Our Vision - CHIA Vic...found that suburbs more than 20 kilometres from Melbourne’s CBD have...

This is the Community Housing Industry Association Victoria’s (CHIA Vic) evidence-based plan to address the state’s critical housing shortage.

Without swift action to increase supply, housing unaffordability and homelessness will only worsen.

The state’s not-for-profit community housing organisations are accountable, efficient and effective custodians of public and private investment and are ready and willing to play a key role in ensuring every Victorian can afford secure and appropriate housing.

A Victoria where everyone can afford secure and appropriate housing

Our Vision

About the Community Housing Industry Association Victoria CHIA Vic (formerly the Community Housing Federation of Victoria) is the state peak body for the not-for-profit community housing sector, which provides secure, affordable and appropriate housing for people on low to middle incomes. CHIA Vic works to support the growth of community housing as the most effective and efficient means of ensuring more disadvantaged Victorians can enjoy the dignity of safe, secure and appropriate housing. CHIA Vic’s member organisations manage more than 19,000 rental properties, including about 9,000 that they own.

Contents

Victoria is facing a growing affordable housing crisis. ................................................................. 1

The solution is challenging, but clear .......................................................................................... 4 CHIA Vic’s analysis of demand ................................................................................................................ 5 A plan for Victoria’s housing future starts with a target ........................................................................ 6

Community Housing’s Key Role ................................................................................................... 7 Regulated and accountable .................................................................................................................... 7 Blending funding from a range of sources .............................................................................................. 7 Surpluses reinvested in more and better affordable housing ................................................................ 8 Creating inclusive communities .............................................................................................................. 8 Working in partnership to get people housed and keep them housed .................................................. 8

Action steps to achieve this ...................................................................................................... 10 Strategy 1: Adopting a strategic commissioning framework with clear growth targets ...................... 11 Strategy 2: Introducing Affordable Housing Supply Programs ............................................................. 12 Strategy 3: Increasing the ratio of community housing as a proportion of social housing .................. 13 Strategy 4: Developing alternative affordable housing finance mechanisms ...................................... 16 Strategy 5: Including targets of 10 to 30 per cent of affordable housing in new developments ......... 18 Strategy 6: Consolidating State Government responsibilities for housing under one department ..... 19 Strategy 7: Supporting alternative tenure models such as shared equity schemes ............................. 20 Strategy 8: Reforming planning to remove barriers to the development of affordable housing ........ 22 Strategy 9: Strengthening the regulatory system for public and community housing ......................... 25 Strategy 10: Developing a housing framework to meet needs of Victoria’s Aboriginal community ... 26

References ................................................................................................................................ 28

Our vision: A Victoria where everyone can afford secure and appropriate housing.

1

Victoria is facing a growing affordable housing crisis. Victoria’s affordable housing system is in crisis as a result of decades of underinvestment and a squeezed private rental sector. Without urgent attention from all levels of government, a lack of affordable housing will hold Victoria back. Doing nothing is not an option — this crisis will only get worse as Victoria’s population booms. The public housing safety net cannot even meet a fraction a demand, with long wait times deterring many from even lodging an application.

• There are over 42,000 households on the Victorian Housing Register who have applied for social housing (public and community housing). This includes over 13,000 priority households who are on very low incomes and have an urgent housing need.1

• At least 10,000 public housing properties have reached the end of their useful life and need total replacement.2

• Public housing stock is not aligned to demand; while 80 per cent of social housing applicants need a one or two-bedroom property, there are more three-bedroom dwellings than any other configuration.3

More Victorians than ever are homeless —22,000 people were homeless on the night of the 2011 Census4 — contributing to the increase in demand for housing and homelessness assistance. Services are unable to cope with an average of 100 requests for assistance each day.5 New government homelessness, disability, mental health and family violence initiatives will be of limited effectiveness without suitable, decent and affordable housing. The National Disability Insurance Authority (NDIA) estimates that between 83,000 and 122,000 National Disability Insurance Scheme participants in Australia have an unmet need for affordable housing.6 The Royal Commission into Family Violence recommended a housing ‘blitz’ to address blockages in the housing system that prevent women and families from leaving refuges and crisis accommodation, further compounding the trauma of family violence.7 The private rental market, which provides housing to 25 per cent of Victorians, is under increasing pressure as rates of home ownership decline.8 This means that just finding an available rental is getting harder, with new private rental lettings dropping by almost 6 per cent over the last 12 months.9 A tight private rental market drives low-income Victorians away from centres of employment and contributes to increasing levels of housing stress in our community. Jobseekers who want to live near possible work find themselves priced out of key housing markets and the employment opportunities on offer in inner-city areas, owing to insecure


2

and unaffordable private market housing. Recent research by the Grattan Institute has found that suburbs more than 20 kilometres from Melbourne’s CBD have access to fewer than three jobs nearby for every 10 residents, while those close to the city centre have access to nine jobs for every 10 residents.10 A lack of affordable housing is such a significant issue that Infrastructure Victoria nominated investing in increasing supply of social housing and other forms of affordable housing for vulnerable Victorians as one of the top three short-to-medium-term priority areas for action in its 30-year Infrastructure Strategy. This independent agency argued that provision of affordable housing was essential to:

• prepare for population change • foster healthy, safe and inclusive communities • reduce disadvantage • enable workforce participation.11

What do we mean by affordable housing? ‘Affordable’ housing is appropriate and available for the range of low to moderate-income households (defined as households earning up to 120 per cent of the median household income) to rent or purchase at approximately no more than 30 per cent of gross household income. ‘Appropriate’ housing refers to dwellings that: • are appropriate for that household in terms of size, quality, accessibility and location • are integrated within a reasonably diverse local community • do not incur unreasonable maintenance, utilities and transport costs • provide security of tenure and cost for a reasonable period. ‘Affordable’ housing is an umbrella term for options that can relieve households from housing stress, including: • social housing – public housing and community housing provided by non-profit

community housing organisations, which is targeted at the households who are most disadvantaged in the housing market

• affordable rental housing – housing that is provided at a subsidised rent to market by non-profit community housing organisations or the private market

• subsidised home ownership products – such as shared equity or rent-to-buy schemes. Investing in new affordable housing makes both social and economic sense.

