Photo: Alex Proimos

HOUSING AFFORDABILITY SERIES: Australia is in the grips of a housing affordability crisis but are we doing everything we can to fix it?

When the Covid moratorium on evictions ended many people saw housing stress worsen with rising rents and increased homelessness.

In Sydney the looming council elections in September are giving rise to some interesting thoughts and strategies on housing.

Greens candidate for Sydney’s Inner West Council Liz Atkins, for instance, says her party is considering a range of innovative policies on housing affordability and homelessness in the leadup to the election.

More than 2500 people in the Inner West are homelessness, Atkins says. Yet one in 10 of these homes sits empty because investors don’t rent them out, and instead leverage the 50 per cent capital gains tax discount to cash in on a rising real estate market.

While the party is still finalising its policy platform, Atkins says an empty homes levy to push property investors to rent out their properties is on the table. The proceeds could generate funds for the council to build more affordable housing.

Also under consideration is using the planning system to capture a developer contribution or levy with the proceeds used to build affordable housing in developments in partnership with community housing providers and other organisations.

While federal, state and territory governments are largely responsible for housing policy, Atkins says councils also need to find ways to make housing more affordable.

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“Housing is a right, everyone should have secure and affordable housing.”

What about getting the private sector more involved?

Housing All Australians founder Robert Pradolin’s organisation aims to curb homelessness and housing stress by making the economic case for supplying all people with safe and affordable housing.

He says housing is a fundamental human need and homelessness is a major economic burden on communities because it leads to a raft of issues including physical and mental health problems, interpersonal violence, increased policing and justice requirements and long-term welfare dependency.

He’s got several innovative solutions for housing affordability problems, including converting vacant properties into emergency accommodation.

Another of his ideas gaining traction sees local governments negotiating with developers to provide affordable private rentals in exchange for better planning outcomes.

He says the permanent affordability development solution (PRADS) model works by leveraging local government’s ability to “add huge value to land at zero cost” through rezoning and other planning decisions. It works by using the value added to developments by allowing extra density or fast tracking the planning process to subsidise below market rent housing.

Under negotiated terms, the value uplift translates into a subsidy for affordable housing in the development that endures in perpetuity because its affordability commitments are enshrined in the dwelling’s title.

By committing to rent the dwelling at, say, 80 per cent the market rate, the homes will stay affordable throughout the “economic life” of the building: that is, the dwellings will not return to the mainstream private market if the building is sold.

The percentage below market rates can vary according to the economic needs of the local government area, Pradolin explains, as long as the balance sheet remains intact. These homes are then rented to low income tenants.

Pradolin’s dream is for the governance structures that keep the housing affordable throughout its economic life to be adopted in national legislation so that it the dwellings can be easily packaged up for small scale retail investors.

“Then you could have mum and dad investors investing in affordable housing.”

He says the affordable housing product would appeal to super funds looking for secure investments that meet yields but also have positive social impacts.

Pradolin says the model is generating interest from both the private and public sector, including the City of Darebin in Melbourne that has agreed to explore the model. “It seems to be getting a lot of traction and support.”

The model was flagged in the Victorian government’s inquiry into homelessness that translated into a recommendation to trial the model. The inquiry did, however, suggest a cautious approach to fast tracking the planning process to secure more affordable housing in case it jeopardises other desirable outcomes.

Critically, Pradolin says the model provides a steady stream of below market rate housing without relying on ongoing government subsidies or support.

He believes people would be outraged if they understood the severity of the housing crisis and the opportunities being missed to fix it.

“Our super fund have several billions invested in housing in the Americas and zero in this country.

“When the Australian public learn that they won’t like it and our objective is to make this a BBQ conversation nationally.”

The glaring omission from the post covid recovery

Last year, many noted the federal government’s missed opportunity to invest in social housing as a post-Covid recovery strategy like the Labor government did to stimulate the economy after the GFC.

Instead, the government poured $2.5 billion into Homebuilder, a grant program aimed at the general homebuilding market. When the program was expanded last month, Kate Colvin, national spokesperson for Everybody’s Home, called for the government to extend the program to social and affordable housing.

“Every economist worth their salt agrees taxpayers receive a compelling return on their dollar when it is invested in social housing,” she says.

“We can create jobs, ease homelessness and reduce the demand on other government services such as hospitals and homeless shelters.”

Despite long term inaction on social and affordable housing at the federal level, states and territories have tried to fill the void to some extent, with Victoria’s $5.3 billion Big Housing Build easily the most ambitious.

Australia has a massive shortage of social and affordable housing, with around 430,000 people on waiting lists for public housing and thousands more on NDIS plans as of late last year.

Despite the huge shortfall in social housing and the backlog of dwellings that need to be built, the rate of construction is not meeting current demand. To keep up with burgeoning need, the country needs to build 650,000 affordable or social housing homes over the next 15 years, according to research from the UNSW City Futures Research Centre.

This article is part of a series on Indigenous businesses and was produced with the support of the City of Sydney.

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  1. The other opportunity that is being missed is tighter regulation of short term letting to tourists. It may not be the main causes of high rents, housing stress or homelessness but it is an aggravator factor. The rental regulatory framework is also being undermined by giving landlords the ‘flexibility’ to shift between both depending on tourist demand. The figures in Sydney and Metropolitan Area are much higher than people realise. Right now Planning is radically reforming permanent residential housing as ‘exempt development’ for tourist market. Housing analysts apart from some academic seem to have missed this entirely!