Affordable Housing Rules Tighten as Proposal Deluge Continues

With developers increasingly drawn to the incentives tied to affordable housing, the NSW Government has announced reforms to curb misuse of planning bonuses and streamline regulation. Developers are turning their attention to affordable housing more than ever, especially in NSW as height and floor space ratio bonuses under state policy changes encourage mixed-tenure development across the state . To keep up with the deluge, the government announced in June to relatively little fanfare that it would be making “sweeping reforms”. Those reforms aim to prevent what Australian Community Housing interim chief executive Alex Raphael calls unscrupulous players from accessing planning incentives without delivering fairly priced homes. Raphael says the reforms tackle a “genuine problem” in the state’s affordable housing system. “Developers could access valuable planning bonuses without delivering genuinely affordable outcomes, and nobody tracked whether affordable homes actually remained affordable or went to eligible tenants,” Raphael says. Urbis partner Stephen White says that while the reforms will have positive outcomes, the devil is in the detail. “We’ve never had a pipeline of affordable housing like this before,” he says. ▲ Affordable home plans are emerging in a wide range of suburbs, including blue-ribbon neighbourhoods such as this proposal for Kirribilli. “No developer was voluntarily doing affordable housing. Now they know that if you want to access the sort of higher densities allowed, then you have to do it. “So there’s going to be a whole swathe of new affordable rental housing, accommodation that wouldn’t have existed before, and [the NSW government] is putting a framework and some checks and balances in place, which weren’t required before.” The NSW Government says the reforms will “close existing loopholes” in the system. One such issue is the lack of reliable data on how many affordable homes there are in the state, making it nigh on impossible to accurately track whether the target of at least 3100 new affordable homes by 2029 is being achieved. “Getting an understanding of the location and ownership of affordable housing and monitoring the outcomes isn’t something that the government has been very good at in the past,” White says. What the reforms say The Community Housing Providers (Adoption of National Law) Amendment Bill 2025 creates a public register of affordable homes, including owners and managers. It introduces a new category of Affordable Housing Manager to determine resident eligibility—a point of contention, White says, given community housing providers themselves usually take this role. “Introducing affordable housing managers, in part, seems positive, to ensure there’s some consistency and eligibility of assessments,” White says. ▲ Urbis partner Stephen White: No developer was voluntarily doing affordable housing before the bonus schemes. White says he questions how this new role differs from community housing providers and whether CHPs would be automatically transitioned into the Affordable Housing Manager category. The reforms also allow the government to ban developers from achieving occupation certificates for a project unless a registered manager is appointed and affordable housing rules are legally recorded on the property title. Indeed, a lack of a CHP was a problem for a Bondi Junction tower that faced the state’s Land and Environment Court this month. The NSW Government also plans to introduce fines and enforcement powers for failing to rent to eligible tenants or breaching conditions. ▲ A rendering of Anglicare’s 35-storey, Chatswood tower comprising 250 apartments, all designated affordable. Raphael welcomes the new enforcement actions. “They will help weed out unscrupulous operators who undermine public confidence,” Raphael says. “The new compliance requirements are proportionate to the problem and reinforce community support for including affordable and social housing in new developments.” Challenges on the horizon But as with most new legislation, the reforms come with challenges. “It does introduce some timing risks to developers,” White says. “It actually creates some extra levels of admin and the developer can’t control the timing for registration because it goes to another entity. “So there could be some slight fine-tuning of the requirements you need to meet before the OC is issued.” Flexible implementation will be key while the reforms are being worked out, White says. “Operational issues, like how information is shared and confidentiality is managed, will need to be worked out,” he says. ▲ A rendering of Deicorp’s Rhodes project that added 48 affordable apartments and another 10 storeys as a result of the SEPP amendments. Overall, however, the reforms lead the way for affordable housing delivery among the states. “The government has been smart, it’s an ambitious plan to upzone designated precincts and in doing that, include an obligation to deliver affordable rental housing,” White says. “And there’s broad support in the industry for that, even though there are challenges on a site-by-site basis from a feasibility perspective. “It’s important in the development of well-functioning cities to have a diversity of housing, accommodation and people.” Raphael says the drive for affordability is encouraging. “The reforms should ultimately attract more investment by reducing uncertainty, though they don’t address the fundamental supply shortage,” Raphael says. “This is a great step forward but it will be most successful if the new regulatory framework is matched by expanding social and affordable housing.”

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