• Housing stress can exacerbate family violence; cause health problems through a lack of nutritional food, heating/cooling and medical attention; and, lead to relationship breakdown — all of which make it more difficult to maintain housing, employment, education and household stability.


3

• The cost to the community of homelessness — in terms of its impact on the health, justice and social services systems — is significant, and may outweigh the costs of providing affordable housing.

• With an ageing population, a lack of stable affordable housing into retirement is forecast to cost governments.

• The residential construction boom appears to be tapering following a tightening of lending conditions for investors and overseas purchasers, so now is a perfect time to stimulate the economy through the construction of affordable housing.

• Fixing affordable housing will support a stable healthy workforce that can access key employment clusters, making Victoria more economically competitive and reducing the need to construct expensive transport infrastructure.

The benefits to the broader community of the increased economic activity and new jobs created by building more affordable housing are clear. The Rudd Government’s stimulus package to support the Australian economy through the Global Financial Crisis included a Social Housing Initiative, which saw more than 19,700 new dwellings constructed and an extra 12,000 dwellings made habitable. An evaluation found the economic benefits and employment outcomes were impressive: • for every $1 of construction activity, an additional 30 cents was generated in the

community • an additional 14,000 jobs were generated, with 9,000 being in the construction

industry.12 The Victorian Government understands the value of such programs as evidenced by the level crossing removal program and upgrades to Victorian schools and the economic modelling of Homes for Victorians, which indicates that these initiatives will contribute ‘more than $3.7 billion in net present value to Victoria’s economy’ and ‘around 50,000 construction sector jobs over the next four years’.13 What is housing stress? Households in the bottom 40 per cent of Australian income distribution with housing costs that exceed 30 per cent of income are defined as being in housing stress, according to the most widely-used indicator of housing stress - the ‘30:40’ rule.14


4

The solution is challenging, but clear The shortfall of affordable housing in Victoria is the result of decades of underinvestment. Between 1962 and 1995, Victoria added 36,000 social housing dwellings at a rate of 1,100 additional social homes per year.15 By 1995, there were about 70,000 social housing units. However, over the last two decades, the rate of growth has been less than half of that and currently Victoria has about 83,500 social housing dwellings made up of:

• 65,000 public housing dwellings (housing 127,000 tenants) • Over 19,000 rental units owned or managed by community housing organisations.

Community housing organisations are not-for-profit organisations that are established to provide affordable housing to

people on low or moderate incomes have a total asset value of $2.7 billion in Victoria, an annual operating revenue of

over $250 million (most of which is rent paid by tenants) are diverse providers, from large scale statewide housing through to smaller or

specialist providers that focus on particular communities receive over $129 million in rent annually and leverage finance of over $300

million.16 Victoria has a low proportion of social housing compared to other countries. Despite being a leader in affordable housing provision in the past, Victoria currently has the lowest proportion of social housing in Australia at just 3.5 per cent of total housing. By contrast, NSW has 5 per cent, Queensland 3.7 per cent and South Australia 6.3 per cent. There are various ways in which we can estimate the amount of new affordable housing that is required to meet demand. Infrastructure Victoria, in its 30-year strategy, estimated that there are between 75,000 and 100,000 vulnerable, low-income households that are not having their housing requirements appropriately met.17 It also noted that 120,000 Victorian households in receipt of Commonwealth Rent Assistance are experiencing housing stress, of which 50,000 are in the very lowest income bracket.18 The government agency was unable to ‘nominate a figure with full confidence’ but provided an estimated target of 30,000 new affordable dwellings within 0-10 years to begin to meet the demand for affordable housing.19


5

CHIA Vic’s analysis of demand To better understand the need for affordable housing, CHIA Vic commissioned research by Swinburne University. This research identified around 76,000 households eligible to register for social housing under the Victorian Housing Register (VHR) who are paying 30 per cent or more of their income on rent, and are therefore in housing stress. Of these, over 40,000 households are on very low incomes — that is, they would meet income eligibility for priority housing under the VHR. These are households that would ideally be able to access social housing to meet their housing needs and alleviate housing stress. To predict future needs, the research estimated that:

• by 2031, 101,592 households would be eligible to register for social housing • by 2051, this number would rise to 138,349 households.

Finally, the research looked at the cohort that would benefit from an affordable rental housing program similar to the National Rental Affordability Scheme (NRAS). NRAS provides rental housing to low and moderate income households at a discount of at least 20 per cent of market rent. This is an indicator of the underlying demand for an affordable rental housing program. Unmet need for social housing in Victoria in 2016, 2031 and 2051 Affordable Housing Category 2016 2031 2051 Victorian Housing Register (VHR) eligible 76,043 101,592 138,349

VHR Priority Housing eligible 40,318 53,105 71,120 National Rental Affordability Scheme (NRAS) eligible and affordable 35,279 46,540 62,181

Additional stock @ 3.5% stock 0 30,800 66,203 The Swinburne University estimates show that:

• Over 6,000 additional dwellings per year are required to meet the unmet housing need of 101,592 households eligible to register for social housing by 2031.

• Over 3,000 additional dwellings per year are required to meet the needs of 53,105 households eligible for priority housing by 2031.


6

A plan for Victoria’s housing future starts with a target While recent state and federal housing initiatives are a good start, governments should adopt a target for new affordable housing to drive a concerted partnership with community housing organisations to ensure that affordable housing supply keeps up with demand. All stakeholders should commit to the following targets to be achieved by 2051: 3,000 new social housing dwellings per year

3,000 new affordable rental dwellings per year

To meet Victoria’s level of social housing need (given Victoria’s current projected population growth).

To create a vibrant affordable rental housing system that will act as a bridge between social housing and the private rental market.

Social housing rent based on a proportion (no more than 30 per cent) of household income to ensure that it is affordable for the most disadvantaged.

Affordable rental housing to be targeted at low to moderate income households in rental stress. Rent in affordable rental housing based on either household income or a discount to market rent.

The new dwellings split evenly between public and community housing and be allocated predominantly to those households who have established a priority need under the VHR.

The new units to be owned by community housing organisations or private investors, with community housing organisations potentially having a management role.

Analysis carried out by CHIA Vic has estimated the level of annual public subsidy required to build, maintain and manage social housing and affordable rental housing over an estimated 25-year lifespan.

• between $17,500 and $22,500 per annum for social housing • about $11,000 per annum for affordable rental housing.

