The most significant recent developments have centred around the establishment by the NSW Government of the $1.1 billion Social and Affordable Housing Fund (“SAHF”) in 2015. SAHF is one of Australia’s biggest social housing construction programmes aiming to deliver 27,000 social and affordable homes over 10 years. Most of the homes are to be built on land owned or acquired by non-governmental organisations. The SAHF is a key initiative under the Future Directions for Housing in NSW Strategy which sets out the NSW government’s 10-year vision for social housing.

This followed the earlier establishment by the NSW Government of its Communities Plus programme, the subsequent establishment of the Community Housing Innovation Fund (a government grant programme set up in 2018 with a 3-year time frame targeting 150 new social and affordable dwellings) and the appointment in 2017 of a consortium comprising Mission Australia Housing, Frasers Property Australia and Citta Property Group to redevelop the 8.2 hectare Ivanhoe social housing estate in Macquarie Park in Sydney’s north (as part of the Communities Plus programme). The NSW Government has also transferred the management of some 14,000 social housing dwellings to CHPs in the period 2011 – 2017.

There have been two phases of roll out undertaken by SAHF to date as follows:

• in the first phase launched in 2017, SAHF selected 5 CHPs to deliver 2,200 homes across NSW – the successful CHPs were BaptistCare, Compass Housing Services Co, SGCH Sustainability Limited, St Vincent De Paul and Uniting. The target group for this phase was single parent families with a focus on women affected by domestic violence; and
• in the second phase launched in 2019, SAHF selected another four CHPs to build a further 1,000 homes.  Those selected were Anglicare (500 homes), Housing Plus (220 homes), SGCH Portfolio Limited (260 homes) and Uniting (300 homes).  This phase is targeted at older residents  with homes being built together with services that support them (such as medical services).

The SAHF procures accommodation as a service rather than the government purchasing and owning properties to provide accommodation.  The SAHF has been particularly successful in unlocking large land banks held by churches, other charitable organisations and CHPs.  It has been less successful in attracting private finance into the sector as the services model adopted by SAHF has thrown up a number of challenges for private sector financiers (such as banks). 

One of the bigger challenges has been finding a way to deal with residual land value risk which is not a risk which sits with the sponsors/SPV in a traditional PPP structure. One way of mitigating this risk is for a consortium member (such as a charitable organisation or CHP) to take that risk at the end of the concession so that financiers know that they have an “exit” mechanism available to them at the end of the concession life and do not have to take a view on residual land value risk.  Other challenges include managing extended force majeure risk which impacts the delivery programme, substitution of properties where there is an extended build programme, the mitigation of risk in respect of the cessation of Commonwealth government rental assistance for low income earners and the lack of any protection for financiers in a default situation (i.e. SAHF will not provide any “floor” for recovery of debt by financiers).

The City of Sydney has also sold a number of properties to CHPs at a significant discount to market value for social housing development including sites in Alexandria and Redfern and the former Royal South Sydney Hospital site in Green Square.  These sales have been accompanied by a caveat on the land title to ensure that the land is used in perpetuity for social and affordable housing.

The most significant recent development has been the announcement by Premier Daniel Andrews in November 2020 of a $5.3 billion programme to build 12,000 public and community housing homes over the next 4 years.  In connection with that announcement, the Victorian Government has established Housing Victoria, as the agency responsible for the delivery of the programme. The new agency aims to develop a 10-year strategy that extends beyond the initial 4-year big housing build project. Housing Victoria has been mandated by the government to be an assertive agency that structurally overhauls the approach to affordable housing. It proposes to engage with both the private sector and superannuation funds to use its existing $27 billion social housing asset base and investment potential to drive affordable housing.

Currently, a number of consortia are competing in a Housing Victoria tender worth up to $400 million that will allow commercial build-to-rent housing to be built alongside social housing on public land – the consortia are Plenary Group (with Kane Constructions, build-to-rent operator Assemble, DKO, McBride Ryan and Mission Australia Housing), Cappella Capital (with Watpac and housing provider HCL) and Tetris Capital (with Qualitas, Citta Property Group and housing provider CHL). The tender seeks proposals for the redevelopment of housing on three existing public housing estates in Flemington, Prahran and Brighton.  As at the date of this article, the outcome of the tender is unknown. The tender follows an earlier deal announced in March 2019 with developer MAB and housing provider HousingFirst to redevelop three estates in North Melbourne, Northcote and Preston. 

Under the current tender, the Victorian Government will retain ownership of the land and lease it to the successful consortium under a ground lease – so at the end of the concession, ownership of the land will remain with the state. Removing the purchase cost of the land should make commercial “build-to-rent” more viable even when rental yields are low.  The term of the ground lease is not yet known but the expectation is that it would be similar to a transport infrastructure concession (i.e. around 25 years). Commentators note that the successful consortium will have to develop the capacity to manage the commercial long-term rental housing units, a skill not yet common in Australia.

