Incentives for New Affordable Housing

Depending on the legal constraints and opportunities enabled by specific planning systems, it may be possible to incentivise new affordable housing development. The underlying objective behind incentives is to reduce the costs associated with housing development, or increase potential profit, with a proportion of these savings or profits used to support an affordable outcome. When an incentive scheme secures dedicated contributions for affordable housing (on-site, or as an equivalent financial or in-kind payment), the value of the increased potential is calculated, and a proportion used for the affordable housing contribution.

Concessions on development standards can be used to reduce project costs or increase yield. Graduated planning concessions allow flexible adherence to development standards based on performance criteria. For instance, car parking standards can adjust to the location or the characteristics of likely residents, so fewer car parks might be needed for student accommodation located near services and high-quality public transport. Similarly, internal space requirements might be adjusted for affordable housing projects designed for singles or couples, and be able to demonstrate strong design and access to open space and a quality public realm.

Bonus schemes relax specified development controls, typically height, density, setback or parking controls, in exchange for the construction of preferred low-cost housing forms or for dedicated affordable housing contributions. Affordable housing meeting defined criteria might also attract special treatment in the planning process, such as fast track approvals, or the reduction, exemption or refund of application fees, infrastructure charges or rates. Often a ‘package’ of these incentives will be available to support affordable housing development in an area.

The contribution might be made as a dedicated number of housing units, to be owned in perpetuity by a local housing programme, or to be available as low-cost rental housing for a specified period of time; as land for affordable housing development. The contribution might also be made as lower-cost homes for eligible households to purchase. Most jurisdictions prefer housing to be integrated on the site of a larger development to maximise locational benefits, but contributions are sometimes provided off-site or as an equivalent monetary payment.

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