Traditionally, government has provided community housing organisations who are managing social housing with subsidies in the form of various grant funding programs, or by providing transfers of government-owned social housing stock.20 These subsidies may be more efficiently provided as a recurrent payment for delivering outcomes, similar to NRAS. The level of subsidy required could be driven down by competitive tension between community housing organisations and the application of complementary initiatives and efficient forms of private investment.


7

Community Housing’s Key Role Community housing organisations have grown rapidly in the past three decades to become a significant new industry in both scale and scope. The Victorian Government has led the way in supporting the development of a diverse and capable community housing industry that it works with in partnership to deliver quality affordable housing to meet the needs of a range of people facing housing stress. Community housing organisations stand ready to take up the challenge of increasing affordable housing supply and there are several benefits to tapping into this industry to tackle the current housing crisis. Regulated and accountable A dedicated regulatory system for community housing, established under the Housing Act protects government investment for future generations and safeguards the rights of tenants. If a community housing organisation fails to meet the standards set by regulation, the independent Housing Registrar can take control of the organisation to safeguard public investment and the homes in which tenants live. Where a property is owned by a regulated community housing organisation with government funding, an interest recorded on the title prevents it from being sold or used as security without the consent of government. Regulation ensures community housing is more transparent and accountable than public housing in its delivery of housing assistance and management of housing assets. Unlike public housing, data on the performance of the community housing sector in Victoria is publicly accessible. In 2015/16, the data shows:

• community housing organisations are efficient managers – with rental arrears making up just 1.4 per cent of the housing portfolio

• 87 per cent of complaints by tenants and prospective tenants are resolved within 30 days

• 91 per cent of urgent repairs are completed within 24 hours; 89 per cent of non-urgent repairs are completed within 14 days

• 87 per cent of tenants are satisfied with the services their landlord provides them.21 Blending funding from a range of sources Community housing organisations have the ability to quickly and effectively access a range of funding sources, including:

• pro bono, philanthropic and corporate


8

• taxation concessions (e.g. GST and stamp duty concessions) • Commonwealth Rent Assistance (CRA) through eligible tenants (not available in

public housing). This adds value to affordable housing development over and above what can be provided through public housing and the private market. Surpluses reinvested in more and better affordable housing Partnering with not-for-profit community housing organisations rather than the private sector keeps public investment in safe financial hands and preserves this investment for future generations of Victorians. Surpluses generated from the sound management of affordable housing, or through property development, provide a sound basis for further expansion within a strong and transparent regulatory framework. Returns from property development are reinvested in growing affordable housing rather than as profits returning to investors in private partnerships and developments. Creating inclusive communities The community housing sector contributes to building robust, resilient and inclusive communities, recognising that supports, community integration, and social and economic participation are critical to sustaining successful tenancies. The community housing sector is well placed to facilitate community building, given its track record in this area and long-term commitment to communities. Community housing can be nimble, flexible and responsive. It is innovative and has the capacity to utilise best practice co-design principles to ensure that housing is responsive to a variety of tenant needs. The industry is experienced at providing housing that meets the needs of people who are not well catered to by the private sector, building accessible properties for people with disabilities, and secure and appropriate housing for women and children escaping family violence. Working in partnership to get people housed and keep them housed Community housing organisations are experienced at working with a range of partners to ensure tenancies are coupled with appropriate community-based supports to ensure tenants can sustain their obligations and use the housing provided as a platform for achieving their goals. Regular tenant surveys show community housing achieves high rates of tenant satisfaction. Some community housing organisations have developed social enterprises employing tenants in unskilled and semi-skilled roles to provide maintenance for their own


9

organisation and others. These enterprises allow tenants to gain new skills and provide a pathway to employment opportunities. This strategy could also see community housing organisations expanding employment opportunities for tenants through:

• employment programs in partnerships with contractors providing services to the site (for example, maintenance and cleaning contractors)

• apprenticeships and traineeships with the construction contractors. Creating mixed communities The Ministerial Advisory Committee’s Plan Melbourne 2015 Review stated that diversity of housing is important not only in meeting the needs of different household types, but also for social inclusion and quality of life, community integration and social cohesion, and facilitating greater workforce participation.22 There are also economic benefits. The KPMG evaluation of Social Housing Investment found that: The mix of tenants is critical for ensuring robust cash flows…the requirement to use the shared wait list, and to take high priority clients from that wait list, reduced CHPs’ [Community Housing Providers] ability to mix and match tenants to types of housing and locations. It also constrains rental cash flows, as these tenants typically pay lower rents….The other issue highlighted was that a diverse social mix makes for a more liveable and enjoyable community. It also works against concentrations of disadvantage, which in turn may help to break the cycle of disadvantage in certain locations.23 Diversity of housing stock to meet household and life cycle needs is critical in meeting the demand for social housing and affordable rental housing. Community housing organisations have demonstrated that social and affordable rental housing works best for tenants and communities when it looks and feels the same as other forms of housing. Quality construction that makes the community housing units indistinguishable from other forms of housing in the community is also critical to spatial and community integration.


10

Action steps to achieve this All levels of government, the community and private sectors must work together to increase the diversity and supply of social and affordable housing in Australia and Victoria. On a state level, the Victorian Government is to be commended on its housing affordability strategy, Homes for Victorians.24 Recognising that there are housing affordability pressures across the housing continuum, Homes for Victorians represents perhaps the most comprehensive housing affordability strategy at a state level in over a decade. Initiatives in the strategy seek to make first home purchases more affordable, speed up the supply of new dwellings, reduce stress in the private rental sector and deliver new social and affordable housing. This includes stamp duty concessions, new land releases, shared equity home purchase schemes, reforms to the planning system and rental laws and more support for people at risk of homelessness. Homes for Victorians has a range of strategies to increase and renew affordable housing in Victoria including: • A $1 billion Social Housing Growth Fund, that is invested and produces an annual

funding stream (estimated $70m p.a.) as both capital for new social and affordable housing on non-government land and rental subsidies for properties leased on the private market.

• Up to $1 billion available as a loan guarantee program, to help housing associations access finance at affordable interest rates.

• A $100 million revolving loan facility providing low-cost, long-term subordinate loans to housing associations.

