b of the

Environmental Planning and Assessment

Act, 1979 (the Act).

Affordable housing contribution schemes

are council-led documents which set out

how, where, and at what rate

development contributions can be

collected by councils for affordable

housing.

They also give local communities greater

clarity about the affordable rental housing

planned for in their areas, and affordable

housing contribution schemes provide

developers certainty and transparency

about how affordable rental housing

contributions will be determined, and the

contribution rate that will be applied in a

condition of consent.

This document guides councils on what

they should include in an affordable

housing contribution scheme to satisfy the

legislative requirements, and how to

develop an affordable housing

contribution scheme under Section

7.32(1)(c) of the Act.

Figure

1 outlines the relationships between SEPP 70, the Act and LEPs.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

How does SEPP 70 work?

One of the objectives of the Act (Section

1.3(d)) is to promote the delivery and

maintenance of affordable housing. Under

Section 7.32 of the Act, councils may

place consent conditions on

developments which require contributions

for affordable housing in that local

government area (LGA). To do this, LGAs

must be identified as having a need for

affordable housing in a state environmental

planning policy.

State Environmental Planning Policy No 70

– Affordable Housing (Revised Schemes)

(SEPP 70) identifies those LGAs. It also

provides the mechanism for councils to

develop schemes and levy developer

contributions for affordable housing.

SEPP 70 commenced on 1 June 2002 and

applied to City of South Sydney, City of

Sydney, City of Willoughby and Leichhardt

LGAs. An amendment to SEPP 70, notified

on 20 April 2018, included five additional

LGAs, City of Randwick, Inner West,

Northern Beaches, City of Ryde, and City

of Canada Bay, into the SEPP. The

operation of SEPP 70 has now been

expanded to include all LGAs across the

State.

While SEPP 70 includes all LGAs, it does

not mean councils can automatically

impose consent conditions for affordable

housing. Under Section 7.32(3)(b) of the

Act, any condition imposed on a

development consent must be authorised

by an LEP and must be in accordance with

an affordable housing contribution scheme

for dedications or contributions set out in,

or adopted by, the LEP.

This means that councils must:

• investigate the affordable housing

need in their LGAs

• identify the areas to which an

affordable housing contribution

scheme will apply

• determine a viable affordable

housing contribution rate

• prepare affordable housing

contribution schemes

• amend their LEPs through the

planning proposal process to

reference their affordable housing

contribution schemes.

Councils can then apply consent

conditions that require contributions for

affordable housing.

Section 7.32(3) of the Act sets out

requirements that must be met to impose a

condition to levy developer contributions

for affordable housing. This guideline will

help councils develop affordable housing

contribution schemes which meet these

legislative requirements.

Developing a viable affordable

housing contribution rate in an

affordable housing

As part of developing an affordable

housing contribution scheme and

preparing a planning proposal to amend

an LEP to levy developer contributions,

councils will need to prepare and provide

evidence that affordable housing

contribution rates are viable.

Councils will need to provide the

Department with the evidence and

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

assumptions used to determine the

affordable housing contribution rate, to

enable the assessment and review of the

proposed affordable housing contribution

rates to ensure that the rates are viable and

would not impact on development

feasibility and overall housing supply. The

evidence and assumptions will be

exhibited as part of the public consultation

on the LEP amendment.

Greater Sydney Commission’s

Objectives

The Greater Sydney Commission’s Greater

Sydney Region Plan and District Plans (the

Plans) for the Sydney Metropolitan region,

support the development of affordable

housing contribution schemes as a

mechanism to implement the

Commission’s housing related objectives.

The Plans include Affordable Rental

Housing Targets as a mechanism to deliver

an additional supply for very low to low-

income households in Greater Sydney and

include Affordable Rental Housing Targets

of 5-10% of new residential floor space,

subject to being viable.

Affordable Rental Housing Targets are to

be applied in areas where an uplift of land

value is created. The contribution rate

needs to be viable when taking into

consideration local and state infrastructure

charges, and the ability for developers to

achieve a reasonable profit margin.

Relationship to legislative changes in

the Act – Strategic Planning and Local

Strategic Planning Statements

In March 2018, a number the legislative

changes came into force through the

updates to the Environmental Planning and

Assessment Act 1979 (the Act). One of the

significant changes to the Act was an

emphasis on strategic planning and the

critical role and importance of councils in

strategic planning in their local

government area.

As outlined in Figure 2 below, the work by

councils to develop their Local Strategic

Planning Statements and Local Housing

Strategies will also inform the development

of an affordable housing contribution

scheme.

The background information and evidence

base required in an affordable housing

contribution scheme is also required in a

Local Housing Strategy. Councils may

duplicate the information from its work in

preparing a Local Housing Strategy.

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Establish the background and context

Establish and analyse the LHS evidence base

to identify the LHS requirements including:

• Demographic analysis

• Housing supply

• Housing demand

• Housing gaps

Establish the vision and

identify objectives

Consider land use planning options and other

implementation mechanisms (including

affordable housing contribution scheme)

Evaluate and select the delivery

mechanism

Prepare and implement delivery plan

Prepare affordable housing

contribution scheme

Identify areas for rezoning and test

affordable housing contribution rates

against identified areas in the LHS to

determine a viable affordable housing

contribution rate

Finalise affordable housing

contribution scheme and

supporting documentation

Planning Proposal prepared and submitted to

Department of Planning and Environment with

proposed rezoning of land

Exhibit draft LHS

LHS approval authority to review LHS

Establish and analyse evidence base

to identify affordable housing needs

including:

• Demographic analysis

• Affordable housing supply

• Affordable housing demand

• Affordable housing gaps

Local Housing Strategy

Affordable Housing

Contribution Scheme

Step 1

Step 2

Step 3

Regional and District Plans

Local Strategic Planning Statements

Figure

2: Steps in the development of strategic planning framework and Local Housing Strategy and how it should

inform the development of an affordable housing contribution scheme.

Local Strategic Planning Statements

All councils are required to prepare Local

Strategic Planning Statements (LSPS).

The

LSPS will implement actions in the Regional

and District Plans and set out the 20-year

vision for land use in the local area, the

special character and values that are to be

preserved and how change will be

managed into the future.

These statements will be a succinct and

easy to understand document that will

allow community members to contribute

to and understand the future direction of

land use in the area.

LSPSs must identify planning priorities for

an area and explain how these are to be

delivered. The LSPS will inform the

housing vision, and a council’s Local

Housing Strategy will provide a

comprehensive evidence base to inform

the development of affordable housing

contribution schemes and the areas they

will be applied.

In Greater Sydney, the LSPS must be in

place by 1 December 2019, and in regional

areas, the LSPS must be in place by 1 July

2020.

Local Housing Strategy

A Local Housing Strategy is a strategic plan

for housing in local government areas.

