Delivering Affordable Housing Overview

Introduction to delivering affordable housing

There are two key opportunities to plan more effectively for affordable housing in Australia. The first, which seeks to enhance the overall operation of the planning system, should result in more affordable housing being delivered through the private market. The second approach, which creates opportunities for dedicated new supply meeting the needs of specified target groups, requires an effective delivery system to develop and or manage this housing.

To date, dedicated affordable housing in Australia has been managed by a small non-profit ‘community’ housing sector with large numbers of geographically dispersed providers. However this picture is beginning to change.

Recognising the not-for-profit sector as a critical vehicle for growing affordable housing, most jurisdictions have moved to develop larger agencies or facilitate group structures. This has been accompanied by efforts to develop the capacity and maturity of the sector so that it is capable of:

• partnering effectively with the private sector to leverage government investment;
• managing a significant asset base;
• operating at a greater distance from government; and
• responding strategically to new opportunities to generate growth.

The Ministerial commitment to develop a National Sector Development Plan is one such example of support for this agenda. This work has highlighted the importance of a transparent policy and regulatory environment for the sector and of support for developing the sector capacity needed for a role expanded beyond that of social housing manager.

Larger agencies emerging in some jurisdictions increasingly bring the experience and skills necessary to collaborate with partner organisations, including local councils, to develop and deliver affordable housing projects and to maximise outcomes generated through planning initiatives. 

Local councils establishing an affordable housing program using financial or in kind contributions secured through the planning process, will need to consider which providers operating in their jurisdiction are best placed to develop or manage this housing.

Overall, this is a rapidly changing sector in Australia and the following information is intended as a guide to current arrangements. Users should approach the relevant section of their state or territorial housing authority for information on the latest arrangements.

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Developing and managing affordable housing

Affordable housing development arrangements and opportunities differ in each of the Australian jurisdictions. Terminology used to distinguish types of community housing organisations also varies across the states and territories. Table 14 provides an overview of existing affordable or community housing organisations currently able to engage in development activities. Some of these agencies are planning to operate nationally and others are forming inter- and intra-jurisdictional networks and alliances to build their capacity and scale. For a full list of community housing providers that may be able to provide tenancy or property management services, contact the relevant state agency.

Affordable or Community Housing providers with capacity for housing development (table 14 in PDF)

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To see examples of housing delivery click on the link below

Australian Capital Territory

The main affordable housing provider in the ACT is Community Housing Canberra (CHC). CHC is involved in developing and managing properties. As well, six community housing providers are involved in tenancy and property management, including properties head leased from government. All providers operate across the ACT.

The ACT government has recently announced plans to support CHC as a major not-for-profit entity able to develop and manage affordable housing. The aim is to boost affordable rental dwellings managed by the CHC by 250 dwellings over five years, and to expand the supply of affordable owner occupied dwellings provided through CHC by 500 dwellings over five years.

Northern Territory

The sector is currently under development in the Northern Territory.

New South Wales

New South Wales has the largest community housing sector. It accounts for about ten per cent of social housing in the state. There is also a sizeable Aboriginal community housing sector. Organisations within these sectors include housing associations, housing cooperatives, crisis accommodation providers, Aboriginal corporations and Land Councils, and a range of other welfare organisations with a housing role. Local governments also provide community housing in New South Wales, focusing particularly on special needs housing like seniors accommodation or housing for people with a disability. Larger Housing Associations registered with the Office of Community Housing and some Aboriginal organisations registered with the Aboriginal Housing Office can develop housing.

The Aboriginal Community Housing sector in New South Wales is funded and regulated through the Aboriginal Housing Office.

Housing NSW, through its Centre for Affordable Housing, provides advice on the development of affordable housing projects and helps broker new financing and delivery models. The Department’s Office of Community Housing provides resources to and manages the community housing sector.

A voluntary accreditation system was introduced in 1998, and many providers have used it to improve their administration, policies and operating systems. A rigorous, performance-based registration system was introduced in 2005, and shows that providers have been achieving the right outcomes both for tenants and for government investment.

Planning for the Future: new directions for community housing in New South Wales 2007-2012 is a five-year strategy supporting the growth and sustainability of the community housing sector, especially in the provision of affordable housing. The strategy sets a target to double the number of homes managed by community housing providers to 30,000 over the next ten years. Through the strategy, Housing NSW will be supporting community housing providers to undertake new business activities, and to finance and develop new affordable housing projects.

Legislation regulating New South Wales’ community housing sector was passed in 2007. This legislation will secure government’s investment in the sector and give private financiers the confidence to invest in affordable housing delivered by community housing providers. 

A range of Affordable Community Housing Initiatives were also announced in 2007, valued at $230 million.  These initiatives include:

• the establishment of a $49.8 million Affordable Housing Innovations Fund;
• the introduction of a pilot for 35 year long term leases; and
• directing $70 million of new supply funding under the CSHA directly through community housing providers over four years, primarily in order to take advantage of the tax concessions the community housing sector can access. 