• Management transfer of 4,000 public housing properties plus $3 million in establishment grants to build the capacity of the community housing industry, with transferring tenants not to be disadvantaged in terms of rent.

• A framework for including social and affordable housing in major new housing developments in return for planning bonuses, including a legal definition of social and affordable housing.

The Victorian Government has also introduced the Victorian Housing Register (VHR) to be a single point of entry into the social housing system. Under Homes for Victorians, community housing organisations will be required to fill 75 per cent of their social housing vacancies with priority applicants from the VHR.25 However, a problem of this scale requires all levels of government, the community and private sector to work together. There is no one strategy that can bring about the level of investment required to deliver the affordable housing target. Rather, a clever combination of a range of complementary strategies, including utilising the potential of the community housing industry, will be required to ensure this target is achieved.


11

Strategy 1: Adopting a strategic commissioning framework with clear growth targets In addition to setting the right framework for investment in affordable housing, government and the industry must utilise effective commissioning to make sure funds are put to optimum use. With this in mind, CHIA Vic engaged SGS Economics and Planning to recommend a strategic commissioning approach for Victoria26. Strategic commissioning ‘is a means to deliver efficient, effective services and to increase competition and innovation’, and usually follows the ‘plan-do-check-act cycle’. A review of social housing systems in countries similar to Australia, with small social housing systems that had multiple public, private and not-for-profit providers, informed the SGS report, which also consulted key stakeholders in the sector, before developing a gaps and opportunities analysis. Whilst SGS’s final report recognised that the State Government has made real progress through Homes for Victorians, and has plans for more rigorous demand and supply models, it was able to make seven priority recommendations for the government on how to implement an integrated, strategic commissioning system in Victoria:

1. Allocate ministerial responsibility for social and affordable housing, recognising the interrelations between housing segments and the current fragmented delivery of social and affordable housing across government (see Strategy 6 for further details).

2. Develop an integrated strategy, including vision, outcomes, targets and priorities, with a key focus on the growth of social and affordable housing, and local contributions towards overall targets, based on evidence-based housing needs assessments.

3. Develop adequate funding mechanisms to deliver social and affordable housing targets and priorities.

4. Co-design and deliver adequate financing mechanisms with the community housing sector to substantially grow investment.

5. Develop and confirm a range of delivery mechanisms across government to ensure the delivery of social and affordable housing in line with targets.

6. Develop clear and supported procurement processes, guidelines and liaison capabilities.

7. Develop clear outcome statements and performance indicators to monitor and track delivery against the targets.

The report presents a broad conceptual framework that can be used as a basis for further consultation, discussion and refinement of a strategic commission strategy that can provide all Victorians with value for money.


12

Strategy 2: Introducing an Affordable Housing Supply Program: a long-term social and affordable rental supply program, with a mix of capital and up-front subsidies The introduction of the Affordable Housing Supply Program would substantially contribute to meeting the actual demand for both social housing and affordable rental housing. Through the Affordable Housing Supply Program, the community housing sector can help the Victorian Government to effectively address the current and future demand for affordable housing. This builds on the Social Housing Growth Fund announced in Homes for Victorians, which is an important first step in creating a stable, predictable funding stream to support new affordable housing in partnership with community housing organisations. Financial support for new social housing and new affordable rental housing would generally take the provision from recurrent subsidies to support the low net rental streams. Up-front grants may be more appropriate for smaller providers targeting particular communities or cohorts disadvantaged in the housing market. Subsidies under the supply program can also be adjusted depending on the needs of the target group and their ability to contribute to the costs of their own housing via rent. In this way, a supply program can reduce the further disadvantage faced by those where the subsidy gap is the greatest – particularly singles and young people – where the capacity to pay rent is the lowest. The level of subsidy required can be reduced if combined with the other strategies in a complementary way. The Council on Federal Financial Relations’ Affordable Housing Working Group recognised the necessity of bridging this funding gap, finding that:

Creating and maintaining a rental housing portfolio targeted to people on very low to low incomes requires explicit ongoing subsidies to bridge the gap between operating costs (including debt servicing) and rental incomes. This is a feature of overseas models and is confirmed by research and evidence from actual projects in Australia. The size of this gap increases along the housing continuum, where a lower income profile and increased complexity of need requires more support from governments…27

The Affordable Housing Working Group recognised that this ‘funding gap’ exists even when efficient private finance is provided, which lowers the cost of debt finance to community housing organisations (see Strategy 4).


13

Strategy 3: Increasing the ratio of community housing as a proportion of social housing to at least 35 per cent by 2022, via the transfer of public housing to the sector, in line with the 2009 Housing Minister’s agreed target. In 2009, Australian Housing Ministers set an agreed target of expanding the role of community housing to manage up to 35 per cent of social housing stock by 2014, ‘as a key component of an integrated social housing system’, reflecting the view that ‘the community housing sector represents a responsive and client focussed approach to social and affordable housing provision’.28 AHURI has argued in recent research that Australian governments have been interested in stock transfer:

…motivated by the increasingly financially stressed and physically run-down condition of public housing, and by the perceived benefits of ‘contestability’ arising from a multi-provider social housing system…29

Community housing currently comprises about 20 per cent of social housing stock in Victoria. The Victorian Government understands the benefits of increasing the capacity of the community housing sector in this way, recognising that:

Community housing agencies … are able to provide flexible housing management and can tailor their services to work with the needs of individual tenants and neighbourhoods. We can build on these strengths by creating economies of scale if these agencies are managing a larger group of homes.30

Under Homes for Victorians, the State Government plans to transfer the long-term management of 4,000 public housing dwellings to community housing organisations to ‘provide the community housing sector with the certainty needed to deliver services to the tenants who need it most, and use the additional revenue stream for the creation of more social housing’, supported by one-off funding of $3 million.31 Increasing the number of transferred dwellings to 35 per cent would help Victoria to achieve the target by 2022, providing government with a viable method of better managing affordable housing provision through the not-for-profit sector rather than the private sector. Other states are using stock transfer to move towards a greater role for community housing as a critical mechanism to increase the quantity and quality of social housing. This includes:

State and Program Timeframe No. units

Tasmania: Better Housing Futures

Started in 2014, 10-year project

3,900 (in 4 parcels)

SA: Better Places, Stronger Communities

SA: Renewing Our Streets and

Started in 2015, 3 + then 20-year leases

Started in mid-2017, 20-

1,080 (in 2 parcels)


14

Suburbs year leases 4,000 (in 7 parcels)

NSW: Future Directions for Social Housing in NSW

Started in mid-2017, three-years to complete the transfers

14,000

AHURI modelled the impact of transferring 1,000 social housing dwellings to a community housing organisation over 30 years. It showed:

• If properties remain in the public sector there will be a $30 million deficit after 30 years. This is the amount needed to fund backlog maintenance.

