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Develop affordable rental housing

Find grants and incentives for developing affordable housing and how to partner with community housing providers

Develop Affordable Housing overview

The NSW Government supports the development of affordable housing that is targeted to very low, low and moderate income earners. It does this in a range of ways, including:

  • Providing floor space incentives for developments which contain affordable housing through the planning mechanism of the State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARHSEPP).
  • Facilitating other incentives for developments which contain affordable housing via mechanisms such as negotiated planning agreements.
  • Offering financial and other incentives, in partnership with the Commonwealth Government, to build and rent new properties at below market rents via National Rental Affordability Scheme (NRAS).
  • Making grants available to assist construction of new, self-contained boarding house supply via the Boarding House Financial Assistance Program (BHFAP – New supply).
  • Making grants available for fire safety upgrades to boarding houses, via the Boarding House Financial Assistance Program (BHFAP – Fire safety).
  • Encouraging partnerships between community housing providers and others, including private developers, on affordable housing projects.

Selecting a manager for affordable housing

Managing affordable housing involves the standard property and tenancy management responsibilities of managing any rental housing. It also involves some additional responsibilities around setting rent, letting properties to eligible households and meeting the requirements of the relevant affordable housing program.

You can manage most affordable housing properties yourself if you have the necessary tenancy management experience or you can contract an organisation such as a community housing provider to manage it on your behalf. Please note that affordable housing properties developed under the Affordable Rental Housing SEPP must be managed by a registered community housing provider.

Floor space and other incentives

Under the State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARHSEPP), floor space incentives for villa, townhouse and residential flat building development projects (in accessible locations and where these uses are already permitted) may be available for projects which include some affordable rental housing.

Floor space incentives may also be available for new generation boarding house developments.

Affordable housing developed as part of a villa, townhouse or residential flat building development project must remain as affordable housing for at least 10 years and must be managed by a registered community housing provider.

Boarding house development projects do not need to be managed by a community housing provider, even if they include floor space bonuses.

For more information about floor space incentives or bonuses, contact:

The NSW Department of Planning
(02) 9228 6111

Some local councils offer additional incentives to encourage the development of affordable housing. These may be offered through mechanisms such as negotiated planning agreements.

For more information about other incentives for developments including affordable housing, including if there are any available in a particular location, talk to the relevant council directly.

National Rental Affordability Scheme (NRAS)

The Australian Government announced in the 2014 Budget that it will not be proceeding with Round 5 of the National Rental Affordability Scheme (NRAS). For further information, see the NRAS resources, documents and information at for outcomes of applications for incentives through NRAS Round 5 on the Department of Social Services website.

National Rental Affordability Scheme – Trading of Incentives – Warning

On 10 October 2014, the Commonwealth Department of Social Services (DSS) released a Cautionary Note to developers, investors and charitable organisations regarding the trading of incentives under NRAS.

DSS has warned those groups to be extremely careful before agreeing to pay any funds in respect of a transaction involving an allocated or reserved incentive under NRAS as it has become aware that dwellings are being marketed in circumstances where the dwellings may be falsely represented as having NRAS incentives attached.

For more information, please see the full content of the Cautionary Note on the DSS website.

Boarding House Financial Assistance Program. This program is under review and no further applications are being accepted

This program is under review and no further applications are being accepted

Boarding house - Fire safety upgrade grants

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The Boarding House Financial Assistance Program – Fire Safety (BHFAP – Fire Safety) provides grants of up to $60,000 to help owners and operators of boarding houses undertake essential fire safety works. These grants improve fire safety for boarding house residents, and help retain boarding houses that provide long term, low cost housing.

To be eligible for a BHFAP – fire safety grant, boarding houses must be zoned ‘residential’ by local council, provide long term, low cost accommodation as defined by the Office of State Revenue for the purposes of granting land tax exemption and be registered with the Office of Fair Trading.

Grants are paid in instalments, generally over five years. The first grant payment for approved applicants will be made once the fire safety work is complete and approved by DCJ Housing.

Additionally, the NSW Government offers Land Tax Exemption for Boarding Houses which meet certain criteria. To find out more visit Office of State Revenue - Land Tax Exemption for Boarding page.

Who can apply for fire safety grants?

If you own or manage a boarding house, or you are extending your boarding house, you are eligible to apply for a fire safety grant. This includes owners/managers of assisted boarding houses authorised by the Department of Family and Community Services (Ageing, Disability and Home Care) (Licensed Residential Centres) under the Youth and Community Services Act 1973/ Boarding Houses Act 2012 and boarding houses built or managed by community housing providers.

Fire safety grants are not available for:

  • Backpacker or tourist accommodation, or premises that include any tourist accommodation
  • Properties owned by commonwealth, state or local government.
  • Premises which have already received a grant for building new boarding house accommodation are not eligible to apply.
  • Fire safety grants are not available for proposed or new premises developed under the State Environmental Planning Policy (Affordable Rental Housing), 2009.