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Queensland

In Queensland, community and local government sectors provide affordable rental housing or other housing services. There are over 450 funded community and local government housing providers, including Aboriginal and Torres Strait Islander local government councils. Much of community and local government managed housing is in rural, regional and remote areas.

There are two community housing organisations with a specific charter for developing and operating ‘affordable’ housing—for households on very low through to moderate incomes. The Brisbane Housing Company, jointly funded by the Brisbane City Council and the Queensland Government was formed in 2003, with initial Government funding of $50 million, and $10 million from the Brisbane City Council, over four years. The Gold Coast Housing Company was formed in 2006, with funding assistance of $15 million from the State Government and $3 million from the Gold Coast City Council over three years. 

South Australia

The Affordable Housing Innovations Unit within the Department for Families and Communities is developing the affordable housing sector in South Australia. While there are currently no completed affordable housing projects in South Australia, a number are underway. For example, the Metropolitan Adelaide Community Housing Association (MACHA) is currently involved in a project to develop and undertake subsequent property and tenancy management of an affordable housing initiative.

South Australia has a vision for community housing that has four key goals:

• strengthen the community housing sector
• develop alternative finance strategies
• define government role in risk management and systemic sector development
• work with NGO partners to strengthen business capacity and ensure business excellence and quality management in community housing

South Australia is currently examining ways in which it can enable the sector to grow and enhance its capacity to play a greater role in the provision of affordable housing.

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Tasmania

The affordable housing sector is at an early stage of development in Tasmania. The Tasmanian Affordable Housing Ltd (TAHL) is the main affordable housing provider although its direct development activities are limited. Currently the target group for housing being offered through the TAHL is low to very low-income households who would traditionally be eligible for social (public or community) housing.

STEPS Community Housing Solutions is a new association that develops and manages low-cost rental housing. It has been contracted to develop housing units to be head leased by TAHL and also funds and manages its own low-cost housing programs (www.stepstas.com.au/housing.php).

Victoria

Housing and Community Building within the Department of Human Services (DHS) is responsible for funding social and affordable rental housing and the development of the community housing sector, and the Office of the Housing Registrar of Housing Agencies within DHS is responsible for regulating the community housing sector in Victoria.

Registration and regulation of not-for-profit, non-government agencies is a fundamental part of the state government’s approach to increasing the supply of affordable rental housing for low-income Victorians.

Together, registered housing agencies comprise a new, regulated housing sector, providing growth and quality service delivery to meet social objectives. Regulation provides a framework for accountability to government and other investors, tenants and the community.

The Victorian Government’s financial commitment is reflected in the 2007 State Budget allocation of $300 million to build 1550 new dwellings over four years, primarily through housing associations. This new funding complements significant existing capital commitments and measures to facilitate innovation and growth.
In addition to this contribution, registered housing associations may leverage capital through partnerships with the private and philanthropic sectors and local government.

The Victorian system of regulation was introduced in January 2005, with a new Part VIII to the Housing Act 1983. The Registrar of Housing Agencies was established to register and regulate these agencies, with the Office of The Registrar of Housing Agencies (ORHA) created as the administrative arm.

Aboriginal Housing Victoria has been responsible for the management of community housing for Aboriginal people in Victoria since 1981. Plans to expand the role of this agency in the development and management of housing for Aboriginal Victorians have recently been announced.

Further information on the Office of the Registrar can be found at http://www.housingregistrar.vic.gov.au/ .

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Western Australia

In Western Australia, community housing is rental housing managed by local government or non-government (not-for-profit) organisations, with similar eligibility criteria to that of public housing. Community housing providers operate across the state.

Affordable and community housing arrangements are under review in Western Australia. In May 2007 the WA premier announced a significant funding boost to help make housing more affordable in WA — $210 million of this funding to be allocated to community housing over a four-year period, starting from 1 July 2007. This money will be known as the State Community Housing Investment Program (SCHIP).

To see examples of housing delivery click on the link below

Funding affordable housing in Australia

The table below outlines the main sources of government funding to support affordable housing projects across the Australian states and territories.
As shown in the table, there is a clear commitment to strengthening the affordable housing sector in most parts of Australia. Many of the funding initiatives directly support the establishment of partnerships to deliver affordable housing that is secured, or subsidised, by contributions through the planning system. Other funding initiatives enhance the capacity of community housing providers to finance and develop their own affordable housing. Planning strategies that facilitate non-profit providers’ affordable housing projects help to maximise the leverage that these approaches might realise.

Sources of funding for affordable housing projects in Australia (Table 15 in PDF)

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Commonwealth programs

Recent federal announcements about programs are resulting in considerable growth in funding through tax incentives and financial support for private sector investors and grants.

National Rental Affordability Scheme

A key election commitment made by the Commonwealth Government was to the implementation of a National Rental Affordability Scheme. The Scheme will provide 50,000 National Rental Incentives for new affordable rental dwellings nationally over four years, to be rented for ten years to low and moderate-income households at 20 per cent below-market rents, who will remain eligible for Commonwealth Rental Assistance. The Commonwealth has indicated that if demand remains high following the allocation of the first 50,000 Incentives, an additional 50,000 will be made available. As a guide to timing, first three calls for Expressions of Interest are anticipated to be announced in July 2008, December 2008 and June 2009.

