Affordable housing contributions: when can a Council require them

April 24, 2025

Abstract

To provide for affordable housing, councils often impose housing affordability contributions as conditions of consent. These conditions require developers to make monetary contributions. For Council to have the authority to impose these contribution conditions, there must be an authorising provision in the local environmental plan.

The recent case of Hanave Pty Ltd v Waverley Council [2025] NSWLEC 19 examines when Council is authorised to impose housing affordability contributions (Contributions) conditions, and whether these conditions can be severed from consents if they are invalid. In this article, we break down the Court's findings and what they mean for you.

Key findings

• The imposition of conditions requiring contributions must be authorised by a local environmental plan (LEP). If the LEP does not contain a provision authorising contributions conditions, they cannot validly be imposed.
• When a condition is imposed invalidly, it can be "severed" (removed) from a development consent, if the removal of the condition would not affect how the consent operates. If the invalid condition can be severed, the remainder of the consent remains valid.

Background

In Hanave v Waverley Council [2025] NSWLEC 19, the applicants were granted a development consent to make extensions to their property. In granting the consent, Council imposed a condition requiring contributions for affordable housing (Condition). But the Waverley Local Environmental Plan 2012 (NSW) (WLEP) did not contain a provision authorising Contributions to be imposed. So, the applicants commenced judicial review proceedings in the Land and Environment Court seeking a declaration that the Condition was invalid.

Can Council impose a Contributions condition if the LEP does not provide authorisation?

Ordinarily, for councils to have the power to impose a condition requiring Contributions, the LEP must include a provision authorising Contributions to be imposed.

Clause 15A of the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017 (NSW) provided that a state environmental planning policy (SEPP) could also authorise a Contributions condition. In this case, Council argued that it relied on this clause, rather than the WLEP, to justify imposing the Condition.

The Court found that clause 15A does not enable councils to require Contributions without an LEP provision authorising the imposition of a Contributions condition. Justice Pritchard reasoned that:

1. Clause 15A was a transitional provision, which only had a temporary effect. By the time the consent was granted (and the condition was imposed), clause 15A no longer had legal effect, so Council could not rely on it to require Contributions.
2. Parliament's intention is clear that only LEP provisions can authorise councils to impose Contributions conditions.

As the WLEP did not contain a provision authorising Council to impose housing affordability contribution conditions, Justice Pritchard held that the Condition was invalid.

Can an invalid condition be severed from the approval?

Since the Condition was found to be invalid, the other question before the Court was whether the rest of the consent remained valid. For the consent to remain valid, the Condition must be "severable" (able to be removed) from the rest of the consent.

The parties used different tests to argue whether the Condition was severable. In finding that the Condition could be severed, Justice Pritchard clarified what the test is and reasoned:

1. To determine whether a condition can be severed, the Court must consider "whether the severance of [the condition] will result in the balance of the consent operating differently".
2. Since the condition is a monetary contribution condition, its severance would not cause the balance of the approval to operate differently. Once the Condition is severed, the consent's operation would remain unaffected.

Put simply, the removal of the Condition would not change how the consent would operate, so the Condition was able to be severed.

What this means for you

• When Council imposes an affordable housing contribution as a condition of consent, it is important to check whether the LEP contains a housing affordability provision that enables Council to require contributions. If the LEP does not contain a housing affordability provision, any conditions requiring a Contribution may be invalid.
• A consent can remain valid even if a condition is invalid, if the severance of the condition would not affect the way the consent operates.

Please let us know if you would like to discuss the implications of this article for you.