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Development and Affordable Housing - What does it mean exactly?

Discussion in 'Development' started by neK, 10th Nov, 2015.

  1. neK

    neK Well-Known Member

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    So with property, you can get bonus FSR if you allocate some dwellings to Affordable Housing. What exactly does this mean?

    NRAS? Housing Commission? Selling it cheaper than market to those who qualify?
     
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    In my WA Councils it means an agreement between the developer and any of a set list of recognised affordable housing providers. So I have an NRAS allocation on one of my developments and that has allowed me to ask for more FSR.
     
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  3. euro73

    euro73 Well-Known Member Business Member

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    The NSWAHSEPP is often confused with NRAS. They share some criteria in common. 20% rental discount. 10 years. But that's where the similarities end.

    Firstly its a NSW initiative, not federal. Some other states have similar policies- but not all. Developers apply for it via council, when submitting a DA. The legislation is designed to offer a developer quite a bonus on FSR (up to 30%) effectively allowing them to build more properties than a council would ordinarily allow. They can apply this to everything from regular apartments to boarding houses or Student accommodation. The trade off is that the extra properties approved by council under the AHSEPP must then be rented out at a 20% rental discount for 10 years, as affordable housing. Unlike NRAS there is no tax credit paid as compensation for renting the dwelling out at 20% below market - the "compensation" is provided up front via the uplift on the number of properties approved within the DA.

    Lots of developers get very exciyed by this prospect. 30% extra stock !!! Obviously at first glance this would appear to mean they can make even greater profits. But selling them means finding buyers who will accept a 20% rental discount for 10 years - that's hard to do unless a developer is willing to discount the price heavily to compensate for the reduced yield that a purchaser has to accept. So what most developers do is they just keep the stock for 10 years and then sell it when the affordable housing requirements have lapsed. If the development feasibility stacks up with just the regular number of dwellings, and then they get uplift by going to council and getting extra's approved under NSWAHSEPP, they are essentially getting "freebies" anyway... the site cost isnt any higher - they only have construction costs . So if they sell all the other stock and still make a healthy profit, holding the AHSEPP stock for 10 years under a "keep and reap" model is quite attractive.

    But where developers can get an ever better result is if they put NRAS incentives on the AHSEPP approved stock as well. You see, NRAS perfectly compliments NSWAHSEPP, as it also requires a 20% rental discount for 10 years, so you can satisfy both policies simultaneously. The difference is, now there is an NRAS credit as compensation - so its much much much more saleable stock. The developer gets to build up to 30% more stock than a council would normally allow AND gets to sell it at full freight . Developer gets a big win. Investor gets a big win. Government gets a big win because they arent having to pay to build affordable housing - developers and investors are delivering it. Low-moderate income renters get a big win. Construction industry gets a big win. Office of State Revenue gets a big win ... Its a very very smart model when properly understood and has been very effective. It had really started to gain traction in the last 2 - 3 years and many developers were planning to continue to utilise the AHSEPP/NRAS combination for many years to come on future projects, until the coalition announced there would be no new NRAS incentives issued beyond the existing 40,000. NSWAHSEPP hasnt been affected, but obviously it will now be less attractive to developers unless they want to follow a "keep and reap" strategy .

    RE housing commission...its a completely different category. Because the world "affordable" sits across NRAS and AHSEPP, it often gets misunderstood as commission type housing. Its a very common misunderstanding by those Monday morning quarterback types who don't know the difference between there, they're and their.... It's simply not the same thing. Income criteria for tenants is chalk n cheese, for starters. Max income in NSW for cpl + 3 kids is @ 60K for social housing. Max income for NRAS is @ 140K . And NRAS can be applied to any project anywhere. I have delivered countless numbers of excellent NRAS developments in areas that housing commission wouldnt get near ... But unless there is an NRAS 2.0 - this model has had its run...
     
  4. Be Developer

    Be Developer Property Developer Business Member

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    There are few different ways to skin FSR cat.

    Few state initiative as euro73 said.
    Thoughtful designes.
    And arguments/infulance at local council.
     
  5. neK

    neK Well-Known Member

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    @Be Developer do you mind elaborating a little on those last two points?

    Reading the LEP, it states that the FSR can't be exceeded. What would "thoughtful" design have to do with it?

    To be honest, almost every new building has near flat roof (in Sydney anyway) - obviously to maximise room while taking in the height restrictions. What happened to the good old hip or gable roof? These new buildings with a heap of bulk, usually goes all the way to the maximum setback setback.

    And with arguments/influence at council, is that about precedents on what other buildings have been approved?

    On another note, this Affordable Housing seems pretty interesting. Being about to increase FSR by allocating dwellings to affordable housing (effectively getting a bonus dwelling when you think about it!).

    Also, does this Affordable Housing help with parking restrictions (I notice that parking requirements under the ARHSEPP is lower). However it doesn't make mention about partial or pro-rating, so does this mean I could build a development, allocate 20% of stock to AH, then the whole building would get the parking concession? Or would the parking concession only apply to those dwellings that are Affordable Housing (therefore the rest would need to be assessed as per the the normal parking requirement rates)?
     
  6. Be Developer

    Be Developer Property Developer Business Member

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    as @AndrewTDP said at meetup, Town planning is a law.. and as every other law, it is up for interpretation.

