December 19, 2018
Foundation Housing believes the Labor Party’s election commitment to address affordable rental supply through subsidies for developers is a game changer for the community housing sector.
Next year’s election still has to be fought but Foundation Housing is hugely excited by the opportunities that yesterday’s announcement presents.
The organisation’s CEO Kathleen Gregory says, “For the first time in a number of years there’s an opportunity to significantly grow our organisation, the WA community housing sector more broadly and for us to do more of what we are here for: enrich lives and communities by providing homes for people in need.”
At the Labor Party conference in Adelaide on 16 December, Bill Shorten outlined his plan to address Australia’s affordable rental housing deficit if the Labor party win office in next year’s Federal election.
Mr Shorten’s proposal would see 250,000 new affordable rental homes built in Australia during the next decade that must be owned or managed by a registered community housing provider, with 20,000 to be delivered in the new government’s first three year term. This represents the single biggest investment in affordable housing, and by extension the community housing sector, since the State and Federal stimulus packages in 2009 and 2010 and could see over 25,000 new affordable rental properties built in WA over the next ten years.
There are similarities to the National Rental Affordability Scheme (NRAS) which is due to expire over the next three years. Eligibility criteria will apply to households wishing to rent the properties so that the program can be focused on people struggling in the private rental market presently and rents set at a maximum of 80% market rents. Developers will be incentivised to build the new rentals with $8,500 annual payments over 15 years. This subsidy will likely make developments viable which might otherwise not have been due to the ‘yield gap’ (difference between rental revenue and total costs). Unlike NRAS however, individual investors will not be invited to participate in the new program meaning it aims to attract institutional investors and community housing providers.
The scheme also acts as an invitation for States and Territories to do more in the affordable housing space. According to the Labor Party, “The policy will complement the financing available from the National Housing Finance and Investment Corporation (NHFIC) and is designed to be further supplemented by additional grants, subsidies, land or shared equity arrangements from the States and Territories to meet housing need in their jurisdictions.”
The NIFHC funding is a Coalition Government initiative that has received bipartisan support from the Federal Parliament.
In this way, the WA state government has the opportunity to work with Foundation Housing and other WA CHPs to increase the number of properties built as a result of the program through complementary partnerships.
More information on Labor’s affordable housing plan can be found here.