Develop affordable rental housing

The NSW Government supports the development of affordable housing that is targeted to very low, low and moderate income earners. It does this in a range of ways, including:

• Providing floor space incentives for developments which contain affordable housing through the planning mechanism of the State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARHSEPP).
• Facilitating other incentives for developments which contain affordable housing via mechanisms such as negotiated planning agreements.
• Offering financial and other incentives, in partnership with the Commonwealth Government, to build and rent new properties at below market rents via National Rental Affordability Scheme (NRAS).
• Making grants available to assist construction of new, self-contained boarding house supply via the Boarding House Financial Assistance Program (BHFAP – New supply).
• Making grants available for fire safety upgrades to boarding houses, via the Boarding House Financial Assistance Program (BHFAP – Fire safety).
• Encouraging partnerships between community housing providers and others, including private developers, on affordable housing projects.

Selecting a manager for affordable housing

Managing affordable housing involves the standard property and tenancy management responsibilities of managing any rental housing. It also involves some additional responsibilities around setting rent, letting properties to eligible households and meeting the requirements of the relevant affordable housing program.

You can manage most affordable housing properties yourself if you have the necessary tenancy management experience or you can contract an organisation such as a community housing provider to manage it on your behalf. Please note that affordable housing properties developed under the Affordable Rental Housing SEPP must be managed by a registered community housing provider.

Under the State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARHSEPP), floor space incentives for villa, townhouse and residential flat building development projects (in accessible locations and where these uses are already permitted) may be available for projects which include some affordable rental housing.

Floor space incentives may also be available for new generation boarding house developments.

Affordable housing developed as part of a villa, townhouse or residential flat building development project must remain as affordable housing for at least 10 years and must be managed by a registered community housing provider.

Boarding house development projects do not need to be managed by a community housing provider, even if they include floor space bonuses.

For more information about floor space incentives or bonuses, contact:

The NSW Department of Planning
(02) 9228 6111

Some local councils offer additional incentives to encourage the development of affordable housing. These may be offered through mechanisms such as negotiated planning agreements.

For more information about other incentives for developments including affordable housing, including if there are any available in a particular location, talk to the relevant council directly.

The Australian Government announced in the 2014 Budget that it will not be proceeding with Round 5 of the National Rental Affordability Scheme (NRAS). For further information, see the NRAS resources, documents and information at www.dss.gov.au for outcomes of applications for incentives through NRAS Round 5 on the Department of Social Services website.

National Rental Affordability Scheme – Trading of Incentives – Warning

On 10 October 2014, the Commonwealth Department of Social Services (DSS) released a Cautionary Note to developers, investors and charitable organisations regarding the trading of incentives under NRAS.

DSS has warned those groups to be extremely careful before agreeing to pay any funds in respect of a transaction involving an allocated or reserved incentive under NRAS as it has become aware that dwellings are being marketed in circumstances where the dwellings may be falsely represented as having NRAS incentives attached.

For more information, please see the full content of the Cautionary Note on the DSS website.

This program is under review and no further applications are being accepted

This program is under review and no further applications are being accepted

Organisations such as private developers, councils, church-based groups and co-operatives can partner with community housing providers to develop affordable housing. Partnerships bring together key components such as land, funding, development expertise and skills. Bringing together these components can result in the delivery of development projects which no partner could achieve individually.

Community housing providers can also manage affordable housing properties on behalf of organisations, individuals and consortiums.

There are a number of factors to consider before partnering with a community housing provider. All community housing providers are organisations that provide housing for people on a very low, low or moderate incomes or people with additional needs. These organisations are not-for-profit and most community housing providers focus their operations within a particular geographic region.

When selecting a provider ensure it is an organisation registered with the national regulatory body . To achieve and maintain registration a provider must satisfy the Registrar that it is performing in accordance with the requirements of the National Regulatory System for community housing.

Registration is designed to provide assurance for a viable and diverse sector, that delivers quality outcomes for tenants and in which investors and partners can have confidence. The Registrar categorises community housing providers into three groups or tiers.

Tier 1 providers are the largest organisations that in addition to property and tenancy management offer development expertise. Many private developers and individuals already have successful and ongoing partnerships with community housing providers.

There are 131 providers registered whose primary operations are in NSW and these organisations house more than 29,000 households. The organisations range from small local housing providers to large enterprises with major assets.

Community housing providers manage their tenancies and client entitlements in accordance with the Residential Tenancies Act 2010 and their own individual policies.

Information about the National Regulatory System for Community Housing, as well as a full list of registered community housing providers in NSW, is available at Registrar's website.

The Community Housing Branch is a business unit of DCJ.  The Community Housing Branch is the primary relationship and contract manager of community housing providers in NSW.

Community housing providers interested in partnership opportunities

Many registered community housing providers are interested in discussing partnership opportunities for developing affordable housing, including the providers listed in the Table below.

If your organisation is interested in exploring partnership opportunities with community housing providers, please contact the provider directly.

You can manage your affordable housing portfolio yourself if you have the necessary tenancy management skill.

Alternatively, you can contract a tenancy manager to manage the properties on your behalf. For most properties, you could choose a community housing provider or a private real estate agent or specialist property management service.

If your affordable housing properties were developed under the ARHSEPP, they must be rented as affordable housing for a period of 10 years and must be managed by a community housing provider.

If you decide to contract a specialist tenancy manager, there are a number of different types of contractual arrangements you could use, each with an appropriate legal arrangement. The table below outlines some of the possible arrangements to consider.

Type of arrangement

Fee for service

The owner pays the manager a standard fee to provide management services – possibly both tenancy and property management services.

Fee for service with risk sharing

Normal fee for service plus the manager agrees to take on certain project risks – eg. vacancy risk – in exchange for a higher fee or other form of compensation.

Affordable Housing Growth Program

Where the owner’s interest is to grow affordable housing, an arrangement can be reached whereby the manager reinvests all surpluses in affordable housing for a certain target group or in a specific local area.

Joint venture

Joint venture arrangements may be reached whereby both parties make contributions to the upfront costs and in exchange, ownership and the proceeds of the project are shared.

Type of arrangement

Fee for service

Standard Agency Management Plus an Affordable Housing Management Annexure. Another option is for the owner to headlease the property to the Manager. The Manager would then sublease to tenants.

Fee for service with risk sharing

Standard Agency Management Plus an Affordable Housing Management Annexure. Another option is for the owner to headlease the property to the Manager. The Manager would then sublease to tenants.

Affordable Housing Growth Program

Specialised Management Agreement Plus headlease over the property.

Joint venture

Specialised Deed of Agreement.