The Department of Planning Industry and Environment is proposing a new Housing Diversity State Environmental Planning Policy (SEPP), which could negatively effect property investors in the build-to-rent, student housing, and co-living categories. The proposed changes I feel would cripple Mum and Dad investors, who are currently filling the market gap for much-needed affordable housing. Find out more in my chat with Smart Property Investment‘s Emma Ryan, below.
Proposed policy to ‘cripple’ mum and dad investors
By Emma Ryan, Smart Property Investment, September 14, 2020.
Small is the New Big co-founder Ian Ugarte said the NSW government’s proposed overhaul of existing planning provisions will spark negative consequences to housing affordability if they go through.
The housing commentator likened the proposed changes to a “sledgehammer to the existing polices when only a scalpel is needed”, noting the changes will “cripple the entire mum and dad investment sector, with the result being that only inefficient community housing providers or large profit-driven commercial property developers can operate in the sector”.
“This approach is likely to not only suffocate the future supply of affordable housing, it will also force planners to relive past mistakes like Macquarie Fields, which failed spectacularly because planners tried to replace inner-city public housing with new block developments in isolated city-fringe locations that were already suffering high unemployment,” Mr Ugarte said.
Mr Ugarte said that should the proposed changes go ahead, the NSW is effectively “pulling the rug out from small, private developers, like mum and dad investors, who want to help ease the escalating housing crisis and invest in properties which provide affordable housing options that result in a positive return”.
“Only a tone-deaf state government would enact policies that would reduce the ability of private developers to continue to play a role in the provision of accommodation to meet the growing demand for affordable housing,” he added.
To further his point, Mr Ugarte expand that under the proposed changes, the following developments would become illegal to build, with the government mandating that all boarding houses be: “Managed by a not-for-profit community housing provider, or pre-qualify as ‘build-to-rent housing’ by providing 50 or more self-contained dwellings within the one development, and have a minimum of 10 bedrooms under the ‘co-living’ developments.”
“[This will] result [in] less efficient community housing providers or large profit-driven commercial property developers that only dedicate a small percentage of future, large-scale developments to community housing – creating a ‘have’ and ‘have not’ divide within the one development,” Mr Ugarte said.
FIND OUT why I believe the Australian Dream needs a radical rethink HERE.
“Not only that, new build-to-rent housing developments will be pushed out of low-density residential areas, where they are currently integrated into the suburban landscape, to high-density zoning. This was the premise behind the development at Macquarie Fields, and we all remember how that ended up. Why is the government committed to repeating the errors of these poor planning decisions of the past now in 2020?
“It’s widely understood that social housing experiments, like Macquarie Fields, failed because planners tried to replace inner city public housing with new block developments in isolated city-fringe locations that were already suffering high unemployment.
“That seems eerily similar to what is being proposed under this policy.”
FIND OUT MORE about how to invest safely in affordable housing with up to 2-3 x typical returns HERE.