Affordable Housing at 'Lachlan's line', Macquarie Park

NSW Government developer UrbanGrowth has released details of its plans for Affordable Housing at 'Lachlan's line' - a major residential development in Macquarie Park, Northwest Sydney. Measuring 9 hectares, Lachlan's line sits between Epping Road and the M2 motorway, and adjacent North Ryde train station. The brownfield site was most recently owned by NSW Government agency RailCorp, and used to assist construction of the Epping to Chatswood train line. Once complete, the site is expected to house approximately 5000 residents in 2700 apartments, across 10 'super lots'. 

Above: Concept art of a completed Lachlan's line

On June 27 2016, UrbanGrowth announced that it is seeking expressions of interest from Community Housing providers - potentially in partnership with private developers - to purchase and develop one super lot as Affordable Housing for key workers. According to the associated information memorandum, this 2507 square metre lot is zoned R4 (high density residential), and has a concept design for 96 apartments, including the floor space bonus available under the NSW planning policy for Affordable Housing. Expressions of interest for CHPs and developers close on 29 July 2016, and UrbanGrowth will issue invitations to tender later this year. No timeline for the development of the Affordable Housing lot specifically is available. However, construction of residential towers at Lachlan's line generally is expected to commence in 2017, with residents moving in by 2019. 

Also announced on June 27 was an EOI and tender process for private developers concerning a further two super lots - of 6883 and 6745 square metres, also zoned for high density residential. Collectively, these are expected to house approximately 172 apartments. UrbanGrowth sold an additional super lot - the largest of the 10 - in late 2014. Shanghai developer Greenland purchased the 1.2-hectare site, zoned B4 (mixed use). According to The Australian Financial Review, Greenland intends to build up to 900 apartments on this land. There is nothing to suggest that any of these lots will include an Affordable or Social Housing component. 

Above: The Lachlan's line build site

Lachlan's line is the second major residential project in Macquarie Park being undertaken by UrbanGrowth - together with the redevelopment of the Ivanhoe Public Housing estate under the 'Communities Plus' program. TUNSW Clearing House has recorded details of the Ivanhoe project here, with an update here. The NSW Government has designated Macquarie Park and its surrounds a 'priority growth area'. 

Our response

Despite the flurry of news this week, Lachlan's line is not an especially new initiative. It was announced way back in September 2013, and the Government's vision for the site as a major residential development can be traced back at least as far as the sale of the mixed use lot in 2014. Until now, all evidence suggested the project would deliver its mammoth 2700 apartments for 5000 residents with a Social and Affordable Housing component of precisely zero; In other words, a rare and valuable opportunity spurned. According to National Shelter, rental housing in Macquarie Park and neighbouring suburbs is 'severely unaffordable' for low income households - meaning they pay over 38% of their income in rent on average. NSW Land and Housing Corporation's own initiatives and decade-long wait times in Northwest Sydney also reflect an urgent need for more Social Housing.

The news that one of the ten super lots comprising Lachlan's line has been set aside for the construction of Affordable Housing is therefore a considerable surprise, but certainly welcome. But it must be noted that the Affordable Housing lot is the smallest of the four to be put to market thus far. It is approximately 20% of the size of the Greenland lot, and one fifth smaller than the other two designated for private housing. In turn, the 96 Affordable Housing apartments will make up around 8% of the 1170 dwellings to be constructed across these four lots. Which is not insignificant in itself; But if the remaining lots are given to private development, that will mean that just 3.5% of all housing at Lachlan's line is Affordable. Moreover, there is still no indication that the project will include any Social Housing at all.

We therefore call on the Government to build on its good work. It should ensure that the remaining six lots at Lachlan's Line include a substantial Social and Affordable Housing component - thereby delivering a true mixed tenure development for the benefit of all of Northwest Sydney. 

Finally, the words of Planning Minister Rob Stokes, speaking to 7 news about Lachlan's line, have also given us pause for thought. He acknowledged there is "plenty of demand" for Affordable Housing throughout NSW, and noted, "We'll earmark a certain percentage in new developments such as this one for key workers - people like emergency service workers, nurses, and teachers". Again, we approve of the principle of including an Affordable Housing component in all major residential developments. We just hope the percentage the Minister has in mind is significantly higher than 3.5. 

Redevelopments in Northern Sydney

Over the past year the NSW Government has launched major projects to transform the State's Social and Affordable Housing portfolios - most notably Communities Plus and the Social and Affordable Housing Fund. But throughout this period, NSW Land and Housing Corporation ('LAHC') has also busied itself with smaller scale initiatives. As we outlined last week (here, with update here), on Sydney's well-heeled North Shore this has involved 'spot sales' of large houses to the private market. It appears likely that the resulting windfall gains have assisted an underfunded LAHC to meet its operating costs. 

