In 2025, The Greens secured major new changes to the City of Sydney’s affordable housing scheme, which will allow for thousands of new affordable home to be built across the LGA.

Currently the City of Sydney charges developers a levy, which is used to build permanent new affordable housing. Council’s levy scheme has been going for 26 years and to date 1,447 affordable housing units have been delivered in the local area.

Following work by the Greens on Council, the City of Sydney has endorsed an even more ambitious proposal to increase the amount we collect from developers.

The new scheme would standardise a 3% base rate from development + capture more when land is rezoned and made more valuable – 20%.

The proposed changes make the scheme the most ambitious council affordable housing scheme in Australia. It is supported by feasibility modelling that proves council can collect millions more from private development, without impacting plans to grow the city.

We made a video which shows how this will work.

More details and answers to key questions are below.

What are affordable housing levies?

In NSW local councils can require developers to pay an affordable housing levy when development is undertaken on existing or new buildings.

Developers provide cash or buildings to the local council, and they are either kept by council, or more commonly transferred to a Community Housing Provider, to buy or build affordable housing.

Councils in NSW can define what sort of “affordability” is delivered. The State Govt needs to endorse any schemes before they can come into effect.

What is the current City of Sydney scheme?

Currently, the City of Sydney Council collects a flat levy from all residential development (0.5-3%) + a higher levy for many developments where there is rezoning to allow larger buildings and make land more valuable. That is - more (12%-21%) is captured for the community when council has rezoned to make the land more valuable.

Council’s scheme started 26 years ago in Pyrmont, collecting a small % from private development to build affordable housing. It has grown from there to become the largest council scheme in Australia.

What does the current scheme deliver?

The current scheme collects between $20M and $75M a year in developer levies for affordable housing. Levies are passed on to Community Housing Providers to deliver permanent affordable housing for people on low incomes. To date 1,447 affordable housing units have been delivered in the local area.

What will the new scheme do?

Following work by the Greens on Council, the City of Sydney has endorsed an even more ambitious proposal, to standardise and increase the amount we collect from developers.

It will mean millions more is collected for affordable housing.

What exactly are the details?

The key changes proposed include:

• For residential development, a standard affordable housing levy of 3% of Gross Floor Area (GFA) will be applied everywhere (replacing 0.5%-3% of which applies across different areas in the inner city now)

• On top of this, where residential land is rezoned to allow more development, a higher 20% “uplift capture” will be applied to the new sections (replacing the current 12%-21%, which is applied *sometimes* and varies depending on suburb)

• For commercial development in Central Sydney, a new 2% levy is being introduced where there is a rezoning (previously a 1% levy on commercial developments was sometimes applied). This will help capture more for the community from the big new tower developments in the CBD.

• Council will have the power to require affordable housing to be built on site (currently developers have the choice to provide cash or buildings)
• Council is also changing the formula for the cash it charges developers, to recognise that land is worth a lot more in some parts of the city (like Darlinghurst and Paddington) compared to others (like Waterloo and Green Square). Under the changes, if a developer is going to give over cash rather than a building for affordable housing, they’ll be charged more in the expensive areas.

Won't the higher fees stop developers building in the City?

No! The council’s scheme has been running for 26 years, and hasn’t stopped development. The City has continued to grow.