We are experiencing a housing affordability crisis across Queensland. A recent report from the Queensland Council for Social Services (QCOSS), “A blueprint to tackle Queensland’s housing crisis“, argues Australia urgently needs a coherent housing policy reform package. One of their recommendations includes phasing in ‘meaningful inclusionary zoning’. Locally, the West End Community Association supports inclusionary zoning, and local MP, Amy MacMahon has a policy that will require all new multi-residential developments, such as luxury tower blocks in the inner city, to include 25% public housing. But what is inclusionary zoning, and will it contribute meaningfully to greater housing affordability in the state? In her three-part series, urban researcher Rachel Gallagher sets out to explain.
Part 1: Can inclusionary zoning make cities more affordable?
Inclusionary zoning compels or incentivises private property developers to keep some units in newly constructed buildings affordable for people on low to middle incomes. The schemes vary by jurisdiction. In Australia, the South Australian program is geared towards home purchasers, where 15% of new dwellings within a specific planning zone (the affordable housing overlay) are required to be affordable. Affordable is defined as priced at $417,000 or less. Most schemes, however, are geared towards renters. Some jurisdictions have mandatory schemes, and others are voluntary where developers receive incentives like density bonuses or tax offsets for providing affordable units. The duration of affordability ranges from 10 years to the life of the building. Examples include London, where developers must provide affordable units in all developments of 10 dwellings or more, and affordable rent is defined as being no more than 80% of local market rent.
Inclusionary zoning emerged in the United States in the post-World War Two period. The Nixon administration placed a moratorium on federal subsidies for housing production in 1973. At the same time as ending support for supply, the Nixon administration increased subsidisation of housing demand by using housing vouchers, rent assistance and the like. As a result, state and local governments in the United States sought to fill the gap in affordable housing supply by introducing inclusionary zoning schemes. Inclusionary zoning may have begun in the United States in the 1970s but it soon spread to other global jurisdictions including London and Sydney.
Australia followed a similar path in shifting the responsibility of new housing supply to the private sector, with governments fuelling the demand through first home buyers’ schemes, rent assistance, tax offsets and the like. Inclusionary zoning was, and still is, a way of governments divesting themselves of their role in providing housing for low and moderate income households.
Does inclusionary zoning work?
Inclusionary zoning can work – if there are strong protections for renters which prevent rent overcharge and illegal evictions, limit rental increases and provide long-term tenancies, and alternative contribution options to discourage developers from tactics that impact housing supply. For example, in London, when inclusionary zoning mandates applied to developments of over 10 dwellings, the number of developments of 9 or fewer dwellings increased.
Some research suggests that inclusionary zoning works best when it is mandatory and applied across the entire local government area, while other research shows the opposite. What is clear is that the definition of what is ‘affordable’ is fundamental. Examples from other jurisdictions like New York City show that the rents in affordable units created through inclusionary zoning are not guaranteed to be affordable for low and moderate income earners. Inclusionary zoning was the key component of New York City Mayor Bloomberg’s affordable housing policy. Criticism of that scheme include that inclusionary zoning was used as a vehicle for allowing large-scale rezonings of working class neighbourhoods. Even with inclusionary zoning mandates, placed like Greenpoint and Williamsburg (Brooklyn) experienced large declines in ethnic minorities, and increases in rent burdens for remaining households.
While inclusionary zoning can play a role in a market-dominated property development system, it is not an adequate safety net to ensure that cities remain affordable for all residents.
Is inclusionary zoning the same as social housing?
Inclusionary zoning is not social housing. Under typical inclusionary zoning, rents are indexed based on the market rather than based on the occupants’ income. Social housing rents are indexed to a person’s income, so that residents generally don’t pay more than 30% of their household income to rent. Social housing is usually administrated by the state or by non-government organisations.
The Bill recently introduced to the Queensland Parliament by the Member for South Brisbane, Amy MacMahon, uses the term inclusionary zoning but the proposal is more akin to a social housing program. It requires 25% of new dwellings (for developments of 10 or more dwellings) to be transferred to the state as social housing.
There are also numerous social housing models. Vienna, Austria is often cited as having one of the best affordable housing systems in the world. The city takes an active role in housing supply and most residents live in dwellings either owned by the state or by subsidised not-for-profits. Vienna has a population of almost 2 million residents, and the city has a target of 8000 to 9000 new social housing dwellings each year. For reference, the Queensland Government has committed to building 5,600 social and affordable homes by 2027.
Other affordable housing models exist too, such as levies. Even in Brisbane, where, back in the early 2000s, Brisbane City Council (largely under the leadership of Tim Quinn) attempted to introduce a levy on high density residential development projects in 4101 (as well as Milton). The scheme was to provide a revenue stream for Brisbane Housing Company to construct affordable housing. The State Government, led by Peter Beattie, refused to amend the City of Brisbane Act to allow the scheme to go ahead, so the levy had to be shelved.
Link to PART TWO – What is exclusionary zoning and how is it designed to make neighbourhoods unaffordable.
PART TWO – What is exclusionary zoning and how is it designed to make neighbourhoods unaffordable.
Link to Part 3: How did exclusionary zoning come to cover most of Brisbane’s residential land?
PART THREE – How did exclusionary zoning come to cover most of Brisbane’s residential land?
Cover image, Rachel Gallagher
