From the AHURI Inquiry: Inquiry into increasing affordable housing supply: Evidence-based principles and strategies for Australian policy and practice

This research examined how land use planning mechanisms (‘Inclusionary planning’) support the supply of affordable housing in the UK and USA, and how they may help in Australia, playing a role in incentivising dwelling units, land or financial contributions towards affordable housing projects.

Inclusionary planning refers to approaches for securing or leveraging affordable housing through the planning and urban development process, including: inclusionary zoning—where development within a designated zone makes a contribution towards supplying affordable housing according to a prescribed percentage of the affordable housing development; density bonuses—where development at a density greater than what is usually permitted is offered in return for an affordable housing contribution; planning concessions—where planning rules are varied for affordable housing development or to enable low-cost market housing; negotiated agreements—where affordable housing contributions are negotiated on a case-by-case basis (although a policy framework to inform these negotiations may still apply); and impact fees—where financial contributions from developers are paid to offset the impact of a project on affordable housing demand or supply. 

Voluntary planning incentives can encourage affordable housing inclusion as part of incremental residential development within the existing planning and development control framework. Incentives can also provide more flexible options to support delivery of mandatory affordable housing requirements. When planning rules are varied to allow for development of lower cost housing forms (e.g. boarding houses), an affordable housing requirement ensures that benefits are passed on and homes are affordable to target groups.