Local Housing Strategies are produced by

councils, with input from the community,

and set out the framework for new housing

in a local government area. In Greater

Sydney, a Local Housing Strategy must

form part of the strategic planning

framework.

A council must prepare a Local Housing

Strategy if required by a Regional or District

Plan, and can also choose to prepare one,

even if it is not required to. In developing a

Local Housing Strategy, councils must

consider demographics, housing supply

and demand, local land use opportunities

and constraints, along with other relevant

evidence.

As part of the broader consideration of

housing supply and demand in their LGAs,

councils must also consider the supply and

demand for affordable housing and how

this is likely to change over time. Local

Housing Strategies, including any

affordable housing components, are to be

consistent with the relevant Regional and

District Plans.

The data gathering, and analysis

undertaken by a council to inform its Local

Housing Strategy, including affordable

housing data, demographic analysis and

needs analysis, can be used to inform the

development of an affordable housing

contribution scheme.

The process for preparing a Local Housing

Strategy is outlined in the Local Housing

Strategy Guideline

(https://www.planning.nsw.gov.au/Polic

y-and-Legislation/Housing/Local-Housing-

Strategy-Guideline-and-Template ).

Councils may wish to review the Local

Housing Strategy Guideline which is

complementary to this document.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Other affordable housing

contribution mechanisms

Special Infrastructure Contributions

A Special Infrastructure Contribution is a

levy paid by developers to share the cost

of delivering key pieces of State and

regional infrastructure, including

affordable housing, within a defined

boundary. The Special Infrastructure

Contribution, and area to which it applies

is determined by the Minister.

Under the provisions of the Act, if a Special

Infrastructure Contribution area lists

affordable housing under the schedule of

infrastructure works, contributions for

affordable housing cannot also be

collected under an affordable housing

contribution scheme.

However, if the schedule for infrastructure

works for a special contributions area does

not include affordable housing, an

affordable housing contribution scheme

under SEPP 70 may apply. This is to ensure

that contributions for the provision of

affordable housing can only be required

under either SEPP 70 or as a Special

Infrastructure Contribution.

Voluntary Planning Agreements

The Act enables a voluntary planning

agreement (VPA) to be undertaken. A VPA

is a planning tool that allows planning

authorities and developers to work

together to deliver innovative infrastructure

outcomes alongside development

proposals. A VPA can include the

provision of or monetary contributions for

affordable housing.

The Minister has issued the Environmental

Planning and Assessment (Planning

Agreements) Direction 2019. The

Direction requires councils to consider a

series of matters when negotiating a

planning agreement with a developer for

the purposes of affordable housing in

connection with a development

application.

Councils that want to negotiate a planning

agreement for provision affordable

housing, after considering the

requirements of the Ministerial Direction,

will need to prepare and publish a policy

that sets out the circumstances in which it

may seek out a planning agreement. This

policy will need to be made publicly

available.

Alternative options to support the

delivery of affordable housing

This guideline explains the provisions of

SEPP 70 and the process to develop an

affordable housing contribution scheme.

However, it is recognised that there are

alternative mechanisms that councils can

utilise to support the delivery of affordable

housing. These include State

Environmental Planning Policy (Affordable

Rental Housing) 2009 (ARH SEPP) and

Local Environmental Plans.

The ARHSEPP provides incentives for the

development of new affordable rental

housing; facilitates the retention and

mitigates the loss of existing affordable

rental housing; and facilitates an expanded

role for not-for-profit-providers of

affordable rental housing. Under the

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ARHSEPP, additional affordable housing

options including boarding houses, in fill

development and secondary dwellings

provide alternative affordable housing

options.

Councils can also utilise the provisions of

its local environmental plan to support

housing diversity, informed by its strategic

planning work. This strategic work occurs

in the preparation of Local Strategic

Planning Statements and Local Housing

Strategies.

A Council, in consultation with its

community, and in alignment with its Local

Strategic Planning Statement and Local

Housing Strategy, may use alternative

options to support the delivery of

affordable housing.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Figure

3 Steps in the development of an affordable housing contribution scheme.

2. How to prepare an affordable

housing contribution scheme

Figure 3 (below) outlines the steps in the development of an affordable housing contribution

scheme. Section 2.1 outlines step 1 in this process.

Step 1

Council prepares an

affordable housing

contribution scheme

Step 3

Amendment to council’s

local environmental plan

(planning proposal)

Step 4

Council collects

contributions for affordable

housing

Council advises the Department that it is preparing an affordable housing

contribution scheme.

Council prepares an affordable housing contribution scheme which is consistent with

the Department’s guideline (below).

A proposed affordable housing contribution scheme is assessed by the Department

through the planning proposal process.

If the proposal is consistent with all the relevant requirements, a Gateway is issued, and

the planning proposal is publicly exhibited.

Council’s local environmental plan is amended to include a clause related to the

provision of affordable housing.

Council may include a condition of consent to applicable development applications in

accordance with that area’s affordable housing contribution scheme.

Funds collected are allocated in accordance with the affordable housing contribution

scheme.

Community and

stakeholder

engagement

Step 2

DPE considers the scheme

Establish an evidence base

Identify areas for rezoning

Establish an affordable housing contribution rate for the scheme

Produce a scheme using a template

Prepare a planning proposal to include or refer to the scheme in a local

environmental plan

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2.1 How to prepare an affordable housing contribution scheme

Figure 4 outlines the key steps for how councils can prepare an affordable housing scheme

contribution scheme, as part of Step 1 in Figure 3.

Figure 4 Process for preparing an affordable housing contribution scheme

A. Establish evidence base

As outlined in Figure 2, a council that is

preparing a Local Housing Strategy will

establish an evidence base to determine

long term planning decisions in its local

government area. When establishing the

evidence-base for an affordable housing

contribution scheme, the evidence base

may be informed by the work already

undertaken by a council. Councils that

have already a Local Housing Strategy in

place may want to update existing work

already undertaken to ensure the evidence

base and affordable housing needs

analysis is robust and up to date.

When establishing the evidence base, the

following should be included, but not be

limited to:

• Demographic analysis

• Affordable housing supply

• Affordable housing demand

• Affordable housing gaps.

In establishing the evidence base, it may

also be appropriate to consider factors

beyond the LGA, such as work travel and

migration.

Demographic analysis

Collection and analysis of demographic

indicators and projections provides

insights into the current and future housing

needs of the LGA’s population.

Councils should consider:

• Population change, and the drivers

of population change

• Population age: population by age

groupings and the projected

change over time

• Dwelling requirements – the

projected dwelling requirements

• Number of households and

household types over time – the

total number of households and

how this has changed and is

projected to change over time

• Types of dwellings in the LGA – the

types and composition of dwellings

in the LGA, low density detached

residential, residential flat

Establish

evidence base

Identify areas for

rezoning

Establish an

affordable

housing

contribution rate

Produce scheme

using template

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buildings, shop top housing, low

rise medium density

• Tenure and landlord types –

composition of dwellings that are

owned, rented or mortgage

• Household income (including very

low, low and moderate-income

households)

• Rental and mortgage stress.

