Overview of The developers hoping to cash in on 'affordable' housing
This ABC News Daily episode, built around a Four Corners investigation by Pat McGrath, examines how Australia’s “affordable housing” policies are working in practice — and whether they are actually delivering homes people on modest incomes can truly afford. The report shows that developers, investors, and community housing providers are increasingly using government incentives to build so-called affordable housing, but the outcomes often still leave tenants in rent stress, create narrow eligibility rules, or deliver housing that is only “affordable” by a loose market-based definition.
Key Findings
- Developers can receive major planning benefits, such as extra building height and density, if they include a portion of affordable rental housing.
- In New South Wales, one scheme requires 10% of floor space to be set aside as affordable rental housing for at least 15 years.
- These developments can be highly profitable: one Potts Point project was estimated to gain $30 million or more in added value from the extra height, while the affordable component might cost around $2 million.
- The episode argues that many “affordable” rentals are still too expensive for low-income renters, especially when rents are simply discounted from market rates rather than tied to income.
Case Study: Potts Point and the “Poor Door”
One of the most notable examples is a redevelopment in Potts Point, Sydney, backed by James Packer and developer Time and Place.
What makes it controversial
- The building would contain luxury apartments on the upper levels and affordable units below.
- The affordable units would have a separate entrance, often referred to as a “poor door.”
- Critics argue this creates a stark physical divide between wealthier and lower-income residents.
- Developers say the separate entrance helps keep costs down and avoids higher body corporate fees for affordable tenants.
Developer defence
Time and Place argues the building is in poor condition, with “concrete cancer,” and that the redevelopment would provide 23 affordable homes in a high-demand area.
What “Affordable Housing” Actually Means
A major theme of the episode is that “affordable” is a slippery term.
Different models discussed
- Income-based housing: rent is set as a percentage of a tenant’s income.
- Market-discount housing: rent is set below local market rates, often around 20% below market.
Why the system is criticised
- A discount to market rent can still be unaffordable in expensive cities.
- The investigation found examples such as:
- a two-bedroom apartment in Bondi Beach advertised at $1,400 per week
- many units in Victoria that still would not be affordable for single people on low incomes or couples on very low incomes
- Experts say many of these rents still exceed the widely used threshold of 30% of income, which is considered rental stress.
People Caught in the System
The episode uses several tenant stories to show how fragile the system can be.
Sarah Hutt
- Sarah moved into housing run by Mission Australia, initially told rent would be 30% of her income.
- Later, Mission Australia changed the formula and moved tenants to 75% of market rent.
- Her rent rose by nearly $100 a week, pushing her back into rent stress.
Mission Australia’s explanation:
It said the change was necessary because of the high cost of providing the housing and to maintain the building’s financial stability.
Christopher Hewson
- Christopher is a part-time university lecturer who also drives Uber.
- He applied for an affordable one-bedroom unit developed by Assemble.
- He was rejected, apparently because the eligibility rules are very tight and designed to avoid tenants spending more than 30% of income on rent.
The “Goldilocks tenant” problem
- The report suggests some schemes may be so narrowly targeted that only a small group qualifies.
- This can leave homes vacant for long periods while waiting for the “right” tenant.
Are These Homes Actually Being Filled?
At one Assemble development called Swift Walk:
- There were still 18 affordable units being advertised seven months after completion.
- Assemble said the model was working and that it expected to lease the units shortly.
- The company defended its strict criteria, saying eligibility is needed to trigger government subsidies and ensure homes go to people on the right incomes.
Bigger Policy Questions
The episode highlights criticism from Susan Lloyd-Hurwitz, former CEO of Mirvac and chair of the federal government’s National Supply and Affordability Council.
Her main arguments
- Affordable housing should be permanent, not temporary.
- If housing becomes affordable for only 15 years and then reverts to market rates, governments are “chasing their tail.”
- She argues that market-discount housing is not genuinely affordable in expensive cities like Sydney.
- She calls for a broader debate about whether governments need to take a more active role, beyond simply subsidising private developers and community housing providers.
Bottom Line
The report’s central takeaway is that Australia’s current affordable housing model is expanding supply, but may not be solving the core problem:
- It can be highly profitable for developers.
- It can create housing that is technically “affordable” but still out of reach for many low-income renters.
- It often depends on market pricing, which can undermine the goal of genuine affordability.
- A more durable solution may require permanent affordability, stronger public involvement, and clearer rules about what “affordable” should mean.
Notable Takeaway
“If you live in Sydney, something that’s 25% below market rent isn’t affordable to very many people at all.”
That quote captures the episode’s core argument: without stricter definitions and longer-term protections, “affordable housing” risks becoming more of a planning incentive than a real solution.