• If transferred to community housing, the portfolio will have a $40 million surplus after 30 years, after all backlog maintenance has been cleared.

• In the community housing transfer scenario, surpluses could be reinvested to produce 113 new social homes (of which a net 42 would be additional).

• If government supported a specialist finance intermediary to lower the cost of borrowing by 2 per cent and provided free land, leveraging totals could rise from 113 to 557 (on the 1,000 portfolio).32

Staff currently working in government public housing departments can be transferred to the successor community housing landlord. In Tasmania, research found that the better staff/client ratios of the successor community housing organisation enabled transferring staff to better get to know tenants and exercise a more responsive, supportive style of management:33

A particularly strong theme in their responses was the contrast between the way in which Housing Tasmania staff and CHP staff responded to them. They said Housing Tasmania staff had been unhelpful, and that when officers did respond to a request, it was ‘as if they were doing you a favour’. Tenants felt stigmatised, inferior and even fearful about approaching them. One participant, who had entered public housing as a result of domestic violence, said public housing staff had ‘acted as if I deserved my circumstances’. By contrast, the successor CHP’s staff ‘always listened’, took a ‘personal interest’ and, even if they couldn’t answer a question immediately, would always respond as quickly as they could. It was ‘not an effort to respond’. If a tenant turned up at the office in tears, they would be invited in, given a cup of tea and listened to. The participants used words like ‘human’, ‘friendship’ and ‘care’ to describe the tone of their interactions with CHP workers. It was clear that participants now felt heard, valued and supported in a way that they had not previously.34

AHURI recommended longer-term contracts (around 20 years) to deliver much better outcomes, giving social housing tenants increased certainty and stability. This strategy supports the transfer of ownership based on a performance assessment after an initial management transfer period of three to five years to confirm that:


15

• the community housing organisation is meeting agreed benchmarks on service delivery and tenant outcomes (with mechanisms in place to deal with unsatisfactory performance)

• the organisation has developed a plan to secure the long-term future of the assets.

Title transfer can extract maximum value from existing public housing assets and ensure that the benefit is kept in a structure that will preserve it for future generations. Such transfers not only build the capacity of the sector but also promote a multi-provider market with greater capacity and more choice for tenants. The Productivity Commission Inquiry into Human Services has recommended that the management of social housing should be made contestable, be backed by a full evaluation of the transfers, and be open to all providers.35


16

Strategy 4: Developing alternative affordable housing finance mechanisms – such as a financial aggregator for community housing organisations to access large scale institutional investment for affordable housing developments. There is clearly a need to bring private investment to affordable housing, as public finance alone is unlikely to be able to meet the scale of the challenge involved. Our sector has a proven track record in raising private finance, however to date this has largely involved standard commercial loans from banks and is not at a scale to support long-term and efficient finance for the level of affordable housing required. Australia’s superannuation funds have made it clear they want to invest in affordable housing and are looking for the appropriate vehicle to provide the necessary scale and a liquid investment class. Industry Super Funds has argued that:

• such investments could play a role in enhancing risk/return outcomes in a diversified investment portfolio

• the housing developed could assist in ensuring super fund members achieve a comfortable retirement

• improved access to geographically diverse mixed housing could deliver economic and social outcomes, consistent with improving wellbeing in retirement.36

Homes for Victorians recognised this, with initiatives by the Victorian government to assist housing associations access government guarantees and a revolving finance facility. It is clear, however, that efficiencies of scale required mean action on a national scale. The Federal Treasurer Scott Morrison announced the creation of an affordable housing bond aggregator, the National Housing Finance and Investment Corporation (NHFIC), as part of the 2017/18 budget. The NHFIC will raise money at lower rates from the wholesale bond market for the use of not-for-profit community housing providers. The government will provide $63.1 million over four years from 2017–18 (including $4.8 million in capital) to establish and run the NHFIC.37 The NHFIC is a financial intermediary that would aggregate the appetite for debt of community housing organisations. It would raise finance on the market, predominantly from superannuation funds and overseas pension funds. This is then lent to affordable housing associations on a long-term basis to finance new affordable housing to be held in the long-term. Government credit support in some form will be crucial to further lower the cost of finance. This finance will provide community housing organisations with the certainty to be able to borrow on favourable terms, efficiently and for a length of time that matches the asset life of affordable housing. This has to be coupled with robust regulation of industry, and industry capacity-building to support the growth of the industry to one where it can support and manage a pipeline of new affordable rental homes. For larger community housing organisations this can drive greater efficiency in their businesses by providing long-term, stable finance. For smaller community housing


17

organisations this can be an opportunity for alliances and access to funds that would not have been possible. There is enough evidence and research to know that this can work. On its own the NHFIC would not generate considerable new affordable housing. What it does do however is create an affordable housing industry with community housing organisations at the centre of a whole range of complementary reforms that are made viable by access to secure, long-term, cost-effective finance. The bond aggregator will provide cheaper finance but this alone will not be sufficient to finance new projects, particularly those housing people on the lowest incomes. For the financial intermediary to be successful, capital funds or a recurrent subsidy will need to be provided to bridge the gap.


18

Strategy 5: Set a planning target that would ensure 10-30 per cent of all dwellings in a new housing development are affordable, depending on the location and whether the development is on government or private land. There is scope to increase the supply of affordable housing by making its inclusion in new multi-unit developments mandatory through legislation. This is often referred to as ‘inclusionary housing’. Under inclusionary housing, a proportion of housing in new developments is set aside as affordable housing. This is a useful way of increasing supply and integrating affordable housing units in the community. The new affordable housing can be for private ownership, private rental or social housing, with the latter having the additional benefit of retaining the affordability of the units into the future. In 2005, South Australia adopted a target of ensuring at least 15 per cent of housing in all new ‘significant developments’ is affordable, with a third or 5 per cent of those properties to be allocated to people with high needs. The Victorian Government has recognised the potential of this strategy to unlock additional affordable housing supply, introducing a pilot program under Homes for Victorians that will trial requiring a set proportion of affordable housing in new developments on surplus government land. This pilot is set to deliver up to 100 new social housing homes with potential models including transfer of ownership to a community housing association or the Director of Housing for use as public housing; the sale of units to a community housing association to be used in perpetuity as affordable rental; and, selling units through a shared equity scheme to first home buyers. This pilot should be used to develop and trial an effective inclusionary housing model with a view to expanding the inclusionary housing target to 10 to 30 per cent of new developments on private and government land by 2025.