Above: LAHC has been busy across the City of Ryde

But LAHC has also pursued a related though distinct strategy in neighbouring Northwest Sydney. The Public Housing provider demolished a number of large, freestanding houses in the Ryde Local Government Area in 2014 and 2015. It constructed units in their place. 

Public tender documents provide that houses across four sites in the suburb of Eastwood - two each on Alison Street, Raymond Street, and North Road, and three on the corner of Banksia Street and Lovell Road - were demolished, with small apartment complexes built in place of each. We understand that the same will likely happen to Public Housing cottages on Irene Crescent, also in Eastwood. 

Eight houses on Neville and Fawcett Streets, Ryde were also levelled for multi-unit developments. Finally, LAHC demolished a house on Adelaide Street, West Ryde, replacing it with a seven-unit building. 

Land and Housing Corporation has provided that all newly-constructed units will be provided exclusively as Public Housing. 

Our response

In our earlier discussion of North Shore spot sales, we highlighted the process LAHC undertakes in assessing its housing assets: "In managing the Public Housing portfolio, Land and Housing Corporation periodically estimates the cost or windfall or maintaining, redeveloping, or selling individual dwellings. In the case of valuable North Shore land in a heated market, it appears the opportunity cost of not selling is proving difficult to resist."

It is concerning that in Northwest Sydney, substantially similar properties to those sold on the North Shore have instead been redeveloped. It is impossible to escape the conclusion that land values were a key consideration; simply put, Ryde is markedly less valuable than its blue chip neighbour. According to Land and Sales Report data, the City of Ryde ranks 18th amongst Greater Sydney's 51 LGAs by average dwelling sale price. A far cry from the North Shore, which contains six of the top ten. The contrasting fortunes of the Ryde and North Shore properties suggests that the future Public Housing is tied to some extent to the fluctuations of a speculative and volatile property market. 

At the least, LAHC has provided that it did not impose any mandatory relocation process on tenants moved on from the now-demolished Ryde properties. This must continue to be the case for as long as LAHC is driven, by underfunding and/or market conditions, to the view that some Public Housing is too valuable not to sell. 

On the other hand, it should be repeated that the redevelopment of LAHC land within the Public Housing portfolio is strongly preferable to the loss a site to private interests. Moreover, LAHC has said that its redevelopment works in Northwest Sydney are addressing increased demand for smaller, more accessible dwellings, and for more Social Housing overall, in the Ryde area. The pursuit of such objectives is legitimate. However, we might also repeat our quibble with similar projects elsewhere in Sydney. That is, a true social mix - of the sort the Government claims to desire - requires a diverse portfolio. That means larger affordable properties as well as small units and bedsits. Most notably, large properties are necessary to accommodate low-income families. LAHC's redevelopment of Ryde may well serve immediate portfolio needs, but it must not result in the disappearance of larger Public Housing properties from the area completely. 

Update: North Shore spot sales

In last week's article, we discussed recent 'spot sales' of Public Housing properties on Sydney's well-heeled North Shore, and its significance for the Social Housing portfolio as a whole. 

Above: Have spot sales been put on hold for Communities Plus?

We have since received some indication that LAHC recently paused intended spot sales in Northern Sydney. It has reportedly taken this decision in order to provide itself with more vacant dwellings for the ongoing relocation of around 400 tenants from the Ivanhoe Estate - part of the large 'Communities Plus' initiative. If accurate, it would not surprise if the reportedly cancelled sale of a 12-unit complex on Upper Spit Road, Mosman was in fact a deferral of sale until after those relocations are complete. 

We understand that LAHC is also planning sales of freestanding cottages in the suburb of Turramurra, in a similar manner to recent sales in Lane Cove and Asquith.

North Shore spot sales

In recent months, the announcement of numerous major estate renewal projects has attracted most scrutiny from those monitoring the Social and Affordable Housing portfolio (including this blog). But throughout this time, NSW Land and Housing Corporation ('LAHC') has also engaged in one-off 'spot sales' of Public Housing properties to private interests - most notably on Sydney's North Shore. 

Above: Lane Cove has seen numerous spot sales

The matter forms the subject of a recent Fairfax Media article, which says the NSW Government has banked $54.5 million from spot sales this calendar year. This figure does not include sales forming part of larger sell-off projects at Millers Point and Cowper Street, Glebe. Fairfax notes that sales took place throughout the inner and middle ring of Sydney, including seven across the North Shore - six at Mowbray Road, Lane and one in Seaforth. 

