A major property developer has admitted to breaching planning conditions by renting affordable housing to one of its own staff.
Sydney developer Hyecorp says it breached its agreement with the Willoughby Council when it rented a unit set aside for affordable housing at a development in the area to the staff member in early 2024.
While Hyecorp maintains the tenant qualified for affordable housing and the unit was leased at affordable housing rates, it acknowledges the unit was not managed via a registered community housing provider as required by its planning conditions.
However, strengthened affordable housing laws the NSW government passed more than a year ago are yet to be officially implemented.
The state government described the 2025 bill as a "crackdown" on developers who misused affordable housing, making it an offence to rent out discounted rental properties without appointing a community housing provider to manage them.
"We're drawing a line under the cowboy era of unregulated affordable housing," NSW Housing Minister Rose Jackson said in a press release in June last year.
When a resident in the Hyecorp development tried to raise the matter with the government in May via their local member, Liberal MP Tim James, they received a response from Parliamentary Secretary for Planning Stephen Bali that said the local council was responsible for investigating.
"I am advised Willoughby City Council is the local consent authority for this development and is responsible for enforcing the conditions of consent," Mr Bali's letter said.
Council investigating 'compliance' issue
In a statement, the NSW government acknowledged the reforms had not been implemented but said they would be in place by the end of the year.
Hyecorp's co-managing director Stephen Abolakian said he had written to Willoughby Council to notify it of the breach to its planning agreement after being contacted by ABC Investigations about the matter.
"We are arranging for the unit to be returned to management by a registered community housing provider," his statement said.
A spokesperson for the Willoughby City Council confirmed it was "actively investigating a potential compliance issue" with affordable housing at the development.
There is no suggestion of any wrongdoing by the tenant, and Mr Abolakian said Hyecorp offered the affordable housing unit to the staff member because at the time they were "facing significant personal and financial challenges".
He said Hyecorp planned to return management of the unit to a community housing provider.
"We will work with the tenant on next steps," Mr Abolakian said.
He said that if they wished to remain in the apartment, they "will do so via the process required by the CHP".
Affordable units need to be managed by housing provider
Under NSW planning rules, developers can win approval for additional height and density for the developments in return for setting aside a portion of units for affordable housing for a set period of years.
In the case of Hyecorp's Willoughby development, it agreed to dedicate 50 per cent of the building to affordable housing for 10 years — an agreement due to expire in 2028.
Under planning rules and Hyecorp's agreement with the council, it is required to appoint a registered community housing provider to manage the affordable housing units.
Housing charity Link Wentworth managed the unit in question until early 2024, just before the Hyecorp tenant moved in.
Mr Abolakian said the staff member qualified for the unit under NSW rules, which set income caps for affordable housing tenants.
"We maintain that the apartment continued to be used as affordable housing," he said.
"The use, occupation and rent charged complied; however, it was not under the management of a CHP at the time."
Second employee living in affordable housing within rules, developer says
Another Hyecorp staff member also lives in affordable housing in the development, but Mr Abolakian said this tenant applied via Link Wentworth.
"It is our understanding that the tenant made their own independent approach to Link as would any other applicant," he said.
"As with any owner of property within the affordable housing scheme and as with any landlord, we approve the tenant put forward.
"Hyecorp did not have any part in the assessment of that application and did not approach Link in relation to it."
Link Wentworth declined to respond to questions about individual tenants, but in a statement said it assessed all applicants according to affordable housing rules.
University of NSW planning researcher Ryan van den Nouwelant said the matter demonstrated the urgency of implementing the government's reforms — particularly after the state introduced generous new height and density bonuses in 2023 for developers that incorporated affordable housing into their projects.
"This is the same government that eagerly pushed the accelerator when offering private developers incentives to build affordable housing," he said.
"It is disappointing that they now seem to have their foot on the brakes when rolling out the regulations they say are needed to ensure the promised affordable housing is actually delivered."