The scheme relies on a positive response both from private investors to take up the subsidy, and on government, community housing providers or private rental managers to manage tenancies. Some investors, including banks and superannuation funds, have already expressed an interest in financing affordable housing ventures, and the scheme will need to be ‘road-tested’ in the first phase of the Scheme to ensure adequate returns for such investors.

As the scheme is targeted at new construction, relatively modest amounts of housing will be supplied in its first years; this supply might be expected to accelerate over the life of the program.

The Commonwealth scheme will cost $623 million over its first four years and relies on the partnership of state governments. Institutional investors are offered tax credits of up to $6000 annually for up to ten years on condition that they rent the newly-built homes to households that meet an income test and charge them at 20 per cent below the market rate for the area. The rental tax incentive is offered alongside $2,000 a year in cash or kind from the states and territories, for up to ten years. The Commonwealth Government estimates that the scheme will attract $2.5 billion in private spending on affordable rental housing over five years and help ease rental stress by delivering estimated rental savings of $50 a week for a tenant paying market rent of $250 a week.

Round 1 Outcomes - Summary of Allocations

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Housing Affordability Fund

The goal of the $500 million Housing Affordability Fund is to address the two most significant ‘supply-side’ barriers to the development of new housing:

• the cost of developing new infrastructure such as water, sewerage, transport, and parklands, with local government infrastructure charges ultimately paid by the new home buyer; and
• the ‘holding costs’ associated with planning and approval delays such as interest, land taxes, council rates and staff costs, which are ultimately paid by the new home buyer.

Government entities are eligible to apply through a competitive process to receive grants to cover some of the cost of new housing infrastructure and/or for innovative planning reforms.  In the latter proposals, the Government organisations will have to outline how their proposals will cut red tape and reform the planning processes.  All proposals will need to demonstrate quantifiable savings and the means by which the savings will be passed on to the purchasers of new homes.

The Housing Affordability Fund will target areas that are experiencing high dwelling demand, or likely to experience high dwelling demand over the next five years.  Priority will be given to proposals that make the greatest impact on the supply of entry level or moderately priced housing.

The first round of applications has closed and announcements of successful applicants are expected in the later part of 2008/09.  Round 2 is expected to open following this.
 

Social Housing Growth Fund

On 29 November 2008, the Council of Australian Governments agreed on a significant package of investment for housing, a total commitment of nearly $10 billion in the National Affordable Housing Agreement and its associated National Partnerships.  This includes additional funding towards:

• Homelessness - $800 million over five years; 
• Remote Indigenous Housing - $1.94 billion over 10 years ($834.6 million over five years); and 
• Social Housing - $400 million over two years; 

The Commonwealth and the States have agreed to a National Partnership on Social Housing, commencing 1 January 2009, with the Commonwealth providing $400 million over two years, $200 million in 2008-09 and $200 million in 2009-10, for capital investment for social housing and homelessness, know as the Social Housing Growth Fund.

The aim of the National Partnership is to increase the supply of social housing through new construction, providing approximately 1,600 to 2,100 additional dwellings by 2009-10.  Implementation plans will be finalised by 1 April 2009.  These Plans will include proposals for funding under the Social Housing Growth Fund. 

The states are examining a number of approaches to delivering new housing under the National Partnership including expressions of Interest of the capacity to deliver new dwellings.

Role of the Commonwealth and States and Territories
Under the National Partnership on Social Housing the States and Territories will be responsible for submitting proposals to the Commonwealth on how they may spend proposed Social Housing Growth Funds in accordance with the National Partnership aims. Once the Commonwealth have assessed the States and Territories’ proposals and approved total funding, the States and Territories will be responsible for allocating the approved level of funding to individual projects and overseeing and monitoring projects in their jurisdictions.

Social Housing Stimulus Package

The Nation Building and Jobs Plan was announced on 3 February 2009. The Plan includes $42 billion to support jobs and invest in future long term economic growth.

One of the key measures funded by the Plan is to build more than 20,000 new social housing dwellings and complete maintenance and upgrades to around 2,500 more. The Plan includes $6.4 Billion for Public and Community Housing

Funding will be allocated to State and Territory Governments on a per capita basis through a new Economic Stimulus National Partnership Agreement containing a schedule on social housing subject to the jurisdiction submitting suitable proposals that meet the requirements of the initiative.

Community housing organisations and industry may approach their State and Territory Governments for advice on how to participate in the tender process.

The construction element of the plan will be implemented over three and a half years from 2008-09 to 2011-12 and the maintenance component over 2 years.

The stimulus package is designed to supply at least 20,000 dwellings for rental to low-income households through affordable public or community housing. The actual number of new dwellings will depend on a range of factors, such as their size, type and location and the capacity of States and Territories and the not-for-profit sector to leverage additional funds from other sources.

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