Am I eligible for a fire safety grant?

To be eligible for the fire safety grant, your boarding house must:

  • provide long term, low cost accommodation,
  • be rated as ‘residential’ by the local council, and
  • be registered with NSW Fair Trading

The fire safety work proposed must be scheduled in a fire order issued by council or be documented in a Development Application for boarding house alterations or additions. Only one application may be made for the premises.

Premises which have received a BHFAP – New supply grant for building new boarding house rooms are not eligible for a BHFAP - Fire safety grant.

What does long-term low cost accommodation mean?

The Boarding House Financial Assistance Program uses the terms long-term and low cost as it’s defined by the Office of State Revenue (OSR) for the purposes of granting a land tax exemption to a boarding house. These are defined as follows:

  • long term means that at least 80% of the rooms are occupied by someone who has lived in the boarding house for at least three months during the year (though this does not need to be consecutive months)
  • low cost means that tariffs are less than those set each year by the Department of Communities and Justice. Read the Table of Rents for the Boarding House Financial Assistance Program.

To qualify as ‘Full board’ the operator must supply on a daily basis a minimum of two cooked full main meals to each resident (equivalent in value to the difference between the threshold rental for a room without board and a room with full board) and weekly supply of fresh linen (sheets and bath towels). The tenants Rental Agreement must specify that these are included in their rent.

OSR tariffs are updated each year and are available on the Office of State Revenue website.

Note that it is not necessary for the premises to have applied for land tax exemption, only that they are eligible according to the Treasurer’s Guidelines as outlined in the relevant OSR Revenue Ruling.

What fire safety works can the grant cover?

Fire safety grants can be used to cover the expense of any essential fire safety works that are specified on a Council’s fire order for the premises, up to a maximum of $50,000. This includes items such as automatic sprinkler systems, smoke detectors, emergency lighting, fire-rated construction, solid core doors and fire extinguishers. It can also cover:

  • costs of system design consultants
  • construction certificate fees for the relevant works (if applicable).

Fire safety grants cannot be used for works not directly related to essential fire safety upgrading, such as:

  • painting
  • the replacement of non-fire-retardant fittings and furnishings such as carpets, curtains or cooking appliances
  • costs of fire drills, periodic inspection, maintenance and certification of ‘essential services’ required by the council, landline rental for back-to-base alarm connections
  • costs associated with applying for the grant, such as feasibility studies, quantity surveyor’s fees, the cost of quotes
  • the demolition and disposal of existing structures
  • work done under an Owner-Builder Permit, or the hire of casual day labour that is not on a trade or contract basis.

How much will I be eligible for?

Fire safety grants can be up to a maximum of $60,000.

The amount of the grants is calculated differently if you are upgrading existing premises than it is if you are extending premises:

  1. If you are upgrading an existing boarding house, the grant can equal the amount you spent for the essential fire-safety works specified in a council fire order, up to a maximum of $60,000.
  2. If you are extending an existing boarding house, grant amounts are determined by calculating the cost of the new construction (excluding GST) divided by the gross floor area of the new construction. This is referred to as the construction cost rate. Grants are calculated according to the following:
    • If the construction cost rate is less than or equal to $1,250/m2, the grant will be 8%of the construction cost, or
    • If the construction cost rate is greater than $1,250/m2, the grant will be a flat rate of $100/m2 of the gross floor area.

For premises rated for mixed uses (for example residential and business), grants are calculated on the proportion of the gross floor area of the premises that are residential only.

Can I apply for a fire safety grant for work I have already completed?

Yes, provided the date when your council signed off the satisfactory completion of the works (occupancy certificate or other documentation) is not more than three years before the date you submit your application for the grant.

Can I apply for a fire safety grant for work that has not yet begun or is underway?

Yes. Attach copies of the fire order and detailed quotes for the work involved.

If your application is assessed as eligible and the quotes are assessed as being reasonable for the works specified, DCJ Housing will notify you in writing of its ‘in principle’ approval of your application. Note that grants are paid on actual funds expended for fire safety upgrading, not on quoted amounts.

To apply for safety upgrade grants

To apply, complete this Fire Safety Application Form and submit to:

Attention: Boarding House Financial Assistance Program – Fire safety
C/ Community, Homes and Place Directorate, Department of Communities and Justice, Locked Bag 4001, Ashfield BC NSW 1800

Make sure you have attached all the evidence that is requested to support your application.

How will my application be assessed?

Applications for fire safety grants will be assessed as they are received.

DCJ Housing will assess the application to ensure it meets the eligibility criteria. This includes ensuring that your boarding house provides long term, low cost accommodation, and is rated as ‘residential’ by council.