The NSW Government's 'eTendering' website provides that in December 2015, LAHC also contracted for the sale of two three-bedroom houses at Mindarie Street, Lane Cove (here and here). The Mindarie Street properties lie adjacent to the Mowbray Road properties. 

All of the Lane Cove properties sold by LAHC are situated on land zoned for high density residential development, and lie adjacent existing apartment blocks. Moreover, the Rent and Sales report provides that prices in the Lane Cove LGA are currently seventh highest of the 51 councils in the Greater Sydney region. Prices have grown by 26.3% over the preceding year, the ninth highest growth rate in Greater Sydney. The properties are therefore attractive to buyers, and especially developers, in multiple respects.

In October 2015, LAHC also completed the sale of a four-bedroom house at Lords Avenue, Asquith. 

However, The Mosman Daily has reported that LAHC recently opted against the sale of the 'Muston Court' apartment complex at Upper Spit Road, Mosman. The site consists of 12 one and two-bedroom dwellings, and is one of only four LAHC-owned apartment blocks in Mosman. LAHC had intended to proceed with a sale; all units are vacant after FACS Housing transferred former tenants over a number of years. But the article quotes a FACS Housing spokesman as saying the 60 year-old development will instead be refurbished and upgraded.

See also our update to this piece.

Our response

Social Housing Minister Brad Hazzard MP commonly extols the virtues of mixed communities - for Social Housing tenants especially. The following, from a February media release, exemplifies the Minister's professed position: "redeveloping [this] estate will lead to a huge improvement in social outcomes...We've already seen this with the Minto redevelopment where we now have a great mixed community and where kids in social housing see their neighbours go off to work and can see the different choices available to them." Such values are also reflected in the Government's Future Directions strategy for Social Housing over the next decade. The 'Communities Plus' and 'Social and Affordable Housing Fund' projects - major components of the objective to deliver more social housing - involve the construction of mixed tenure communities. In the case of Communities Plus, this will be delivered at the direct expense of current Public Housing estates.

As a basic principle the Tenants' Union supports the fostering of socially mixed communities, albeit with some caveats. Long have we advocated accordingly - most recently for Ultimo and Glebe. 

But in assessing the North Shore spot sales, it must be emphasised that the region is uniquely well heeled. This is borne out in the property sales data. In addition to Lane Cove, the Mosman, Hunters Hill, Willoughby, Manly, and Pittwater LGAs are also amongst the ten most valuable in the Sydney metropolitan area. Moreover, according to 2015 ATO data, the region also contains a full 7 of the 25 wealthiest postcodes in Australia by residents' average taxable income.

In managing the Public Housing portfolio, Land and Housing Corporation periodically estimates the cost or windfall of maintaining, redeveloping, or selling individual dwellings. In the case of valuable North Shore land in a heated market, it appears the opportunity cost of not selling is proving difficult to resist. Indeed the Mindarie Street houses delivered almost $3 million apiece. 

This is problematic. As Shelter NSW Executive Officer Mary Perkins told Fairfax, "social mix shouldn't be a one-way street. "You don't just rip down Redfern, Waterloo and make it a more economically mixed community [Communities Plus] and then say to the North Shore, well you're not going to have any public housing because it's a cash cow."" LAHC should look to develop mixed communities across all of Sydney and NSW - not just where it is cheap and convenient to do so. Accordingly, any sale of Public Housing should not be a reflexive or lightly taken decision. When a house sits on valuable land, and/or is expensive to maintain, renovation should be preferred, followed by redevelopment within the Social Housing portfolio. 

This would not only allow Social Housing to maintain a presence in more valuable areas, but an appropriate range of dwellings. Large houses on larger blocks will of course sell for higher sums. But social mix also requires the availability of larger dwellings as affordable rental housing - to accommodate low income families particularly. 

We also agree with Kirsty Needham, author of the Fairfax report, that the sales are "puzzling, because the Baird government gave the impression in January that the days of using public housing stock as a cash cow were over". Clearly LAHC has not ceased offloading valuable and/or high maintenance properties. In all likelihood this is a matter of financial necessity - the public landlord needing to sell to meet its operational costs. The effects of this are obviously damaging, not just to social mix but because they are patently unsustainable. There will only ever be a finite amount of prime land to sell. The NSW Government must therefore consider providing additional funds to maintaining and growing the Public Housing portfolio across the State, so that LAHC may cease dividing Sydney's suburbs into haves and have-nots. 

We welcome feedback from all tenants affected by Public Housing sales, including in Northern Sydney. This may be provided anonymously to contact [@] tenantsunion.org.au.