A new investment focused funding model for social housing could change the profile of this sector currently under scrutiny especially in price hotspots around the country.
The model was developed by Infrastructure Partnerships Australia and KPMG in conjunction with the NSW government and industry stakeholders, including the community housing sector.
Launched at the National Press Club this week, the model involves the state governments undertaking staged divestment of their housing assets over the next 20 years, with the money from sales invested in a ring-fenced fund similar to the federal government’s Future Fund.
The Social Housing Future Fund would target a return of CPI plus 4.5 per cent a year according to IPA and KPMG in a report.
Money from the fund would then be used to procure housing for those identified by the government as eligible for social housing, at market rents plus 20 per cent from community housing providers, charities and other social housing organisations.
Being paid above market rent would give providers capacity to create more housing, including potentially affordable housing for key workers, as well as social housing.
Governance of social housing would remain with the states, and a “wrap-around services” approach incorporated for services such as education, addiction recovery support and rehabilitation.
“Our model gives governments control of the single most important levers in social housing, the ability to pay for it and the structures to run it properly,” IPA chief executive Brendan Lyon said.
“Our key message is that public housing is not a particular type of house, it is a public service that’s about people and their needs and our model puts the money on the table to pay for it.
“Any government vision without resources is just a hallucination”
“Sustainable government funding is critical, because any government vision without resources is just a hallucination.”
Mr Lyon said the public housing system is “broken”, and that the existing stock does not reflect current community needs. The system currently has 250,000 people on waiting lists, a figure expected to grow by 50 per cent over the coming decades.
Empty bedrooms abound as singles dominate social housing
The report showed that while most public housing comprises three bedroom homes in the “Radburn estates” in outer metropolitan and regional suburbs, the majority of tenants are now single person households.
This has resulted in literally thousands of homes with one or more empty bedrooms, while thousands of people are either homeless or experiencing severe housing stress.
Currently one bedroom apartments comprise around just one quarter of housing stock.
There is also little housing that meets the needs of people with disabilities, even though more than half of current tenants are disabled or have other special needs.
The quality of a significant proportion of the existing housing is also poor, with many ageing properties now having high maintenance costs.
The model would also reverse the current situation where public housing is a drain on state government budgets, Mr Lyon said.
“Our model uses the value of the public housing system better, to bring billions in new, sustainable government funding and allow smarter and more flexible choices for tenants and for providers,” he said.
“Our model assumes the funding goes from well below market to 120 per cent of private property market costs, funded by the investment fund meaning no change to the amount paid by tenants.”
The model also suggests the sale of assets should coincide with natural vacancy rates over the next two decades, to minimise disruption for tenants. Mass relocations are to be avoided wherever possible, the report said.
At the same time, the aim would be to ensure new housing assets developed by community housing providers and other providers are co-located with private housing to reduce the stigma that can be attached to areas where social housing is the only housing.
Mr Lyon said the model would allow for “much better housing”.
It would also allow governments to create a system that enables competition, transparency and accountability, changing the focus for governments from being focused on the assets to being focused on people.
“Everyone in the country acknowledges that Australia’s social housing model is broken, but fixing it will take more than policy tweaks or nudges, it needs the changes recommended in our paper,” Mr Lyon said.
“Our research shows that we have the ways and the means to fix the most fundamental problems, too little housing and too little money, but only if we change what we do.”
- Read the full report here