There’s a catch in the plan to build more affordable housing in Sydney – and tenants are feeling the brunt

Erina Delinicolas didn’t find out her apartment in Marrickville, in Sydney’s inner west, faced demolition through a letter or an email. “One of my mates came up for coffee and was like: ‘How are you feeling about them demolishing your house?’” she says. Delinicolas had yet to see a council notice on her front gate about a proposed development application (DA), under which her art deco building in Marrickville could be knocked down for a nine-storey block of flats. Now, she is among tenants who fear they will be priced out of the neighbourhood amid concerns laws meant to incentivise developers to build affordable dwellings are leading to a loss in low-cost rental housing. Under the New South Wales “in-fill” bonus for housing located near transport, property owners can get up to 30% extra density in exchange for providing up to 15% of the project’s dwellings at 20% below market rent for 15 years. Rent can then return to market rates. Under the scheme, the high-profile redevelopment of The Chimes building in Potts Point will see studio and one-bedroom units, which rent for $350-$380 a week, replaced with apartments selling for up to $10m. Sign up: AU Breaking News email The more modest application for Delinicolas’s building on Warren Road, 4oom from Marrickville station, would see 17 low-cost rental units across two buildings knocked down and replaced with 43 mostly two and three-bedroom units, eight of which have been designated as affordable. Residents, who Delinicolas describes as students, essential workers and seniors, say their existing apartments start from $380 a week for a studio. According to the NSW government’s Rent Check website, the median rent for a one-bedroom unit in Marrickville is from $5oo to $720 a week, meaning an affordable unit could be anywhere from $20 to $200 more. The development’s project manager has declined to comment. Modelling for Shelter NSW has found the proportion of the value from the bonus which goes to developers varies from 8% to 79%, but higher-value suburbs deliver a greater benefit to developers than to renters. The modelling did not include the inner west. John Engeler, chief executive of Shelter NSW, says the area’s vacancy rates, as low as 1% in some suburbs, mean all developments that add to supply are needed, affordable or not. Related: Beachside apartments deemed ‘affordable’ cost $1,000 a week. Is the NSW policy helping renters or developers? He says while Shelter NSW will continue to advocate for new units to be affordable in perpetuity, “if that then renders projects like that unviable, then 15 years is better than none”. But Nicky Morrison, professor of planning at Western Sydney University, says redevelopment does not have to mean the loss of low-rental housing, adding “short-term incentives” risk the loss of generational affordability. “Developers aren’t necessarily opposed to affordability, they just need predictable planning rules and financing frameworks,” she says, adding affordable housing policy in countries such as the UK is more stringent. The DA for Delinicolas’s block, which closed to submissions on Thursday, is being assessed by Inner West council’s planning panel, according to changes under the state government’s Transport Oriented Development (Tod) zones. In the inner west, the zones allow six- or seven-storey unit blocks within a 400m radius of train stations, which would see 7,800 homes built in the area within five years. Related: Once Australia’s second priciest city, Melbourne has become more affordable. What happened – and will it last? The NSW planning minister, Paul Scully, says the council will have to consider the merits of the individual DA. But he defends the In-fill Affordable Housing bonus, including in Tod zones, saying the number of affordable homes approved or in the pipeline exceeds national housing accord targets in NSW. “We’re seeing more affordable homes than ever,” he says. The Warren Road development is not subject to the changes proposed under the council’s Our Fairer Future plan, which could see 30,000 homes built in the LGA over the next 15 years through high-rises of up to 22 storeys, although most would be between six and 11. Scully says the state government is still assessing the plan, after councillors narrowly backed it last month. But residents and advocates have raised concerns the Marrickville demolition would set a precedent for the loss of older, low-rental dwellings under the council’s more extensive development proposals. The Inner West mayor, Darcy Byrne, says the Warren Road DA had “nothing to do with the Our Fairer Future plan”, which requires 2% of all new units to be affordable, rising to 3% after three years. Last month the council voted to require a 20% contribution for any additional floor space beyond the Our Fairer Future new height limits, which Byrne said would remain affordable in perpetuity. But he says “mindless opposition to new homes” is “the reason that young people are being forced out of the inner west en masse”. Eddie Ma, a local architect who made a submission against the DA, says low-rental properties like Warren Road provide a “stepping stone” for young renters, but also a stopgap for older and more vulnerable tenants. “Most people have lived in housing like Warren Road at some point,” he says. Madeleine Evans, an inner west resident of more than 70 years, moved into the building just over 12 months ago. She says she has seen the housing situation become “bleak” in her lifetime. “Growing up, there was always a chance for people to get housing, but now they’re taking the chances away.”