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The Affordable and Social Housing vSummit brought together a wealth of experience to discuss affordable and social housing in Australia.
The vSummit featured speakers from on the ground providers to funders and researchers, as well as presentations from those in the sectors in the United Kingdom, USA and New Zealand.
National law firm McCullough Robertson partner Kristan Conlon joined to discuss community housing providers, and the projects and policies that deliver social housing outcomes.
To subscribe to the McCullough Robertson legal updates, including affordable housing, click here.
“Social” and “affordable” housing are two distinct concepts along a continuum that broadly spans from homelessness to market home ownership.
Social housing typically involves a rent determined by reference to the resident’s income and is allocated based on priority waiting lists, while affordable housing is typically determined at a discount to market rate (usually up to 74.9 per cent of market rate) and is often driven through planning mechanisms.
“Affordable” housing should not be confused with “housing affordability”, the latter describing the affordability of either the purchase or rental market more broadly.
Both social and affordable housing provides a range of community benefits including a reduction in the prevalence of homelessness and domestic violence, improved economic participation—including through greater stability in employment, construction and education—and community wellbeing and participation.
Australia has throughout history experienced shortages of availability in social and affordable housing products compared to the market demand, with various measures being introduced at times, particularly following major economic events—such as wars and recessions—aimed at stimulating growth.
More recently, between 1996 and 2011, and despite a concerted effort to increase supply, AHURI research showed demand continuing to outstrip the total number of available affordable and social housing stock.
This research indicated that some 727,000 new social housing dwellings would be required within 20 years—an annual average growth of 5.5 per cent above the existing stock.
One factor in the complexity of designing any response is the complex shared funding and regulatory role of varying levels of government, from federal to local.
While programs such as the National Rental Affordability Scheme (NRAS) and Social Housing Initiative have introduced some 20,000 properties, the deficit remains and the problem continues to grow, particularly as NRAS ends.
There is, however, continued interest and a number of more recent initiatives aimed at promoting further growth in the area, including:
The NSW Social and Affordable Housing Fund ;
The Social Housing Acceleration and Renovation Program ;
Western Australia’s Social Housing Economic Recovery Package ;
The Affordable Housing Bond Aggregator through the National Housing Finance and Investment Corporation (NHFIC) .
The Covid-19 pandemic has added additional stress to these already stretched sectors, as well as novel and complex challenges to address. As a result of the pandemic, there has already been an increase in unemployed and underemployed people, who are likely to be added to the demand side of the equation in the coming months or years.
Even the way in which housing is being used has been altered by the Covid-19 pandemic, with working from home increasing dramatically (and expected to stay at higher levels than pre-pandemic), reinforcing the need for housing solutions.
Over recent history, we have also seen a global shift away from homogenous "social housing blocks" towards mixed communities compromising a blend of social housing, affordable housing and market rate housing, which is reflected in the Australian approach.
This is now recognised as the leading approach, both for providing a vibrant and engaged community as well as allowing for viable yields on developments.
Along with the broader community, there are broadly four key players in the social and affordable housing market—government, funders, developers and community housing providers.
Each of these play a vital role in either funding, regulating, developing or operating the sectors and many have multifaceted responsibilities that touch on all of those areas.
Unsurprisingly, all levels of government remain key to the successful delivery of social and affordable housing, primarily through subsidies and regulation.
While those operating in the social housing and affordable housing sectors continue to look at new and innovative ways to reduce risk in projects and achieve commercially viable outcomes, it is unlikely we will see a model that can be sustained without government subsidy, at least in the medium term.
Subsidies can include a variety of approaches, from direct contributions to tax and planning incentives, and bond guarantees.
Another emerging key player in the sectors is funders, financiers and investors, who can help bridge the funding gap between the income generated by the housing stock and the level of funding required for development and deployment of the stock.
In the current low interest market, investors are increasingly interested in lower but stable and long-term returns that are achievable through social and affordable housing investments, together with the social benefit such investment brings.
This can be further encouraged by the introduction of medium to long-term strategy and direction in the sectors, leading to greater certainty and understanding for investors.
However, changes to foreign investment in recent years, including additional fees, duties and taxes, could have a dampening effect on what may otherwise be an important source of investment.
Developers and builders of course remain key players in the market, bringing new stock into the sectors, either through new developments, refurbishments or a combination.
The final key players within the sectors are the providers who ultimately make these communities and developments successful by introducing and managing residents and maintaining the community.
As the sectors have matured over recent years, there has been an increasing opportunity for community housing providers to expand into new and creative areas to diversify their portfolio and meet continuing challenges.
Partnerships between stakeholders, including public-private partnership models, have continued to offer success in these sectors, and offered opportunities for sharing of expertise and management of risks that may otherwise prevent projects from proceeding. Examples include:
The government guaranteed Affordable Housing Bond Aggregator through the National Housing Finance and Investment Corporation ;
Joint ventures between government and developers allowing for development of land, such as through a staged project or with residual stock guarantees;
partnerships between developers, CHPs and government to deliver high quality communities .
Meeting the demand for social and affordable housing is a global issue, and there are many opportunities for Australia to learn from other regions, including great success stories coming from the UK, Switzerland, New Zealand and the United States, among many others.
While the laws, customs and history will inform and guide each country, these can offer insights into potential innovations in Australia. Some examples highlighted in the vSummit included:
New Zealand implementing Maori focused Iwi-led projects, with design focusing on Maori traditional community living and utilising land trust arrangements to remove land cost while preserving benefit ;
Co-operative housing models in Switzerland, involving significant community ownership and involvement, with architecture competitions leading to innovative and high quality designs ;
Closer to the Australian model, successful mixed community developments in both the UK and US, elevating the standard of living across the social, affordable and private market ;
Build-to-rent models across various countries, particularly the UK, which are coming into the Australian market.
In each instance, strong co-operation between the various participants remains key to the successful implementation of social and affordable housing projects.
The Urban Developer vSummit highlighted the passionate and innovative work occurring across the social housing and affordable housing sectors.
However, in order to meet the ever growing demand, it will be important that:
Broad and longer-term plans for the sectors be developed and adopted, to provide greater certainty and clarity in order to encourage participation ;
Governments (federal, state and local) continue to work towards removing barriers to viable projects, including through harmonisation of regulation and ensuring subsidies are available ;
Co-ordination and partnerships between the key players continue, in order to deliver high-quality housing outcomes.
The social and affordable housing markets are at a critical juncture, and together, the sectors can make a significant difference to the lives of many Australians.
McCullough Robertson is a leading independent law firm that offers full-service legal solutions for developers and affordable housing providers.
Kristan Conlon is a partner of McCullough Robertson. Kristan is a real estate lawyer with a corporate background who uses this combined experience to advise on the structuring, development, leasing, acquisition and disposal of all asset classes and tenures.
Emile McPhee is a senior associate of McCullough Robertson. With seven years in the property and finance space and previous private client structuring experience. His skills across these areas and understanding of commercial drivers present a holistic offering for his clients.
The Urban Developer is proud to partner with McCullough Robertson Lawyers to deliver this article to you. In doing so, we can continue to publish our free daily news, information, insights and opinion to you, our valued readers.