The demographic evidence should assist

councils in determining what percentage

of households are on a very low, low, or

moderate incomes.

• Employment profiles, identifying:

o the main employment sectors

o an income and wages profile

o whether employed people can

afford housing close to work;

public transport access to

employment centres

o potential changes in the

community’s employment

structure

o potential fluctuations in the

area’s residential real estate

market.

This demographic analysis should be

considered at the smallest geographical

scale.

Sources of Information which may be

useful for councils:

• the Department’s Local Housing

Strategy Guideline

• the ‘NSW Population and

Projections Data and the NSW

Household and Dwelling

Projections data’

• the Australian Bureau of Statistics

(ABS) Community profiles and

census data

• the Department of Family and

Community Services (FACs) ‘NSW

Local Government Housing Kit’.

FACs’ database includes time

series data and provides data on a

range of housing topics

• The rent and sales report

produced by FACs, includes

timeseries data and is the sole

authoritative source of data on

NSW rent movements.

Links to sources of information which may

be useful to councils are available in

Appendix 4.

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Affordable housing supply

In developing an affordable housing

contribution scheme, establishing the

evidence base for housing supply should

analyse the area’s existing affordable rental

housing stock. This should identify how

many affordable housing dwellings are in

an area and compare this to supply and

demand for affordable housing.

In determining affordable housing supply,

councils should consider:

• The amount and type of current

and planned housing stock

(including proportion of stock

available for very low, low and

moderate-income earners),

including:

o the existing housing diversity

and include housing owned

and/or operated by

community housing providers

o properties sold or rented on

the private market that would

be affordable for very low, low

and moderate income

earners.

• Rental vacancies (where possible)

and vacancy rates

• Price and type of dwellings for sale

• Where possible, a council should

provide sale prices and rental data

which is cross-referenced with

employment and income data

• Capacity within the existing land

use controls for additional housing

– comparing the number of

existing dwellings and the number

of dwellings that would be

delivered if the land use controls

were fully developed

• Potential displacement of existing

houses due to redevelopment –

including considering the loss of

affordable housing in existing

developments or change of

housing affordability in area

through redevelopment

Sources of information which may be

useful for councils

• Data and data sources collected in

the development of a council’s

Local Housing Strategy

• the Department of Planning and

Environment’s Sydney Housing

Supply Forecast (for councils in

Greater Sydney).

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Affordable housing demand

Housing demand requires the analysis of:

• Underlying demand: the need or

number of new homes required

based on a projected level of

households, primarily driven by

demographic and migration

factors

• Effective demand: the size, type

and location of dwellings that

people are willing to buy and rent.

In determining affordable housing

demand, Councils should consider:

• existing affordable housing stock

• incomes

• rent and sales prices

• housing stress

• employment

• homelessness

• affordable rental housing and

social housing wait times.

Additionally, councils should consider

demand from local workers – sources of

employment for very low, low and

moderate-income workers who perform an

important service within the area but are

unable to live nearby due to price

constraints. Important services are

generally front-line services, and for the

local area may include medical

professionals, teachers, police, child care

workers and aged care workers. The

industries in which these local workers are

employed will vary by location.

The collection of an evidence base and

analysis of housing demand should include

consideration of market preferences

including where people want to live in the

LGA and in which type of homes.

Sources of information which may be

useful for councils

• Data and data sources collected in

the development of a council’s

Local Housing Strategy

• FACs releases information on the

expected social housing waiting

times by geographic regions

• Councils in Sydney can refer to the

housing market areas set out in

research by UNSW (City Futures

Research Centre).

Affordable housing gaps

Following consideration of supply and

demand for affordable housing, councils

should identify any gaps between existing

housing stock and future residents’

affordable housing needs – the analysis of

demographic, housing and affordability

data may also reveal the need for specific

housing for key groups.

Councils which identify a gap between the

current needs and supply of rental

accommodation for very low, low, and

moderate income households, may decide

to develop an affordable housing

contribution scheme, if an affordable

housing contribution scheme and rate is

viable.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

B. Identify area(s) for future rezoning

Affordable housing contribution schemes

apply to developments that are facilitated

by upzoning. For the purpose of this

guideline, an upzoning is a change of zone

to enable residential development or a

change of planning controls (such as floor

space ratio) which enables greater

residential density in site.

This ensures contributions are drawn from

the increase in land value generated by the

rezoning and are consistent with the

affordable housing targets established in

the Greater Sydney Commission’s District

Plans.

A Local Housing Strategy will identify areas

suitable for growth, and the land use

planning mechanism to achieve the

growth required in the local government

area. To identify areas for growth, councils

should analyse the multiple opportunities

and constraints factors across the LGA and

identify different areas with capacity for

development.

The areas identified for growth may be

investigated to implement an affordable

housing contribution scheme at the same

time as a rezoning or change of density or

permissible building typologies in a local

environmental plan amendment.

The areas identified for growth in a

council’s Local Housing Strategy may also

provide an early indicator where an

affordable housing contribution scheme

may be investigated as part of a future

rezoning. This allows for a detailed viability

assessment specific to the development

conditions applicable to the area being

rezoned.

This in turn provides greater certainty that

the affordable housing contributions rate is

viable. It also ensures development will be

feasible in those areas.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

C. Develop an affordable housing contributions rate

Once a council has selected an area, it

must develop an appropriate affordable

housing contribution rate.

An affordable housing contribution

scheme must establish an affordable

housing contribution rate as either a

percentage of floor space that can equate

to a completed affordable rental unit,

which can be dedicated, or a monetary

contribution rate, or any combination of

the two.

This flexibility will allow councils to

determine when it is appropriate and

efficient to receive completed dwellings

and when it would be appropriate to

receive monetary contributions. The

affordable housing contribution scheme

must provide supporting evidence for how

the proposed rate was determined.

Councils may need to consider both a

percentage of floor space and a monetary

contribution, if a percentage of floor space

contribution does not meet the minimum

size requirements of an affordable rental

housing unit.

Once councils have identified the

affordable housing needs and have

identified areas suitable for the

development of an affordable housing

contribution scheme, councils will need to

test affordable housing contribution rates

to ensure the proposed rate is viable and

will not impact development feasibility and

overall housing supply. A developer’s

ability to achieve an investment return is

key to maintaining a sustainable

development market and continued

housing supply.

In determining where to apply an

affordable housing contribution scheme,

not all development factors are the same.

As such, a council may have different

affordable housing contribution rates

applying in different areas.

The preferred method for determining a

viable affordable housing contribution rate

is using the residual land value method

(RLV). The RLV is calculated by estimating

the anticipated revenue from a

development, then deducting all the

development costs and allowance for a

reasonable developer profit. The RLV is the

remaining (residual) amount from this

calculation and identifies how much can be

paid for a site to enable its development.