19

Strategy 6: Bring together all State Government responsibilities for housing under one department including private rental, social housing, affordable housing planning and supply, and affordable home ownership. Homes for Victorians provides strategies to strengthen the supply and accessibility of affordable housing in Victoria, however, there is no single department responsible for its implementation and outcomes; responsibility for broad housing policy is diffused across government, challenging implementation and coordination. This strategy would consolidate all responsibilities for housing affordability across the housing spectrum, including private rental regulation, state tax concessions and affordable home ownership, and public and community housing, within the one area. Reconfiguring responsibilities so the housing portfolio has oversight for the entire housing system would enable it to incorporate planning for population growth and infrastructure investment in plans for social and affordable housing. This would strengthen the Victorian Government’s ability to provide a cohesive and co-ordinated response to housing adequacy and affordability concerns. Public housing should also be managed by a statutory housing authority that is separate from government departments with responsibility for affordable housing funding and policy. Separating the State Government’s policy and service provision would improve both functions, and also allow that department to determine the best allocation of funds, free from any concerns about its own operational needs. Creating a separate statutory housing authority would allow that agency to focus on public housing provision, management of tenancies and the protection of public assets. These measures would also improve competition, contestability and informed user choice as discussed by the Productivity Commission:

There is a case for a separation of social housing policy and service provision. There may be conflicts of interest if the department setting criteria for tenders to manage social housing is also competing for the tender itself …. Contestability requires that the government social housing provider faces a credible threat of replacement if they underperform, which would not be the case if that provider is responsible for monitoring their own performance.38


20

Strategy 7: Supporting alternative tenure models such as shared equity schemes Alternative tenures, such as subsidised home ownership and shared equity schemes, have the potential to be a bridge between affordable housing and home ownership. These schemes seek to assist households who meet the criteria for a bank loan, but lack a big enough deposit or the ability to meet repayments for the full cost of a new home purchase. CHIA Vic applauds the initiatives in Homes for Victorians to support subsidised home ownership. This includes:

• HomesVic: A pilot shared equity scheme will be introduced from 1 January 2018 with an initial allocation of $50 million over two years to assist 400 first home buyers.

• Buy Assist – the government will invest $5 million to deliver up to 100 new shared equity loans in a community shared equity scheme operated by the National Affordable Housing Consortium.

These pilots should be evaluated with a view to their expansion if proven successful. Shared equity schemes have been particularly successful in other parts of Australia, notably Western Australia and South Australia. Community housing may play a role in such schemes in a variety of ways, including:

• incorporating shared equity home purchases into new housing developments • allowing existing tenants to purchase their own home • investing in equity loan funds as a way of delivering more affordable housing

outcomes. What is shared equity? In a shared equity arrangement, a person’s home purchase is assisted via a non-interest bearing equity contribution from an equity investor, plus a normal bank loan. The resident’s share can vary from 25 to 75 per cent of the property value. These arrangements promote home ownership by reducing the deposit required and the monthly repayments. Both the resident and the equity partner have an interest in the property. This can take the form of the equity partner being registered on title (as tenants in common with the resident) or via a second-ranking mortgage. The resident is not required to pay interest to the equity investor, but rather this interest appreciates or depreciates over time in line with the market value of the property. The resident repays the equity interest if the property is sold, or if the resident decides to refinance. The resident has all the rights and responsibilities of full home ownership. They are fully responsible for any repayments on their home loan, as well as repairs and maintenance, rates, insurance, body corporate and utility charges. In addition, the purchaser may be required to pay ongoing administration fees to the equity investor.


21

Government should also support the development of additional subsidised home ownership schemes, including:

• ‘Mixed equity’ programs, in which a family can contribute part of the purchase price of a home in return for it being let to a family member on a secure basis and at an affordable rental. Such programs have a particular potential to provide secure housing outcomes for people with a disability.

• Community Land Trusts, where a not-for-profit entity holds title to land to create and steward affordable housing and provide community benefit. A community land trust can lower the cost of home purchase by removing the need to purchase land and can lock in the benefit of the uplift in the value of land to subsequent purchasers of homes built on that land.


22

Strategy 8: Reforming planning regulations to remove barriers to the development of affordable housing The potential for planning reform to address housing affordability is recognised both in Australia and internationally. A consistent national planning framework would provide the greatest benefits, but in the absence of a national agreement, the state planning system should take measures to increase the supply of social and affordable housing. The State Government has introduced definitions of both Social Housing39 and Affordable Housing40 in legislation. This measure is a step in the right direction in the utilisation of the planning system to deliver an increase in social and affordable housing supply. Planning reforms that should be implemented by the State Government include: 1. Fast track planning approvals with appeal rights limited. Local governments across Victoria do not have a consistent approach to applying residential code, and social housing developments face objections and appeals based on non-planning grounds. These factors increase costs for social housing developments and ultimately slow down and reduce the number of social housing dwellings delivered. In order to reduce unnecessary time and excessive requirements for housing developed by registered housing agencies, there should be a new fast track approval process modelled on VicSmart that also removes third party appeal rights for applications that meet state and local planning policy.

2. Inclusionary housing: also known as inclusionary zoning, where planning authorities

require developer contributions for social housing when they initiate planning scheme amendments or land rezoning, for example, changing the land use from industrial to residential and/or mixed use zones.