All quotes or invoices for fire safety work will be reviewed by DCJ Housing and compared to similar works for other premises. If, after consultation with you, costs are considered to exceed average or typical costs, the grant amount will be based on an application of typical, rather than quoted/invoiced, costs.

If an eligible application is for work that has not yet begun or is underway, approvals may be granted ‘in principle’ and payment of grant monies will depend on the work being completed as outlined on the application, and receiving necessary approvals.

DCJ Housing will advise you of the outcome of your application in writing, including the amount you are eligible for if your application is successful.

What happens if my grant application is successful?

Fire safety grants are paid in an equal annual instalment over a period of five years. The first instalment is made once the fire safety work is complete and approved.

If your application is successful, the process to receive your grant is as follows:

  • Notify DCJ Housing when your fire safety work is complete. You can do this at application if your work is already complete. If you have been extending your boarding house or constructing a new one, you also need to attach a copy of the occupancy certificate from your local council.
  • A DCJ Housing representative will then inspect your premises to ensure your fire safety work is consistent with the information provided in your application.
  • Once the DCJ Housing inspection is complete, and all necessary paperwork has been received, DCJ Housing will confirm the grant amount you will receive, a payment schedule and that your first grant payment can be made.
  • You then need to submit an invoice to DCJ Housing for the amount of the first instalment. DCJ Housing will pay on receipt of this invoice. Note that grant payments are calculated exclusive of GST. To receive the 10% GST component, this must be a Tax invoice which confirms your GST registration and includes an ABN.

Each subsequent year, you will be required to submit an invoice for the amount due. You must also attach a statutory declaration confirming that, in the previous calendar year, the premises were leased at or below tariffs set by the Office of State Revenue for the purposes of assessing land tax exemption during that period.

What are the taxation arrangements of the grant?

Grant payments are calculated exclusive of GST. To receive the 10% GST component, submit a tax invoice to DCJ Housing with confirmation of your GST registration and your ABN.

The Australian Taxation Office has ruled previously that financial assistance grants will be subject to taxation. Applicants should seek advice as to the taxation implications of grants.

Definitions explained

Boarding house

A boarding house is a building wholly or partly let as lodgings in which:

  1. there are rooms, some or all of which may have private kitchen and bathroom facilities, that accommodate one or more lodgers
  2. there may be shared facilities, such as a communal living room, bathroom, kitchen or laundry
  3. each letting provides the occupant with a principal place of residence
  4. the premises must be used and occupied by at least three long term residents who are not members of the family of the owner or manager, or are not members of the family of a shareholder of a company if an exempt proprietary company is the owner
  5. lodgers are provided with a principal place of residence for 3 months or more

This definition does not include backpackers’ hostels, a group home, a serviced apartment or other tourist establishment, seniors housing or hotel or motel accommodation or a residential flat building or premises which are licensed under the Liquor Act 1982.

Backpacker hostel

Backpacker hostel means a building or part of a building which provides accommodation for travellers, tourists or persons engaged in recreational pursuits, which is not their principal place of residence.

Serviced apartments

Serviced apartments means a building containing two or more dwellings intended to be used for short-term accommodation of travellers and tourists and where such dwellings are cleaned or otherwise serviced or maintained by the owner or manager of the apartments or the owner's or manager's agent.

Long term, low cost rental accommodation

BHFAP uses the definitions of long term and low cost developed by the Office of State Revenue for the purpose of assessing eligibility for Land Tax Exemptions.

Full board and lodging

Describes accommodation in a boarding house where three meals a day, plus other services such as regular provision of clean linen, are included in the tariff.

Classification of boarding houses

Under the Building Code of Australia, boarding houses are classified as follows:

  • Class 1b - premises which accommodate up to and including 12 persons, and where the gross floor area of the premises is less than or equal to 300 square metres.
  • Class 3 - premises accommodating more than 12 persons or where the gross floor area of the premises is more than 300 square metres.

Gross floor area

For the purposes of estimating the area of a boarding house construction, the gross floor area is the total floor area of new construction, measured between the inner faces of the external walls.

Partnering with community housing providers

Organisations such as private developers, councils, church-based groups and co-operatives can partner with community housing providers to develop affordable housing. Partnerships bring together key components such as land, funding, development expertise and skills. Bringing together these components can result in the delivery of development projects which no partner could achieve individually.

Community housing providers can also manage affordable housing properties on behalf of organisations, individuals and consortiums.

There are a number of factors to consider before partnering with a community housing provider. All community housing providers are organisations that provide housing for people on a very low, low or moderate incomes or people with additional needs. These organisations are not-for-profit and most community housing providers focus their operations within a particular geographic region.