Appendix 2 outlines the process for

determining the residual land value of a site

to determine a viable affordable housing

contribution rate.

Figure

5 Outlines the steps to testing a viable affordable housing contribution rate under a residual land value

method.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Evidence that an affordable housing contribution rate is viable

As part of developing an affordable

housing contribution scheme and

preparing a planning proposal to amend

an LEP to levy developer contributions,

councils will need to prepare and provide

evidence that affordable housing

contribution rates are viable.

These worked examples, provided with

the assumptions used to determine the

affordable housing contribution rate, will

allow the assessment and review of the

proposed affordable housing contribution

rates to ensure that the rates are viable and

will not impact on development feasibility

and overall housing supply.

The evidence must include the data

sources for determining the contribution

rate, including comparable sales, building

finishes, site preparations and construction

costs. How the affordable housing

contribution rate was determined must be

consistently and transparently applied and

be made publicly available to be assessed

and examined.

The proposed affordable housing

contribution rate will also need to take into

account any local infrastructure

contribution and Special Infrastructure

Contribution that will be applied on the

site, when determining if the contribution

rate is viable.

The Department will test the worked

examples in the assessment of the LEP

amendment. The Department may seek an

independent peer review of any affordable

housing contribution scheme to ensure the

proposed affordable housing contribution

scheme is viable.

Councils may want to organise preliminary

discussions with the Department when

starting to consider contribution rates to

help identify the most appropriate way of

addressing the viability analysis. Agreeing

on an affordable housing contribution

scheme’s key features at this stage will help

ensure the process progresses smoothly

and viability issues are addressed early.

The Minister has also made a Ministerial

direction providing guidance for planning

agreements which include the provision of

affordable housing (as outlined on page

10).

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

D. Produce scheme using the template

Once a council identifies proposed areas and establishes viable affordable housing

contribution rates, it must produce a draft scheme using the template in Appendix 3.

Section 2.2 and the template (in Appendix 3) outlines the key concepts and matters that need

to be addressed in an affordable housing contribution scheme.

2. 2 Key concepts in the development of an affordable housing

contribution scheme

Section 7.32(3) of the Act sets out

requirements that must be met to impose a

condition to levy developer contributions

for affordable housing.

Section 7.32(3)(a) of the Act enables a

condition to be imposed if it complies with

all relevant requirements set out in a State

Environmental Planning Policy. SEPP 70

includes a provision that refers to

requirements under section 7.32

conditions. A condition will need to

comply with this section of SEPP 70.

Under Section 7.32(3(b) of the Act, a

condition can only be imposed by a

council to levy a developer contribution for

affordable housing if the developer

contribution for affordable housing is in an

LEP and the condition is in accordance

with an affordable housing contribution

scheme. The affordable housing

contribution scheme is either set out in the

LEP or referred to in an LEP. If the

affordable housing contribution scheme is

included in or referred to in an LEP it

cannot be changed without seeking an

amendment to the LEP.

Section 7.32(3)(c) of the Act helps councils

to design the scope of these schemes,

based on:

(i) the extent of the need in the area

for affordable housing

(ii) the scale of the proposed

development

(iii) any other dedication or

contribution required to be made

by the applicant under this section

or section 7.11.

An affordable housing contribution

scheme will also provide detail and clarity

on:

Application of the scheme

Where does the affordable housing

contribution scheme apply?

This section must show the proposed areas

within the LGA that the affordable housing

contribution scheme covers. It must also

provide maps with sufficient detail to

identify specific lots to which the

affordable housing contribution scheme

applies.

A single scheme may apply to multiple

areas within an LGA, as long as the viability

analysis supporting each area specifically

addresses each one.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

The affordable housing contribution

scheme boundaries will generally be

identified in broader strategic planning

processes and informed by Regional Plans,

District Plans, and Local Housing

Strategies.

Councils must also consider individual sites

and locations with unique characteristics

that could justify exclusion from the

affordable housing contribution scheme.

This may be appropriate when the viability

of the location is not consistent with that of

the broader area. It may also be

appropriate when a viability assessment

has demonstrated that affordable housing

is unviable in a location.

What types of development does the

affordable housing contribution scheme

apply to?

An affordable housing contribution

scheme must clearly state what types of

development will be subject to affordable

housing contributions. It may differentiate

between residential and non-residential

land uses or provide for others.

In line with the viability assessment, it may

be appropriate for each development type

to have its own affordable housing

contributions rate.

An affordable housing contribution

scheme may identify development types

excluded from affordable housing

contributions. Councils must clearly justify

why an area should be excluded from an

affordable housing contribution scheme,

to provide transparency and certainty.

Overview – Affordable Housing Need

This section provides the context for the

affordable housing contribution scheme in

relation to the broader planning

framework, and in relation to land use and

development within the area and LGA. It

must also draw on a Local Housing

Strategy, if one is available.

The overview must provide an overview of

the housing affordability issues that the

affordable housing contribution scheme

aims to address. This must include

information from the analysis of the

evidence base which informed the

scheme. The supporting evidence base

must be included in Appendix A.

Definitions

This section must define all relevant terms.

This may include, but is not limited to:

• the definition of affordable

housing

• definition of median household

incomes provided for in an

affordable housing contribution

scheme

• definition of total floor area

• definition of registered community

housing providers.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Affordable housing contributions

rates – dedication of land and/or

payment of equivalent monetary

contributions

Contribution rates

The affordable housing contribution

scheme’s contributions rates must be

provided in this section.

Rates may differ between residential and

commercial floorspace, between areas, or

between development types.

They must be tested for viability and

councils must provide justification when

rates differ. The affordable housing

contribution scheme must include worked

examples of the affordable housing

contribution rates. Section 2.1C and

Appendix 2 provide more details on what

needs to be included in the justification

and worked examples, and one method to

determine an affordable housing

contribution rate.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Dedication of dwellings

This section outlines how the contribution

rate can be fulfilled by dedicating

completed affordable rental dwellings.

This includes any requirements for

dwellings and their provision, such as

whether:

• dwellings will be owned by

government or a recommended

community housing provider

• dwellings will be provided in

perpetuity

• dwellings will align with the

affordable housing principles in

Schedule 2 of SEPP 70

• there are any design or

construction requirements,

including minimum total floor

space areas

• there are any ongoing

requirements for rental

arrangements or use of rent.

Councils must provide worked examples

of how contribution rates for each

development type were calculated.

Equivalent monetary contribution

This section provides detail on an

equivalent monetary contribution to be

provided instead of a floor space

(dwelling) contribution, if an affordable

housing contribution scheme includes this

option. This section must outline how the

contributions rate can be fulfilled by a

monetary contribution. This will be an

equivalent monetary contribution and be

expressed as an amount in dollars per

square metre.

Councils must provide worked examples

of how they calculate contribution rates for

each development type.