In December 2019, the SA Government announced a $550 million plan to continue to support housing needs in South Australia.   In terms of key initiatives, the SA Government has committed to invest more than $452 million into new social and affordable housing supply, $75 million to start addressing the public housing capital maintenance backlog to 2030 and to improve sustainability and energy efficiency of public housing, where appropriate and possible and $20 million to support innovative housing trials where there are clear gaps in the system, with the aim of generating further investment through partnerships and to reduce the reliance on emergency accommodation for people in need.

Our Housing Future 2020-2030 is the 10-year plan released by the SA Government to address a better housing future for South Australia.  The strategy sets out the actions required from all partners in the housing sector, including government and non-government, to cooperate to contribute to meeting the level of need highlighted in the findings of the Australian Housing and Urban Research Institute (AHURI) report.  The actions include an increase in the supply of affordable housing (with 20,000 affordable housing outcomes over 10 years) and a range of actions to improve housing pathways and modernise the social housing system and to help existing social housing tenants on moderate incomes to access other housing options (including affordable home ownership) where possible.  Innovative partnerships with the private and not-for-profit sectors are expected to result in a further $220 million construction investment as part of Community Housing Asset and Investment Plans, which are planned to result in more than 1000 homes, of which 720 are forecast to be retained as social and affordable housing. Further, a government-funded $400,000 affordable community housing land tax exemption pilot will offer 100 supported opportunities in the private rental market over five years for eligible social housing customers. The government has also committed an additional $5 million to the Affordable Housing Fund over five years from 2021/22.

The SA Housing Authority manages delivery of the 15% Affordable Housing Policy on behalf of the SA Government – this includes facilitating partnerships between private industry and CHPs to deliver commercially successful developments that include affordable housing.  Renewal SA, the SA Government’s leading urban development agency, also plays a role in the development of affordable housing in that State.

In 2018, the State Budget included $184 million in provisions for the Metronet Social and Affordable Housing and Jobs Package – a major investment in housing, linked directly with the Metronet transport project, to help build liveable and connected communities. The objective was to leverage the existing investment in Metronet by integrating quality affordable housing and community facilities with transport hubs. In partnership with the private sector, the package will use four different work streams to develop eight high-density mixed-tenure projects, create unique compact urban communities on strategic sites close to Metronet stations and develop and redevelop smaller scale sites within 800m of new Metronet or existing heritage line stations.  

In October 2020, the WA Government launched The WA Housing Strategy 2020-2030 (“WA Housing Strategy”) with the aim of connecting 150,000 households to safe, stable and sustainable homes by 2030.  The strategy calls for greater cooperation between different sectors to improve housing choices and access to suitable and affordable homes, particularly for the most vulnerable. The strategy builds on the foundations of the Affordable Housing Strategy 2010-20: Opening Doors to Affordable Housing and the Affordable Housing Action Plan 2017-20 and was also guided by the Ageing with Choice five-year plan to support older Western Australians.  Pursuant to the strategy, three plans are being developed at the moment namely an affordable housing implementation plan, a social housing framework and a regional and remote housing implementation plan.

The WA Housing Strategy commits to a 6% net increase in social homes over the next 10 years (2,600 homes), diversifying the rental sector, continuing to responsibly support home ownership opportunities for people on low to moderate incomes, improving the availability of liveable designed housing, building liveable, inclusive and connected communities that improve social and economic participation, improving outcomes through a more integrated approach to housing and service assistance and creating jobs and contributing to the State’s economy.  The strategy was kicked off by the $444 million Housing Stimulus Package announced in June 2020 which included the  $319 million Social Housing Economic Recovery package (which will refurbish 1,500 homes, build and purchase about 250 new dwellings and deliver a regional maintenance program to 3,800 homes).

Notwithstanding these initiatives, the WA Government has been subject to recent criticism over its lack of action on social housing issues.  The CEO of Shelter WA has also commented that the WA Housing Strategy’s target of a 6% per cent increase of social housing over the next ten years will only deliver around 260 new social homes each year which is insufficient to address the sector’s needs. 

In 2017, the Queensland Government released the Queensland Housing Strategy 2017-2027 which is a 10-year framework driving reforms and targeted investment across the housing continuum.  Pursuant to The Housing Construction Jobs Programme (a key part of the Housing Strategy), the Queensland Government has committed to investing $1.6 billion to deliver more social and affordable housing over the 10-year period covered by the Housing Strategy.

As at July 2020, contracts had been awarded by the government for the commencement of 1,949 new social homes.  The government is also partnering with the community housing sector to increase the supply of community and affordable housing in Queensland, through modern program investment and funding arrangements. To date, 923 new social and affordable dwellings have been approved, supported by over $75 million of government investment.

Interestingly, the Queensland Government is also supporting initiatives in the “build-to-rent” sector as a partial solution to affordable housing supply.  The Queensland Government is currently running a pilot project which will provide a targeted rental subsidy to deliver affordable and market rental housing within “build-to-rent” developments in Brisbane.  The pilot project will initially target delivery of developments on privately owned land at the cost and risk of the successful proponent. Two projects have been approved to date - one by Frasers Property in Fortitude Valley and the other by Mirvac in Newstead - and in each case, the land is owned by the developer rather than the State. These projects together will deliver 750 apartments with up to 240 affordable dwellings to be provided at a discounted rental rate (i.e. there will be a government rental subsidy). 

