Minister for Planning and Housing Anthony Roberts says the affordable rental scheme is being reviewed Credit:Daniel Munoz Under the NSW scheme, developers can apply for permission to build extra storeys or apartments exceeding local planning restrictions in return for guaranteeing that a percentage of units are rented at "affordable" levels. Only people below certain income levels are eligible to rent the apartments, which are sold to investors at a discount with the caveat that they must be leased affordably by their owners for at least 10 years. But the surge in property prices in Sydney is leading to some rents being set at levels well above the target 30 per cent mark. For example, two-bedroom apartments in a new development in Wentworth St, Glebe, are on the market under the affordable rental scheme at $850 a week. Under the rules a couple with one child would need to earn below $107,900 – defined as a moderate income – to be eligible to rent one of the apartments, making the rent at least 41 per cent of their combined gross income.

The apartments are even more unaffordable for a single person with one child, whose income cap for eligibility is $77,900 – also defined as a moderate income. The rent equates to at least 55 per cent of their annual gross income. In a new development in Willoughby, Sienna, opened by Premier Gladys Berejiklian in June, studio apartments under the scheme are being offered for $440 a week, representing at least 38 per cent of the gross annual income of a single person on the eligible income of $59,900 or below. The rent is more affordable for a couple – at least 25 per cent of their income based on the $89,900 eligibility cap. But the same development is offering one-bedroom apartments for $536 per week, which represents at least 46 per cent of the gross annual income for a single person. A couple would pay a more affordable 31 per cent of their income, but a single person with a child would pay at least 35 per cent. Ms Berejiklian attended the official launch of Sienna, which is in her electorate, just months after she announced that housing affordability would be one of her priorities as Premier.

When Ms Berejiklian unveiled her response to the housing affordability issue, she was criticised for a lack of affordable rental housing measures. Labor has promised that, if elected, every residential development built on state-owned land will have 25 per cent of its dwellings designated affordable housing. The apartments let under the scheme in each development in Willoughby and Glebe are leased by non-profit community housing provider Link Housing, which manages 1600 properties. Link chief executive Andrew McAnulty told Fairfax Media that rents were set based on a combination of market prices and eligibility criteria, a process that is "a bit subjective". Mr McAnulty described the $850 rental as "an extraordinary high price" but insisted it was "an anomaly". He said private buyers of units under the scheme usually set the rent at about 20 per cent below market, but Link and council-owned properties were set much lower.

But Mr McAnulty said because the Sydney property market had boomed since the scheme began, "the government needs to be encouraged to look at how we make a slightly deeper subsidy" in many areas. A spokesman for Planning Minister Anthony Roberts said the government was reviewing the scheme "to make it more robust, simpler and fairer". "Proposed changes are the first step towards boosting the number of affordable rental homes in Sydney and across the state," he said. The review would examine ways the policy could be refined to ensure it would better reflect the Sydney housing market, Mr Roberts said. The government was committed to ensuring that affordable housing was available for key workers.