Indexing of payments

How payments are indexed, including

how often this must happen, the formula

for indexing payments, and where the data

for this calculation has been sourced, are

outlined in this section.

All monetary contributions must be

indexed at the time of payment to ensure

funds received will cover the full costs of

delivering the required affordable housing

contributions.

Administration and Implementation

of the Scheme

Registered community housing provider

and delivery program

This section identifies the process to

nominate a registered community housing

provider that can manage and operate the

affordable rental housing and monetary

contributions in line with the affordable

housing contribution scheme. An

affordable housing contribution scheme

may have more than one registered

community housing provider, or each

scheme may have a different community

housing provider. However, in the

instance an affordable housing

contribution scheme identifies more than

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

one community housing provider it must

identify how funds will be split between

providers.

It is recommended that councils ensure

that the community housing provider is

registered in the National Regulatory

System for Community Housing (NRSCH).

The NRSCH can be accessed here -

http://www.nrsch.gov.au/

Councils may also want to access the

Affordable Housing Provider

Prequalification Scheme (ProcurePoint).

Procurement is managed by Landcom and

facilitates procurement of registered

community housing providers in a

transparent and competitive way.

Procurepoint can be accessed at: -

https://www.procurepoint.nsw.gov.au/s

cm4421 . ProcurePoint also lists registered

community housing providers interested in

developing and/or managing affordable

housing in particular local government

areas.

Family & Community Services has released

NSW Affordable Housing Ministerial

Guidelines for 2018-2019. These

guidelines set out the policy framework for

delivering affordable housing that has

been developed with financial assistance

from the NSW Government and is owned

or managed by community housing

providers. These guidelines provide some

useful advice in the implementation and

delivery of an affordable housing

contribution scheme and can be accessed

at:

https://www.facs.nsw.gov.au/download

?file=576199

Councils must provide registered

community housing providers with a

delivery program that outlines how funds

raised or dwellings dedicated under the

program will be used to provide affordable

housing. The program must refer to the

costs of providing affordable housing in

the area.

This section must also establish what

registered community housing providers

are required to do in relation to using the

funds, which may include reporting or

transparency requirements.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

3. Process for including or referring to

an affordable housing contribution

scheme through an amendment to a

local environmental plan

3.1 The process for requiring affordable housing contributions

Figure 6 outlines how councils can implement an affordable housing contribution scheme

through a planning proposal. This section outlines the process of Step 3 in Figure 3.

Councils may consult the Department for advice at any stage in this process.

Figure 6 Process to implement an affordable housing contributions scheme

Council advises the

Department of it intentions

to prepare an affordable

housing contribution

scheme

Preliminary meeting with

the Department to discuss

the preparation of

affordable housing

contribution scheme

(optional)

Council prepares an

affordable housing

contribution scheme using

the guideline and template

Council tests scheme with

community through public

consultation (optional)

before preparing a

planning proposal

Preparation of a planning

proposal to amend LEP

Submit planning proposal

for a Gateway

determination

Planning proposal

assessed by Department

including testing the

affordable housing

contribution scheme for

viability

Gateway determination

Planning proposal

progressed according to

Gateway determination,

including public exhibition

Finalisation of LEP

Amendment

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A. Council advises the Department of

its intention to prepare an

affordable housing contribution

scheme

Councils should write to the Secretary to

advise of its intention to prepare an

affordable housing contribution scheme.

This will enable the Department to keep a

record of which councils are preparing an

affordable housing contribution scheme

and ensure there are resources available to

assist councils, if required.

B. Council has a preliminary meeting

with the Department to discuss

preparation of an affordable

housing contribution scheme

(optional)

Councils are encouraged to hold early

meetings with the Department’s relevant

Regional team to address key issues that

might affect the delivery of affordable

housing in their LGA.

Preliminary meetings also help identify the

most appropriate way of addressing the

viability analysis of an affordable housing

contribution scheme’s contribution rate(s).

Agreeing on an affordable housing

contribution scheme’s key features at this

stage will help ensure the process

progresses smoothly and viability issues

are addressed early.

C. Council prepares an affordable

housing contribution scheme

Councils can begin preparing an

affordable housing contribution scheme at

their discretion. This may be an

amendment to a council’s existing

affordable housing policy, or a new

initiative resulting from a Local Housing

Strategy as outlined in section 2.1 of this

guideline.

Councils must initiate planning proposals

to introduce schemes. The affordable

housing contribution schemes must be

developed according to this guideline.

D. Council tests its proposed scheme

through public consultation (optional)

Once a council has prepared an affordable

housing contribution scheme using the

guideline, it may undertake public

consultation before preparing a planning

proposal.

While this is not mandatory, it is a good

opportunity for a council to test its scheme

and lead the local community through the

process. It will also give the development

industry an early signal that an affordable

housing contribution scheme is being

prepared, giving it time to make informed

business decisions.

Once a council submits a planning

proposal for an affordable housing

scheme, it must be publicly exhibited in

accordance with the Gateway

determination for the planning proposal.

E. Preparing a planning proposal

Once a council has prepared an affordable

housing contribution scheme, it must

prepare a planning proposal to amend its

LEP to refer to the affordable housing

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

contribution scheme. The Department’s

Guide to Preparing Planning Proposals,

available at planning.nsw.gov.au, explains

this process in detail. Councils may

progress a stand-alone amendment for an

affordable housing contribution scheme

and the proposed rezoning of the land

where the affordable housing contribution

scheme applies, or include an affordable

housing contribution scheme and

proposed rezoning of land with other

proposed LEP changes.

In some instances, affordable housing

contributions schemes may apply in

State-led planned precincts. In these

instances, councils will work with the

Department to determine the appropriate

affordable housing contribution rate.

F. Council submits its planning

proposal to the Department for

Gateway determination

A council must submit its draft scheme to

the Department to be assessed as part of a

planning proposal. It must submit all

required information and ensure this is

presented clearly and concisely and is

supported by robust and up-to-date

evidence. The Department will contact the

council if it needs more information or

clarification.

Councils must ensure all the information in

its planning proposal is as up to date as

possible. It is recognised that housing and

construction markets change rapidly, and

councils may be asked to provide revised

inputs when there have been significant

changes or time periods between the

preparation, submission, and assessment

stages of a proposed scheme.

The supporting information included with

the planning proposal will include, but is

not limited to: an affordable housing needs

analysis; council’s strategic planning work,

for example the Local Housing Strategy or

affordable housing policy; and worked

examples of the proposed affordable

housing contribution rate; as well as any

other requirements outlined in the

Department’s Guide to Preparing Planning

Proposals.

Once planning proposals are lodged,

progress can be tracked online at:

leptracking.planning.nsw.gov.au.

G. The Department assesses the

planning proposal and tests the

proposed scheme’s viability

The Department will assess whether all

required information has been submitted

and whether the council has used the

correct methodology to prepare the

affordable housing contribution scheme.

