Posted on April 17, 2019 by Frances Tse and Sue Puckeridge

New Ministerial Direction Applying to Affordable Housing VPAs

The Minister for Planning has given a new direction to local councils which impacts on the negotiation of planning agreements (‘VPA‘) which include the provision of affordable housing (‘VPAs for Affordable Housing’).

Under s7.32 of the Environmental Planning and Assessment Act 1979 (‘EPA Act’) a consent authority can, in certain circumstances, impose a condition of development consent requiring the dedication of land or payment of monetary contributions, or both, for the purpose of providing affordable housing.

In addition, under s7.4 of the EPA Act, a council can enter into a VPA for the provision of affordable housing.

The direction imposes preconditions and mandatory considerations for a council to take into account prior to entry into a VPA for Affordable Housing in connection with DAs (and proposed DAs).

It applies to all local councils, as planning authorities, under Division 7.1 of the Act but only where VPAs negotiations commenced after 28 February 2019.

Before a council enters into a VPA for Affordable Housing in connection with a DA or proposed DA , a council must have prepared and published, or otherwise made publicly available, a policy setting out the circumstances where the council may seek to negotiate a VPA for Affordable Housing.  There is no requirement to prepare a draft or publicly notify the draft before adopting the policy.

In addition, when negotiating a VPA for Affordable Housing, local councils are also required to consider a list of matters set out in the direction. These include:

  • whether the consent authority for the development application is authorised by a local environmental plan to impose a condition under s7.32 of the EPA Act,
  • whether the VPA will provide for affordable housing instead of a condition imposed under s7.11 or s7.12 of the EPA Act,
  • whether the development proposed will result in the demolition of affordable housing,
  • the terms of an affordable housing contribution scheme (under s7.32(3)(b) of the EPA Act) set out in a LEP,
  • whether the value of the affordable housing contributions in the proposed VPA is reasonable having regard to all the other listed considerations.

There are an increasing number of planning agreements being entered into which provide for affordable housing. For councils where it might be likely that a VPA for Affordable Housing will be negotiated, preparation of the policy required under the direction should commence as soon as practicable so as to avoid potential delays in entering into such VPAs. Local councils should also  incorporate appropriate internal processes to ensure they comply with the direction while negotiating VPAs for Affordable Housing.

The direction can be found on the NSW Planning Portal website here.