Inclusionary zoning offers an opportunity to leverage private investment in additional social and affordable housing. Inclusionary zoning requirements should be mandated in new development projects that occur as a result of land rezoning. Planning scheme amendments result in a massive uplift in development potential and land values, and inclusionary zoning ensures this increase is shared for social benefit either as dwellings, a monetary contribution or a donation of land. We suggest starting at a minimum 5 per cent and increasing to 15 per cent by 2030. 3. Inclusionary approvals: where a planning authority may place covenants or other

conditions upon developments that require a provision for social housing. Larger scale planning development proposals and applications that comprise 21 or 41 or more dwellings should have a mandated contribution of between 10 and 30 per cent of the total value of the development towards the delivery of social and affordable housing. These


23

properties should be transferred to community housing organisations (or a financial contribution in instances where on-site delivery is not feasible). This would be best achieved in key employment centres with access to public transport, education, health and welfare services. These can be delivered in medium to high-density developments in metropolitan activity centres. Any financial co-contribution by the community housing organisation must be calculated against the rental yield of the property, not the market value of the dwelling. 4. Density bonuses: where developments will be approved for higher density or higher

scale than the mandated controls if the applicant includes a provision for social housing. An increase in yield is one of the highest value benefits the planning system can provide to developers. This measure has the potential to result in a significant contribution to the supply of housing and contribution to social and affordable housing on the basis of a value share arrangement.

This measure could operate in a similar way to Planning Scheme Amendment C270 in the City of Melbourne. C270 establishes a Floor Area Ratio, which provides a threshold density control. This is paired with the option for a developer to apply for a Floor Area Uplift for development capacity greater than what is provided in the control. This process triggers a value sharing mechanism in the form of investment into public benefits. In this case, we would suggest the best public benefit is social housing. The dwellings dedicated to social housing (or a financial contribution in instances where on-site delivery is not feasible) should equal between 5 to 15 per cent of the estimated additional yield delivered through this mechanism. For example, if the planning scheme mandates height controls or a floor area ratio, this should be able to be exceeded with a requirement that a percentage of the extra yield is delivered as social housing. Public housing renewal program and community housing Community housing organisations can play a leading role in the renewal of ageing public housing estates to support improved quality and design and to strengthen these communities. Community housing organisations, working in partnership with developers and government, can adopt place-management strategies for both the redevelopment and the management of urban renewal projects. This ensures that urban renewal is an inclusive process that results in tenants being supported to live successful lives in the community. Community housing organisations have a vested interest in the long term, with a clear incentive to engage with all residents in redevelopments and renewal – tenants and owners – in a meaningful way to promote a stable, healthy and vibrant community.


24

Strategies include: • engaging the ideas and energy of residents and the community in a meaningful way in

the design and management of urban renewal sites • planning community building programs to promote social well-being and inclusion • providing clear, accurate and timely information to residents and the surrounding

community • engaging with and listening to tenants in matters that concern them • working in close partnership with community-based supports to sustain successful

tenancies • promoting well-being and social and economic participation through community

building, employment, education and training programs. Community housing organisations are experts in community regeneration and engagement. This expertise can be mobilised with the transfer of public housing stock to not only regenerate housing estates and re-engage tenants, but also to undertake community renewal programs for surrounding neighbourhoods and in the building of new affordable housing. Providing affordable housing for key workers such as aged care, disability support, retail and hospitality staff near employment is important for a well-functioning city. Providing a diversity of affordable quality dwellings in communities close to education, employment and transport opportunities for low income workers who would otherwise experience housing stress in the private market is an important aspect of social housing. This strategy should also work to prevent the geographic concentration of socio-economic disadvantage that has come from prioritising people most in need into public housing estates over the last 20 years.


25

Strategy 9: Strengthen the regulatory system to promote investor confidence and create a single regulatory system for public and community housing Victoria should join the National Regulatory System for Community Housing so that our community housing providers are regulated in a manner consistent with those interstate. This would broaden the provider market in Victoria by promoting cross-border competition, support alliances and mergers and reduce barriers to Victorian community housing organisations operating interstate. In its report supporting the bond aggregator model, the Council for Federal Financial Relations recognised that regulatory frameworks across the country needed to be strengthened to boost investor confidence.41 This regulatory system should be extended to public housing to ensure it is the subject of independent prudential oversight and performance measures, including asset management and maintenance, with safeguards for tenant wellbeing. The Productivity Commission has argued that regulation should be consistent across providers with different organisational structures — whether they are government, not-for-profit, mutual and cooperative, or for-profit.42 Putting public and community housing on an even footing will:

• support formulating coordinated policy and service delivery • promote contestability and an equal playing field • ensure tenants experience the same standard of housing, regardless of their

provider. The Victorian Housing Register is a strong example of how one structure can be developed and implemented to maximise benefits across the whole social housing system.


26

Strategy 10: Developing a framework to meet the housing needs of Victoria’s growing Aboriginal community There is also a need for specific strategies to meet the housing needs of Victoria’s growing Aboriginal community in a culturally-appropriate way. As a part of the Victorian Government’s agenda for self-determination and justice for Aboriginal people, on September 5, 2016, the Victorian Government and Aboriginal Housing Victoria (AHV) jointly announced their agreement for the gradual transfer of title to 1,448 properties from the Director of Housing to AHV. At the conclusion of the transfer, AHV will be the custodian of land and housing assets valued at almost $500 million. Control over the properties will deliver real and tangible benefits to AHV and the Aboriginal community it serves, and will support strategies to:

• more aggressively pursue asset recycling to dispose of uneconomic properties and better align properties to meet Aboriginal needs

• transform and better leverage the housing stock, providing the opportunity for Aboriginal tenants, community members and staff to identify and build housing to meet Aboriginal needs and cultural expectations

• provide the ability to take advantage of development opportunities to grow the housing stock, including the capability to exploit larger scale and more complex development opportunities.

The transfer of title to properties to AHV is the first substantive act under the Victorian Government’s wider self-determination agenda, an agenda which emphasises the importance of status and control of resources. As such, it should set the tone for what the broader self-determination agenda might achieve. At its heart, transfer of title advances self-determination for Aboriginal people through the ownership of housing. The acquisition of Aboriginal land and sovereignty is unfinished business in Victoria. For Aboriginal Victorians, the experience of post-European settlement has been one of disconnection and forced removal from land and community, forced removal of children, loss of language and culture and breakdown in traditional values. For the vast majority of Aboriginal people in south east Australia there was no remedy and no justice — only continuing denial. Custodianship of land reinforces the deep sense of responsibility and accountability to the Aboriginal community that also serves to deepen community ownership of AHV. Not only will it ensure delivery of services consistent with Aboriginal cultural values, it will challenge, influence, and shape housing services so they are delivered holistically as part of a broader concerted effort to close the gap between Aboriginal and non-Aboriginal Victorians.