This includes examining the evidence

provided as well as assessing viability, data

inputs and assumptions, and the proposed

contribution rate.

These items will be assessed against this

guideline and relevant strategic plans.

The Department may also engage an

independent consultant to complete an

assessment of an affordable housing

contribution scheme. The Greater Sydney

Commission will be consulted on planning

proposals in Greater Sydney.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

H. Gateway determination

The Gateway determination will outline

what is required to progress a proposed

LEP amendment. This may include:

additional studies or information; changes

to the proposed scheme: or changes to

ensure the amendment is consistent with

strategic planning documents. The

Gateway determination may require a

council to revise its planning proposal and

resubmit it to the Department before it is

exhibited.

I. Planning proposal progressed

according to Gateway determination,

including public exhibition

A council must progress its planning

proposal in line with the Gateway

determination conditions, including

publicly exhibiting the proposed scheme.

Exhibition of a planning proposal ensures

the public, including the development

industry, communities and other relevant

stakeholders, can comment on a proposed

scheme before it is implemented.

Consultation should generally run for 28

days.

J. The Department finalises LEP

amendment

Once the LEP has been notified and an

affordable housing contribution scheme is

referred to in a LEP, a council may apply

consent conditions in line with the

approved scheme. Consent conditions

must be consistent with the affordable

housing contribution scheme. If a council

wishes to modify an affordable housing

contribution scheme or impose conditions

which are inconsistent with the affordable

housing contribution scheme, it must

lodge a LEP amendment.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

4. Monitoring and review of

development contributions collected

under affordable housing contribution

schemes

Councils must review their schemes regularly to consider the impacts of the schemes and

whether they have been effective. Each council must establish a program for reviewing and

monitoring affordable housing programs to ensure all contributions are being used to deliver

affordable housing outcomes in a timely manner.

A program’s outcomes must be made publicly available and updated annually. These

outcomes could include how much has been collected to fund the affordable housing

contribution scheme, how much money has been allocated to affordable housing projects, or

how many affordable housing dwellings have been developed.

This could be included in council’s annual reports.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Appendix 1 – Definitions

In this guideline, affordable housing is defined as follows:

affordable housing means housing for very low income households, low income

households or moderate income households, being such households as are prescribed by

the regulations or as are provided for in an environmental planning instrument

(as per section 1.4(1) of the Act).

Definition of ‘affordable housing’ households:

For the purposes of the definition of affordable housing in section 1.4 (1) of the Act, very low

income households, low income households and moderate income households are those

whose gross incomes fall within the following ranges of percentages of the median household

income, for the time being for the Greater Sydney (Greater Capital City Statistical Area) or the

Rest of NSW (Greater Capital City Statistical Area) according to the Australian Bureau of

Statistics:

Very low income household

less than 50%

Low income household

50 or more but less than 80%

Moderate income household

80–120%

The definition of affordable housing has been amended in SEPP 70 to reflect two

geographical areas. For LGAs within the Greater Sydney (Greater Capital Sydney City

Statistical Area) as defined by the ABS, the median household income for Greater Sydney

(Greater Capital City Statistical Area) will apply to the definition of affordable housing. For

LGAs outside Greater Sydney (Greater Capital City Statistical Area), the median household

income for the ‘Rest of NSW’ (according to the Australian Bureau of Statistics) will apply to the

definition of affordable housing.

Figure 7, below, outlines the ‘Greater Sydney’ (Greater Capital City Statistical Area) Area.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Figure 7: Map of Greater Sydney (Greater Capital City Statistical Area)

(http://quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/1GSYD?opendocument)

The ‘Greater Sydney’ area includes the following local government areas:

Bayside, Blacktown City, Blue Mountains City, Burwood, Camden, Campbelltown City, City

of Canada Bay, Canterbury-Bankstown, Central Coast, City of Sydney, Cumberland, Fairfield,

Georges River, Hawkesbury City, Hornsby, Hunters Hill, Inner West, Ku-ring-gai, Lane Cove,

Liverpool City, Mosman, North Sydney, Northern Beaches, City of Parramatta, Penrith City,

Randwick City, City of Ryde, Strathfield, Sutherland Shire, The Hills Shire, Waverley,

Willoughby City, Wollondilly Shire, Woollahra local government areas.

Figure 8, below, outlines the ‘Rest of NSW’ (Greater Capital City Statistical Area) area.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Figure 8- Map of ‘Rest of NSW (Greater Capital City Statistical Area)’

(http://quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/1RNSW?opendocument)

The ‘Rest of NSW’ includes the following local government areas:

Albury City, Armidale Regional, Ballina Shire, Balranald Shire, Bathurst Regional, Bega Valley

Shire, Bellingen Shire, Berrigan Shire, Bland Shire, Blayney Shire, Bogan Shire, Bourke Shire,

Brewarrina Shire, Broken Hill City, Byron Shire, Cabonne, Carrathool Shire, Central Darling

Shire, Cessnock City, Clarence Valley, Cobar Shire, Coffs Harbour City, Coolamon Shire,

Coonamble Shire, Cootamundra-Gundagai Regional, Cowra Shire, Dubbo Regional, Dungog

Shire, Edward River, Eurobodalla Shire, Federation, Forbes Shire, Gilgandra Shire, Glen Innes

Severn, Goulburn Mulwaree, Greater Hume Shire, Griffith City, Gunnedah Shire, Gwydir

Shire, Hay Shire, Hilltops, Inverell Shire, Junee Shire, Kempsey Shire, Kiama, Kyogle, Lachlan

Shire, Lake Macquarie, Leeton Shire, Lismore City, Lithgow City, Liverpool Plains Shire,

Lockhart Shire, Maitland City, Mid-Coast, Mid-Western Regional, Moree Plains Shire, Murray

River, Murrumbidgee, Muswellbrook, Nambucca Shire, Narrabri Shire, Narrandera Shire,

Narromine Shire, Newcastle City, Oberon, Orange City, Parkes Shire,

Port Macquarie-Hastings, Port Stephens, Queanbeyan-Palerang Regional, Richmond Valley,

Shellharbour City, Shoalhaven City, Singleton, Snowy Monaro Regional, Snowy Valleys,

Tamworth Regional, Temora Shire, Tenterfield Shire, Tweed Shire, Upper Hunter Shire,

Upper Lachlan Shire, Uralla Shire, Wagga Wagga City, Walcha, Walgett Shire, Warren Shire,

Warrumbungle Shire, Weddin Shire, Wentworth Shire, Wingecarribee Shire,

Wollongong City and Yass Valley.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Appendix 2 – How to determine a viable

affordable housing contribution rate

As discussed in Section 2.1C, once a

council has selected an area and identified

its housing conditions, it must develop an

appropriate affordable housing

contribution rate.