When selecting a provider ensure it is an organisation registered with the national regulatory body . To achieve and maintain registration a provider must satisfy the Registrar that it is performing in accordance with the requirements of the National Regulatory System for community housing.

Registration is designed to provide assurance for a viable and diverse sector, that delivers quality outcomes for tenants and in which investors and partners can have confidence. The Registrar categorises community housing providers into three groups or tiers.

Tier 1 providers are the largest organisations that in addition to property and tenancy management offer development expertise. Many private developers and individuals already have successful and ongoing partnerships with community housing providers.

There are 131 providers registered whose primary operations are in NSW and these organisations house more than 29,000 households. The organisations range from small local housing providers to large enterprises with major assets.

Community housing providers manage their tenancies and client entitlements in accordance with the Residential Tenancies Act 2010 and their own individual policies.

Information about the National Regulatory System for Community Housing, as well as a full list of registered community housing providers in NSW, is available at Registrar's website.

The Community and Private Market Housing Directorate (CAPMH) is a business unit of DCJ Housing. CAPMH is the primary relationship and contract manager of community housing providers in NSW. The Centre for Affordable Housing is part of the CAPMH Directorate. More information about community housing providers is available at the CAPMH Website

Community housing providers interested in partnership opportunities

Many registered community housing providers are interested in discussing partnership opportunities for developing affordable housing, including the providers listed in the Table below.

If your organisation is interested in exploring partnership opportunities with community housing providers, please contact the provider directly. Up-to-date contact details for registered providers are available through the Registrar of Community Housing’s website.

Community housing providers interested in partnership opportunities

Organisation Operating Area

Argyle Community Housing

South West Sydney, South Western NSW

Baptist Community Services

Sydney, NSW South West, NSW Far North Coast


Sydney, Blue Mountains, Southern Western NSW, Southern NSW

Bridge Housing


Common Equity NSW

Sydney, North Coast NSW, Southern NSW

Community Housing Limited

Sydney, Hunter, Central Coast, Mid North Coast, Far North Coast, Illawarra, Shoalhaven

Compass Housing Services Co Ltd

Newcastle, Hunter, Central Coast, North Coast, Western NSW

Evolve Housing


Ecclesia Housing

South West Sydney, Newcastle

Homes North Community Housing Company Ltd

New England

Homes Out West

South West NSW

Housing Plus

NSW Central West

Hume Community Housing

South Western Sydney, Western Sydney, North West Sydney

Illawarra Housing Trust


Link Housing

North and North West Sydney

Lithgow Community Housing Inc

Western NSW

Metro Housing


Mission Australia Housing

Western Sydney, Southern Sydney, Mid North Coast

On Track

Northern NSW

North Coast Community Housing

Northern NSW

Sapphire Coast Tenancy Scheme Inc

South Coast

Southern Cross Community Housing

Illawarra, South Coast, South West NSW

St George Community Housing Limited

South West Sydney, Inner Western Sydney

Wentworth Community Housing

Western Sydney, Blue Mountains

Women’s Housing Company

Southern Sydney, Western Sydney

Selecting a manager for your affordable housing properties

You can manage your affordable housing portfolio yourself if you have the necessary tenancy management skill.

Alternatively, you can contract a tenancy manager to manage the properties on your behalf. For most properties, you could choose a community housing provider or a private real estate agent or specialist property management service.

If your affordable housing properties were developed under the ARHSEPP, they must be rented as affordable housing for a period of 10 years and must be managed by a community housing provider.

If you decide to contract a specialist tenancy manager, there are a number of different types of contractual arrangements you could use, each with an appropriate legal arrangement. The table below outlines some of the possible arrangements to consider.

Type of arrangement

Fee for service

The owner pays the manager a standard fee to provide management services – possibly both tenancy and property management services.

Fee for service with risk sharing

Normal fee for service plus the manager agrees to take on certain project risks – eg. vacancy risk – in exchange for a higher fee or other form of compensation.

Affordable Housing Growth Program

Where the owner’s interest is to grow affordable housing, an arrangement can be reached whereby the manager reinvests all surpluses in affordable housing for a certain target group or in a specific local area.

Joint venture

Joint venture arrangements may be reached whereby both parties make contributions to the upfront costs and in exchange, ownership and the proceeds of the project are shared.

Type of arrangement

Fee for service

Standard Agency Management Plus an Affordable Housing Management Annexure. Another option is for the owner to headlease the property to the Manager. The Manager would then sublease to tenants.

Fee for service with risk sharing

Standard Agency Management Plus an Affordable Housing Management Annexure. Another option is for the owner to headlease the property to the Manager. The Manager would then sublease to tenants.

Affordable Housing Growth Program

Specialised Management Agreement Plus headlease over the property.

Joint venture

Specialised Deed of Agreement.

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Last updated: 24 Sep 2019