With the end of the National Rental Affordability Scheme, ABC Four Corners revealed damning evidence that developers were also using the government’s lucrative infill affordable housing scheme to build luxury apartments.
Developers are demolishing existing affordable housing, forcing tenants out and raising questions about the sustainability of the current model for the sector.
Professor at the Institute of Culture and Society at Western Sydney University, Louise Crabtree-Hayes, told The Fifth Estate it was good to see the investigation unpack what was emerging in the affordable housing space – especially the challenges and failings with the affordable housing model.
She said it would start conversations around homes that are not permanently affordable. Crabtree-Hayes, along with University of Sydney emeritus professor of planning, Peter Phibbs, have been leading research on community land trusts (CLT) as an affordable housing model in Australia.
The model, which is more widely adopted in Europe, the UK, the US, Latin America and some Asian countries, involves a partnership with a non-profit entity that retains ownership of the land used to build affordable housing. Tenants can enter a 99-year lease or permanently own the individual house while paying a small ongoing ground lease.
Crabtree-Hayes said CLTs are permanently affordable and settings can be adjusted to keep the model “watertight”.
The model is generally adjusted so tenants cannot be voted out, and sale of the land would usually only occur if the land was unoccupied and the managing organisation could no longer find an interested tenant.
“We don’t have a strategic housing planning framework in New South Wales. Everything is piecemeal, and there’s certainly nothing focused on permanently affordable home ownership.
“We need to see greater thinking in this space in terms of having a strategic policy, and then that folds into things like inclusion in how the state invests land and new ways of the state contributing to the sector.”
Crabtree-Hayes says the other big changes needed include state government doing more to enable local government and communities to innovate in this space and taking the lead with making CLT a more familiar model to Australia.
Because these more affordable houses need to last over a long period of time, they tend to be better built, Crabtree-Hayes said.
“[CLTs] are actually a lower risk product here than overseas, but the financial regulators see them as non-traditional, so there’s a capital cost to the banks, which means the banks can’t make affordable mortgages.”
“There’s some thinking that needs to happen in the space of financial regulation.”
What ABC uncovered about so called affordable housing
Depending on the state and scheme, rent discounts in affordable housing schemes expire after 10, 15 or 25 years, and developers are then free to sell off, repurpose the homes or hike up rent.
Susan Lloyd-Hurwitz, former Mirvac chief executive and current chair of the government’s National Housing Supply and Affordability Council, said affordable housing “should stay affordable”.
Lloyd-Hurwitz told the ABC Four Corners program that the current system was like “chasing your tail the whole time” by creating affordable stock and then taking it away, rather than creating permanent stock for the “most vulnerable members of society”.
NSW State Planning Minister Paul Scully defended the scheme, saying “it was a better outcome than not adding affordable housing at all”.
Lloyd-Hurwitz also questioned “pegging affordable housing rent to market rates” when in Sydney, 25 per cent below market rent was still “not affordable to very many people at all”.
The investigation
The program followed the development application to knock down The Chimes, a 1960s 12 storey apartment in NSW’s Potts Point which offered 80 affordable one bedroom and studio units.
Residents refusing to sell were forcefully evicted after being taken to court. One former resident, Anastasia Moesses, received $1.4 million in the forced sale of the home but then paid $200,000 in legal and administrative costs. The 80-year-old, who owned her unit for 44 years, has been living in a nearby hotel paid for by the developers since January.
Billionaire James Packer’s real estate investment firm, NPACT, and developer Time & Place have already gained approval by the NSW government to develop 21 luxury homes and 23 affordable apartments.
Utilising the state’s infill bonus, the developers have been allowed to build 20-30 per cent above local height limits and above density restrictions but only needed to dedicate 10-15 per cent of the building floor space to affordable housing for 15 years.
Meanwhile, the affordable units will have a “poor door” to stop their residents from accessing the building’s pool and other amenities, which industry insiders have said is increasingly common.
Analysis from Phibbs found that the bonus scheme would add an extra $31.9 million to the value of the project, while the developers would only lose $2 million to renting 23 units for 15 years at affordable prices.
Prominent issue across the nation
The National Affordable Housing Scheme that just ended also offered developers indexed tax incentives which by 2026 equated to more than $13,000 per dwelling.
The scheme required new dwellings be rented out at less than 80 per cent of local median rent, eligible for tenants such as essential workers, on below median income.
Steven Rowley, professor at the Curtin University School of Economics, Finance and Property, says the scheme is not without critics despite delivering on its main promise set by the Rudd government in 2008. This includes that dwellings delivered tended to be small.
Developers can only access the funding for 10 years, causing the loss of the final 3600 properties approved from the final round in 2016, before it was axed by the Abbott government in June this year.
Rowley said while there was little research into what happened to tenants after the scheme ended, there was “little doubt” that landlords have increased rents by 20 per cent or higher.
The program interviewed one such tenant, who was forced to leave his apartment after the scheme ended in 2022. The tenant, while grateful, asked what the point of these temporary solutions was.
In Victoria, developers can fast-track approval for their apartments by going straight to the planning minister and secure infill bonuses without even building the affordable units. Instead, it can opt for a 3 per cent cash levy to the government or donate 3 per cent of its units to a community housing provider.
For example, Mirvac, which originally promised 10 per cent affordable housing for an apartment building in Brunswick, Victoria, changed its mind after winning its permit, opting instead to pay the 3 per cent levy.
In 2020, the City of Sydney allowed Meriton, the nation’s largest residential apartment developer, to build 800 new apartments without affordable housing, and instead pay a financial equivalent of around $29 million in levy to the council.
Critics say that by the time rising construction costs are factored into the equation, these levies fail to provide the housing originally intended.
Getting government involved
Originally the federal National Housing Accord was meant to ensure all levels of government, investors and the construction sector would work together to accelerate the supply of affordable housing.
But the government is opting to sit out and let developers and community housing providers do the heavy lifting. Although, thanks to taxation and a lack of access to subsidies provided to community housing providers can mean public housing developed by the government can cost more than community housing.
Government needs to lean in directly
Susan Lloyd-Hurwitz is calling for the government to become more involved in building homes, saying it should directly build and fund them, rather than subsidise them.
“I think there’s a debate that we probably need to have as a society.”
The Urban Development Institute of Australia national president Oscar Stanley insists the industry should maintain the status quo – saying it could “affect the feasibility of some projects” and people “don’t do things for free”.
Federal Housing Minister Clare O’Neil, while also opting to leave building to others, said she welcomed a debate about price setting for discounted homes.