27

Closing the gap: Victorian Aboriginal disadvantage • Aboriginal people make up 9 per cent of all clients of homelessness services. • Aboriginal people are more than seven times more likely to be an affected family

member in a family violence incident. • One in three AHV households has experienced or is experiencing family violence. • The average placement rates for Aboriginal children in out of home care in Victoria is

62.7 per 1,000, compared to only 5.1 per 1,000 for non-Aboriginal children. • Rates of adult justice supervision (community based and in custody) are growing

faster for Aboriginal adults compared to non-Aboriginal adults. • The gap between rates for young Aboriginal and non-Aboriginal Victorians entering

the justice system continues to widen.


28

References 1 Department of Health and Human Services, Victorian Housing Register social housing waiting list data, found at: housing.vic.gov.au/public-housing-waiting-list 2 Victorian Auditor-General, Access to Public Housing, March 2012, page 8 3 Victorian Auditor-General, Managing Victoria’s Public Housing, June 2017, pages 14 and 20 4 Australian Bureau of Statistics, Census of Population and Housing: Estimating homelessness, 2011 5 Australian Institute of Health and Welfare, SHS fact sheet: Specialist homelessness services 2015–16: Victoria 6 Remarks by Bruce Bonyhady AM to the Community Housing Federation of Australia conference on Housing and the NDIS The National Disability Insurance Scheme: A catalyst for scalable, affordable and accessible housing for people with disability, March 27, 2014 7 Royal Commission into Family Violence: Report and recommendations, March 2016, page 91 8 Victorian Government, Residential Tenancies Act Review Laying the Groundwork - Consultation Paper, June 2015, page 16 9 Department of Health and Human Services, Rental Report June Quarter 2017, Table 5 10 The Age, Melbourne's planning disaster: Jobs boom in CBD while affordable housing grows ever outwards in suburbs, March 2, 2015 11 Infrastructure Victoria, Victoria’s 30-year Infrastructure Strategy, December 2016, page 82 12 Housing Ministers’ Advisory Committee, Social Housing Initiative Review, September 2012 13 Victorian Government, Homes for Victorians, 2017, page 6 14 Australian Housing and Urban Research Institute, Understanding the 30:40 indicator of housing affordability stress, Comparing household income with housing costs, found at ahuri.edu.au/policy/ahuri-briefs/2016/3040-indicator 15 Community Housing Federation of Victoria, Quantifying the shortfall of Social and Affordable Housing, found at: chiavic.com.au/wp-content/uploads/2017/08/CHFV-Housing-Needs-Estimates.pdf 16 Victorian Government, Housing Registrar, Sector Performance Dashboards 2015-2016 17 Infrastructure Victoria, page 83 18 Infrastructure Victoria, Page 83 19 Infrastructure Victoria, Page 89 20 For more information on historical funding arrangements, see paper by the Community Housing Federation of Victoria, Access to Community Housing in Victoria, November 2015 21 Victorian Government, Housing Registrar, Sector Performance Dashboards 2015-2016 22 Plan Melbourne Review 2015, Ministerial Advisory Committee Report, June 2015, page 30 23 KPMG, Social Housing Initiative review, Report for the Housing Ministers’ Advisory Committee, 2012, page 40 24 Victorian Government, Homes for Victorians 25 Victorian Government, Homes for Victorians, page 35 26 SGS Economics and Planning Strategic Commissioning: Towards coordinated, efficient and evidence based delivery of social and affordable housing in Victoria, found at: chiavic.com.au/wp-content/uploads/2017/08/20160373-Final-Report-170616.pdf 27 Australian Government, Council on Federal Financial Relations, Affordable Housing Working Group, Report to Heads of Treasuries: Supporting the implementation of an affordable housing bond aggregator, September 2017

https://chiavic.com.au/wp-content/uploads/2017/08/20160373-Final-Report-170616.pdf


29

28 Housing Ministers’ Conference (2009) Implementing the National Housing Reforms Report: a progress report to the Council of Australian Governments from Commonwealth, State and Territory Housing Ministers, published by the Victorian Government Department of Human Services on behalf of the Housing Ministers’ Conference 29 Pawson, H., Martin, C., Flanagan, K. and Phillips, R. (2016) Recent housing transfer experience in Australia: implications for affordable housing industry development, AHURI Final Report No. 273, Australian Housing and Urban Research Institute Limited, Melbourne, found at: ahuri.edu.au/research/final-reports/273, page 2 30 Victorian Government, Homes for Victorians, page 34 31 Victorian Government, Homes for Victorians, page 34 32 Pawson et al, pages 49-55 33 Pawson et al, page 42 34 Pawson et al, page 44 35 Productivity Commission, Introducing Competition and Informed User Choice into Human Services: Reforms to Human Services, Draft Report, pages 174-5 36 Industry Super Australia, Submission Regarding Affordable Housing Working Group Issues Paper: Options for unlocking institutional investment in affordable housing, March 2016 37 Commonwealth Government, 2017-2018 Budget Paper no 2, page 169 38 Productivity Commission, page 184 39 Housing Act 1983 (Victoria) s. 4 Definitions (Austl.) 40 Planning and Environment Act 1987, (Victoria) s. 3AA (Austl.) 41 Affordable Housing Working Group, 2017, page 23 42 Productivity Commission, page 195

The Community Housing Industry Association Victoria (CHIA Vic) is the peak body representing and advocating for the growth of this vital sector.

CHIA Vic actively works with government and other stakeholders to tackle the housing crisis facing an increasing number of Victorians and is keen to engage with any parties interested in working towards our vision of ensuring all Victorians are able to afford secure and appropriate housing.

You can download CHIA Vic’s detailed position paper, including the research that informed this brief, at chiavic.com.au/vision

For further information, contact:CEO Lesley [email protected] Vic1/128 Exhibition StreetMelbourne 3000T: 9654 6077

Date post:	25-Jul-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Our Vision - CHIA Vic...found that suburbs more than 20 kilometres from Melbourne’s CBD have...

Documents