I recently spoke at the AHURI National Housing Conference in Darwin. My co-panellists and I were invited to discuss the question “Can CHPs deliver our Social and Affordable Housing Future?”
This is a critical question given the recent AHURI research findings that by 2036, Australia will be facing an unmet need of 727,300 social and affordable housing dwellings.
My response to this question was, and still is, “Yes, emphatically they can”. To me, there are five key elements that would position CHPs to lead this charge:
- CHPs are the ones to do it.
The case is clear and has been made many times – Community Housing Providers should be in the driving seat when it comes to Affordable Housing delivery. We are philanthropic and reinvest all profits back into more affordable housing. CHPs are GST, land tax and stamp duty efficient entities; it makes incontrovertible financial sense. We are entrepreneurial and commercial and are sophisticated enough to do deals with government, the private sector and joint venture partners. We understand and are used to layering subsidies to make the equation work. We build quality buildings that are there for the long term and were the original Build-To-Rent before it was sexy. And most importantly, we know, understand and are motivated by the need to provide our tenants with quality homes that lay the foundations for their futures.
- It needs to be funded.
Capacity of the sector is not the limiting factor – funding is. Australia is a prosperous country and it is a travesty that we have such a colossal affordable housing gap. It is a decision that needs to be made by government – do we accept living in a country where people live in housing stress, or do we set aside the resources we need and fund it. I say we fund it.
- We need a bipartisan National Housing Strategy and predictable subsidy to underpin growth.
Meeting the affordable housing gap is a big job and we need everyone around the table. There is a role for government and there is a role for the private sector if we want to truly increase the supply of affordable housing at scale. What is needed more than anything is a plan that we can all work to – a common goal and direction. We need a bipartisan National Housing Strategy underpinned by a predictable set of subsidies that we can rely on.
- In the meantime leading CHPs (like BHC) are getting on and doing things.
In the absence of a National Housing strategy, many organisations including BHC are getting on and defining their own futures. BHC has attained a AA- credit rating through Standard and Poors in order to work credibly with institutional investors. We have self-funded our first affordable Retirement Village project, and we have set up our own Real Estate agency to cross subsidise our Affordable Housing operations and help address the drop off of NRAS. We are also very pleased to be working in partnership with the Qld state government through Partnering for Growth. Under this initiative BHC will receive $28M from government in grants, undertake $200M in capital expenditure activities with our partners and deliver 680 affordable properties.Whilst all of this is great – we have the capacity to do so much more!
- Think Big – to get the scale, we must partner with institutional investors who can bring the cash.
And lastly, and most importantly if we are going to address the affordable housing gap, we have to think big and bring institutional investors to the table. This is where the real money resides. There are many ingredients needed to make this work, but the two key things that are immutable are (1) Affordable Housing needs to be viewed as essential infrastructure (not as a property transaction) and (2) that there is a predictable long term subsidy to top up the yield gap and make the proposition workable. This could be done via a contestable NHFIC fund straight to Community Housing Providers, for example.
The scale of the need requires access to substantial capital and a real long-term commitment from government to resolve. With these ingredients, combined with the capacity and drive of the community housing sector, we will absolutely be ready to deliver our social and affordable housing future.
Rebecca Oelkers
BHC – Chief Executive Officer
Resources
Listen to Rebecca’s speech from the panel discussion here
Listen in full the ‘Can CHPs deliver our social housing future?’ panel here