In addition, there are two new EOI processes currently underway by the Queensland Government:

• the first is for the proponent to deliver a “build-to-rent” development with an affordable housing component on a State-owned site of the former Children’s’ Court in Brisbane and maintain that development thereafter (submissions were due by 9 April 2021); and
• the second is for the proponent to deliver a “build-to-rent” development with an affordable housing component on a privately-owned Brisbane site and maintain that development thereafter (submissions are due by 7 May 2021).

The Department of Communities in Tasmania is responsible for administering a number of programmes and agencies including:

• a Supported Accommodation Programme;
• an Affordable Housing Strategy;
• a Community Housing program (provided through CHPs);
• the Housing Connect service;
• the HomeShare and Streets Ahead programs (which provide assistance to low or moderate income earners to purchase a home); and
• Housing Tasmania (which provides housing assistance for Tasmanians with low incomes and special needs).

Tasmania's Affordable Housing Strategy 2015-2025 was developed to improve affordable housing.  It provides direction and a framework for action and investment over its 10-year timeframe. Specific actions and initiatives were set out in the Affordable Housing Action Plan 2015 – 2019 (Action Plan 1) and the second stage the Affordable Housing Action Plan 2019- 2023 (Action Plan 2). A third action plan is to be developed for the final years of the Strategy. 

Action Plan 1, released under the Strategy, was supported with an investment of $73.5 million to deliver new supply of affordable housing and assistance. This plan was due for completion in June 2019 and was on track to assist 1600 households, including new supply of 941 affordable lots and homes.  In developing Action Plan 2, stakeholders agreed that whilst market conditions had changed significantly, the broad three key drivers of the Strategy remain relevant.  The second stage of the Strategy had a commitment of an additional $125 million over five years, taking the total investment in affordable housing to nearly $200 million over 8 years.  This would result in a total of 3600 households assisted under both Action Plans, including the new supply of 2400 affordable lots and homes.

The Northern Territory (“NT”) has 12 times the national average of homelessness - 6% of all people in the NT are homeless and 16.5% of Territorians under the age of 18 are homeless.

The NT Government operates a number of housing schemes including the following:

• Affordable Housing Scheme: Persons who work in one of the NT’s key service industries and are seeking housing to rent may be eligible to apply to rent an Affordable Housing Scheme dwelling. Under that scheme, the NT Government head leases dwellings from the private sector to provide more affordable housing options around the NT - these are then subleased to eligible low to middle income earning tenants.
• Low Income Public Housing: Persons on low incomes can apply for public housing - public housing comprises units and houses owned and managed by the government.  The waitlist for public housing is lengthy and can be as long as 6-8 years.

The NT Government has also committed to improve housing in remote communities with its Our Community. Our Future. Our Homes Remote Housing Investment Package of $1.1 billion to be provided over the period 2016/2017 – 2026/2027.  This package is focused on local decision making, engagement and planning with communities to identify their housing needs – it has a particular focus on ensuring residents have input into what housing looks like in their local community and that work is carried out in a manner which supports sustainable local employment and training and helps develop Aboriginal businesses and economic development. Funded is provided through 4 programs including $500 million over 10 years for the construction of new public housing; $200 million over 10 years to increase living space in existing homes; $200 million over 10 years for repairs and maintenance and $200 million over 10 years to expand Government Employee Housing to include locally recruited NT Government employees in remote areas.

The ACT Housing Strategy published in 2018 by the ACT Government provides a roadmap for housing in the ACT over the 10 years to 2028.  The strategy builds on the 2007 Affordable Housing Action Plan, what the ACT Government learnt  through its conversation with the ACT community in 2017 (including the Housing and Homelessness Summit), an analysis of the issues by housing industry and community leaders, and research and analysis relevant to the housing sector.

The city of Canberra faces a number of challenges – it is growing towards 500,000 residents by 2030, putting pressure on land availability, infrastructure and public open space. Based on this growth projection, an estimated 3000 new homes will be required each year at a time when the city’s urban footprint becomes more constrained. In addition, high wages and low unemployment have put pressure on the existing housing stock. Low income households have been crowded out of the private housing market and the demand for social housing and homelessness support is increasing.

Of particular note in regard to the Strategy are:

• the ACT Government’s commitment to dedicating 15% of its annual Indicative Land Release Program (an indicative 2,550 dwellings) to growing the supply of public, community and affordable home purchase homes. This also includes the setting of an annual community housing target to provide additional affordable rental properties managed by registered CHPs.  Equally, it will look to increase the supply of affordable and social housing on privately leased land through incentives and, where appropriate, by use of planning controls.;
• a focus on the role of the private sector in supplying affordable rental properties. The Strategy considers possible financial and planning incentives and plans to release a site for private investment specifically in affordable rental accommodation; and
• whilst a shared equity program is run for public housing tenants through Housing ACT, shared equity is not available within the affordable housing market. The Strategy proposes piloting a shared equity initiative in partnership with a CHP and investigating the feasibility of, and a possible program design for implementing, a broader ranging shared equity (or “rent-to-buy”) scheme in the ACT.