The residual land value approach to

valuing land for redevelopment is the

preferred method to determine a viable

affordable housing contribution rate.

The residual land value (RLV) is calculated

by estimating the anticipated revenue from

a development, then deducting all the

development costs and allowance for a

reasonable developer profit. The RLV is the

remaining (residual) amount from this

calculation and identifies how much can be

paid for a site to enable its development.

The residual land value test must be tested

over a range of sites within an identified

area, where there is a noted difference in

planning controls – for example, where

there is a mix of zoning (residential and

business zoned land) or a mix of land use

controls (variation in maximum floor space

ratio control).

The testing of a viable affordable housing

contribution rate is considered in three

parts.

Figure 9 outlines the steps to testing a

viable affordable housing contribution rate

Figure 9: Steps to testing a viable affordable housing contribution rate

1. Base development value

In the first part a council collects data and

assumptions that create a base

development value. The res+idual land

value of a site if it were developed to its full

potential is considered.

This includes information on existing

development controls, highest and best

use development type, and development

considerations including development

costs, project length, built form

considerations including average unit size

and mix, and the quality of the finishes.

In collating assumptions, a council must

also source sales data from comparable

new constructions projects; and

associated developer considerations

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including selling commissions, marketing

costs and legal fees; typical developer

margins for profit and risk; site preparation

and construction costs; professional fees,

contingency, financing costs, land finance

costs, and land tax.

With the above data collated, council can

make an informed assumption regarding

the base development value, if the site was

developed to its full potential.

Alternatively, the base development value

could be determined with the existing use

of the site, regardless of maximum

development potential, with the collation

of comparable land sales. For example,

comparable sales data of dwelling houses

of a similar age and lot size. Determining

the base site value through comparable

sales data is especially relevant on sites

which do not allow for residential

development. Sales data can be obtained

by a real estate agent or property value, or

property sales data and site area

measurements can be found within the free

NSW Globe Google Earth data set.

2. Site value with upzoning

Once a council has determined the base

site value, council can calculate the

residual land value of the site with an

upzoning. This is to determine if there is

the potential for it to be viable to

redevelop the site.

In this assessment, council can amend the

proposed built form and previous

assumptions if the proposed upzoning

changes these inputs, for example

originally the site could be developed for

apartment under three storeys and the

proposed upzoning will enable apartment

over three storeys. Council must also

include local infrastructure contributions

and Special Infrastructure Contributions

which will be applied to the development.

Once these inputs have been finalised,

council can make an informed assessment

on whether the proposed upzoning results

in the potential for it to be viable to

redevelop the site.

3. Testing a viable affordable

housing contribution rate

If it is determined that there is potential for

it to be viable to redevelop the site,

councils can then test an affordable

housing contribution rate that can be

applied to the site in a development

consent, without losing the potential for it

to be viable to redevelop the site. The

affordable housing contribution rate will be

tested as a percentage of gross floor area

that the developer of the site would be

required to contribute to affordable

housing units. The percentage of floor

space could then be equivalised as a

monetary contribution, if a council choose

to levy affordable housing contributions as

a monetary contribution or in part as a

monetary contribution.

In testing a viable affordable housing

contribution rate, there are key inputs or

important variables that could be tested to

understand and optimize the project

outcomes. These are the affordable

housing contribution rate, the local

infrastructure contribution, Special

Infrastructure Contribution and maximum

floor space ratio.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

The above variables will enable councils to

consider that if additional density was

permissible on the site, would it be

possible to increase the affordable housing

contribution rate? Alternatively, if a local

infrastructure or Special Infrastructure

Contribution rate is increased, would this

require a smaller contribution for

affordable housing? It is important that any

testing of increased density with a greater

maximum floor space ratio control is line

with council’s strategic work; and is

feasible with the surrounding development

and market conditions.

For example, is there a demand for the

proposed housing type in the area?

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Appendix 3 – Template for affordable

housing contributions schemes

Section 1 –Strategic context and background

1.1 Objectives of the affordable

housing contribution scheme

This section must outline the objectives of

the affordable housing contribution

scheme.

1.2 Where does the affordable

housing contribution scheme apply?

This section must show the proposed areas

within the LGA that the affordable housing

contribution scheme covers. It must also

provide maps with sufficient detail to

identify specific lots to which the

affordable housing contribution scheme

applies.

1.3 What types of development does

the scheme apply to?

This section outlines the types of

development that are subject to the

proposed affordable housing

contributions. Detailed explanations of the

types of developments that are exempt

from an affordable housing contribution

scheme, along with justification and

examples, must be provided in section

2.4.

1.4 Overview - Affordable housing

need

An overview of the housing affordability

issues that the affordable housing

contribution scheme aims to address, is

outlined in this section. More detailed

analyses of demographics and housing

needs must be provided at Appendix A.

This must include an overview of evidence

base which informed the development of

the affordable housing contribution

scheme, including the affordable housing

needs analysis in the LGA. It must also

draw on a Local Housing Strategy, if one is

available, as outlined in section 2.1 of the

document.

1.5 Legislative basis for affordable

housing contributions

This section must explain the legislative

framework for affordable housing

contributions, including the relevant

references to the LEP, the State

Environmental Planning Policy No. 70 –

Affordable Housing (Revised Schemes),

and powers under the Act.

1.6 Relationship to other affordable

housing provisions in the LGA

This explains the relationship between the

affordable housing contribution scheme

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and any other affordable housing

mechanisms in the LGA, and how the

affordable housing contribution scheme

could impact future voluntary planning

agreements.

1.7 Affordable housing principles

This outlines the principles which inform

the affordable housing contribution

scheme. These must be consistent with the

principles for affordable housing in

Schedule 2 of the SEPP.

1.8 Definitions

This section must define all relevant terms.

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Section 2 – Affordable housing contributions

2.1 Contribution rates

This section must provide the affordable

housing contribution scheme’s

contributions rates.

Rates may differ between residential and

commercial floorspace, between areas, or

between development types. They must

be tested for viability and councils must

provide justification when rates differ.

More detailed justification and viability

testing must be provided in Appendix B.

2.2 Dedication of dwellings

how the contribution rate can be fulfilled

by dedicating completed affordable rental

dwellings, is outlined in this section. This

includes any requirements for dwellings

and their provision, such as whether:

• dwellings will be owned by

government or a recommended

community housing provider

• dwellings will be provided in

perpetuity

• dwellings will align with the

affordable housing principles in

1.7

• there are any design or

construction requirements

• there are any ongoing

requirements for rental

arrangements or use of rent.

Councils must provide worked examples

of how they calculate contribution rates for

each development type were calculated.

2.3 Equivalent monetary contribution

How the contributions rate can be fulfilled

by a monetary contribution, is outlined in

this section. This will be an equivalent

monetary contribution and be expressed

as an amount in dollars per square metre.

Councils must provide worked examples

of how they calculate contribution rates for

each development type.