    FSR is calculated for Habitable rooms. Habitable rooms have blurr line when it comes to planning. so things like storage, balcony, voids, etc aren't part of FSR. (best to check with TP).

    Re: Parking.

    Student accommodation
    One Bedroom
    Studio
    Closer to transportation

    Arguments can help to have reduced parking requirement. (We have old age planning schemes but Clover Moore wants to make Sydney another Amsterdam.. two opposite end of agenda)


    RE: Flat pitch roof

    Planning department at council are tackling with two issues:

    Pitched roof (with attic conversion, in most cases of non -compliance of min required height for habitable room)
    1950 Flat roof.

    I personally love flat pitch roof with articulated building envelope.
    (next time if you make it to meetup, i will show you few designs)


    Re: Council

    Anything goes at council, just need to know How/who to ask? (going back to that legal interpretation of planning laws).

    If nothing works: Keep some liberal/labor councilors on speed dials (if you are in development game) :)
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    ...it pays to bat for both teams ;)
     
  8. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    The ARHSEPP (Affordable Rental Housing State Environmental Planning Policy) takes precedence over the LEP as it is a state rather than local environmental planning instrument.

    When it comes to FSR this is what it says:
    13 Floor space ratios
    (1) This clause applies to development to which this Division applies if the percentage of the gross floor area of the development that is to be used for the purposes of affordable housing is at least 20 per cent.
    (2) The maximum floor space ratio for the development to which this clause applies is the existing maximum floor space ratio for any form of residential accommodation permitted on the land on which the development is to occur, plus:
    (a) if the existing maximum floor space ratio is 2.5:1 or less:
    (i) 0.5:1—if the percentage of the gross floor area of the development that is used for affordable housing is 50 per cent or higher, or
    (ii) Y:1—if the percentage of the gross floor area of the development that is used for
    affordable housing is less than 50 per cent,
    where:

    AH is the percentage of the gross floor area of the development that is used for affordable housing.

    Y = AH ÷ 100

    or (b) if the existing maximum floor space ratio is greater than 2.5:1:(i) 20 per cent of the existing maximum floor space ratio—if the percentage of the gross floor area of the development that is used for affordable housing is 50 per cent or higher, or (ii) Z per cent of the existing maximum floor space ratio—if the percentage of the gross floor area of the development that is used for affordable housing is less than 50 per cent,
    where:
    AH is the percentage of the gross floor area of the development that is used for affordable housing.

    Z = AH ÷ 2.5

    (3) In this clause, gross floor area does not include any car parking (including any area used for car parking).

    But there is also a section on joint ventures which sets out additional areas.

    Interestingly, this is the definition used for affordable housing
    (1) In this Policy, a household is taken to be a very low income household, low income household or moderate income household if the household:
    (a) has a gross income that is less than 120 per cent of the median household income for the time being for the Sydney Statistical Division (according to the Australian Bureau of Statistics) and pays no more than 30 per cent of that gross income in rent, or
    (b) is eligible to occupy rental accommodation under the National Rental Affordability Scheme and pays no more rent than that which would be charged if the household were to occupy rental accommodation under that scheme.
    (2) In this Policy, residential development is taken to be for the purposes of affordable housing if the development is on land owned by the Land and Housing Corporation.
     
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  9. neK

    neK Well-Known Member

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    @AndrewTDP - thats the part I was reading. Pretty interesting stuff and not too bad if there is a plan where you plan on keeping some stock.

    That said, under Clause 14(2)(a) for Parking, (NSW Legislation), I'm curious to know if this applies to entire building or just the dwellings that are allocated to ARH.

    (2) General
    A consent authority must not refuse consent to development to which this Division applies on any of the following grounds:

    (a) parking
    if:

    (i) in the case of a development application made by a social housing provider for development on land in an accessible area—at least 0.4 parking spaces are provided for each dwelling containing 1 bedroom, at least 0.5 parking spaces are provided for each dwelling containing 2 bedrooms and at least 1 parking space is provided for each dwelling containing 3 or more bedrooms, or

    (ii) in any other case—at least 0.5 parking spaces are provided for each dwelling containing 1 bedroom, at least 1 parking space is provided for each dwelling containing 2 bedrooms and at least 1.5 parking spaces are provided for each dwelling containing 3 or more bedrooms,
     
  10. neK

    neK Well-Known Member

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    I wanted to, but by the time i realised the "full house" sign was already up :(
    But your next one is at a bigger place right?

    I'm still keen on development personally, and i think gaining a better understanding of this will help ease my wife's fears - risk mitigation through increased knowledge :D
     
  11. Be Developer

    Be Developer Property Developer Business Member

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    All good!

    no rush for development. It's a business. Timing (Somewhat) is irrelevant. $ and % is what chase.

    FSR, LVR,etc tricky words are for other professionals, somewhat best in industry!:)
     
  12. neK

    neK Well-Known Member

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    Just got off the phone with the town planner, they said, as long as 20% of the unit block is allocated to Affordable Housing, then 100% of the unit block gets the Affordable Housing parking rules applied (which are substantially less than non AH parking rules) - he didn't seem happy about it, but said rules are rules.

    Is this correct? Surely this is a piss take on the rules! Logic would dictate it would be pro-rated... No?

    Can anyone shed some light on this?
     
  13. euro73

    euro73 Well-Known Member Business Member

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