2.4 Development that is exempt from

the affordable housing contribution

scheme

This section must clearly state which types

of development are exempt from

affordable housing contributions.

Exemption of any development must be

justified to provide transparency and

certainty. Examples may provide clarity to

the community and development industry.

2.5 Conditions of consent for

affordable housing

This section outlines how council will

impose conditions of consent for

affordable housing contributions, and what

the conditions will include. This section

must cover conditions of consent for the

dedication of dwellings as well as

conditions of consent for monetary

contributions.

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The conditions of consent must detail:

• the total floor area of dwellings to

be dedicated, or the monetary

contribution required

• the different floor areas that can

contribute to the total contribution

amount (this only applies in

instances where rates differ

between development types or

between commercial and residential

floor space)

• the relevant contribution rates

• the indexation period at time of

determination

• a requirement to demonstrate that

the title of any dwellings will be

transferred to a community housing

provider or council

• a requirement to make any

monetary payment at a specified

time or stage in the development

application process

• a requirement that any dwellings

that will be dedicated are shown on

approved plans in the same

development application.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Section 3 – Administration and implementation

3.1 How to make a contribution

This must outline how to make a

contribution, including the process for the

dedication of units, and the payment

process for monetary contributions.

To ensure contributions are received

promptly, it may be appropriate to place a

condition of consent requiring that any

affordable housing contribution payments

are paid before the relevant construction

certificate or occupation certificate is

issued.

3.2 Indexing of payments

How payments are indexed, including

how often this must happen, the formula

for indexing payments, and where the data

for this calculation will be sourced from, is

outlined in this section.

All monetary contributions must be

indexed at the time of payment to ensure

funds received will cover the full costs of

delivering the required affordable housing

contributions.

3.3 Processes for the distribution and

management of funds

How councils and other agencies will

manage funds in waiting (funds which are

yet to be transferred to the nominated

community housing provider), and how

they must transfer the funds to registered

community housing providers, is outlined

in this section.

3.4 Registered community housing

providers and delivery program

This section must identify a process to

nominate a registered community housing

provider that can manage and operate the

affordable rental housing and monetary

contributions in line with the affordable

housing contribution scheme. An

affordable housing contribution scheme

may have more than one registered

community housing provider. However, in

that instance the affordable housing

contribution scheme must identify how

funds will be split between providers.

Council must provide registered

community housing providers with a

delivery program that outlines how funds

raised or dwellings dedicated under the

program will be used to provide affordable

housing. The program must refer to the

costs of providing affordable housing in

the area.

This section must also establish what

registered community housing providers

are required to do in relation to using the

funds, which may include reporting or

transparency requirements.

3.5 Monitoring and review of scheme

This section must establish the monitoring

and review program for the affordable

housing contribution scheme.

Under this program, councils must review

evidence related to the affordable housing

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

contribution scheme at least once a year.

Evidence must be reviewed more regularly

when monitoring identifies issues or

considerable changes in market

conditions.

Under the program, councils must also

review the project’s outcomes. This will

help ensure the contributions collected are

being used to deliver affordable housing in

line with the affordable housing

contribution scheme. A council’s

monitoring and review of its affordable

housing contributions schemes must be

made publicly available on its website.

Appendix A – Local housing

needs assessment

See Section 2.1A of the guideline. This

must be included as an appendix to an

affordable housing contribution scheme.

The local housing needs assessment will

provide the evidence base and the analysis

of the evidence base used to determine

the affordable housing needs in the local

government area. Data sources, analysis

and recommendations will be included in

the assessment.

An overview of the affordable housing

issues will be provided in the affordable

housing contribution scheme, as shown in

section 1.4 of the template. The appendix

will provide more detail and the

supporting data and analysis.

Appendix B – Viability

assessment

See Section 2.1C and Appendix 2 of the

guideline. This must be included as an

Appendix to an affordable housing

contribution scheme.

The viability assessment must include

worked examples, as well as providing

spreadsheets of the assumptions and data

used to determine the affordable housing

contribution rate. This will enable the

assessment and review of the proposed

affordable housing contribution rates to

ensure that the rates are viable and would

not impact on development feasibility and

overall housing supply.

The evidence must include the data

sources for determining the contribution

rate, including comparable sales, building

finishes, site preparations and construction

costs. As well as data on any local

infrastructure contributions and Special

Infrastructure Contributions, which are in

place or will be in place. This information is

necessary to determine if proposed

affordable housing contribution rate is

viable.

The determination of an affordable housing

contribution rate must be consistently and

transparently applied and be made

publicly available to be assessed and

examined.

Appendix C - Information

Sources

This must provide references for all

information cited in the affordable housing

contribution scheme. This must be

included as an appendix to an affordable

housing contribution scheme.

Guideline for Developing an Affordable Housing Contribution Scheme | FEBRUARY 2019

Appendix 4 – Information Sources

Establishing an evidence base

City Futures Research Centre, 2013. Implementing metropolitan strategies: taking into

account housing local demand, Technical Report, UNSW

Department of Planning and Environment’s Local Housing Strategy and Template -

https://www.planning.nsw.gov.au/Policy-and-Legislation/Housing/Local-Housing-Strategy-

Guideline-and-Template

Department of Planning and Environment’s Strategic Planning Toolkit -

https://www.planning.nsw.gov.au/Plans-for-your-area/Local-Planning-and-

Zoning/Strategic-Planning-Toolkit

Department of Planning and Environment’s population projections -

https://www.planning.nsw.gov.au/Research-and-Demography/Demography/Population-

projections

Family and Community Services (FACs) NSW Local Government Housing Toolkit -

https://www.facs.nsw.gov.au/resources/nsw-local-government-housing-kit

Family and Community Services (FACs) Future Directions for Social Housing

https://www.facs.nsw.gov.au/about/reforms/future-directions

Family and Community Services (FACs) Rent and Sales Report -

https://www.facs.nsw.gov.au/resources/statistics/rent-and-sales/dashboard

Sydney Housing Supply Forecast - https://www.planning.nsw.gov.au/Research-and-

Demography/Sydney-housing-supply-forecast/Forecast-data

Administration and implementation – community housing providers

Family and Community Services (FACs), Community housing providers -

https://www.facs.nsw.gov.au/providers/housing/community

National Regulatory System Community Housing - http://www.nrsch.gov.au/

ProcurePoint - https://www.procurepoint.nsw.gov.au/scm4421

Preparing a local environmental plan amendment

Department of Planning and Environment’s Guide to preparing local environmental plans –

https://www.planning.nsw.gov.au/-/media/Files/DPE/Other/guide-to-preparing-local-

environmental-plans-2019-02-05.pdf?la=en

Department of Planning and Environment’s Guide to preparing a planning proposal –

https://www.planning.nsw.gov.au/-/media/Files/DPE/Guidelines/guide-to-preparing-

planning-proposals-2019-02-05.pdf?la=en