Subsidised affordable housing

HIA's Position statement

1. HIA supports Governments working in partnership with the housing industry and the community housing sector to identify feasible and effective actions that support the delivery of long term solutions for public housing and affordable housing needs.
2. Mandated affordable housing levies and quotas are not an appropriate mechanism to manage the delivery of public housing, subsidised affordable rental housing or other affordable housing needs.
3. As a priority, governments should continually focus on addressing the factors that result in house prices increasing over time creating increased demands on both public (social) housing and subsidised affordable housing. This should include addressing increasing regulatory requirements, constrained land supply, taxes and charges on land and housing and cumbersome zoning and development approval processes.
HIA supports the following range of options to increase the delivery of subsidised affordable housing stock.
• Increasing land supply for affordable housing
  All governments should proactively increase land supply for affordable housing by auditing surplus government land and releasing that land for the purposes of industry delivering the desired quota of affordable housing. Authorities should also ensure an adequate supply of land is available for the purposes of building and supplying affordable housing.
• Voluntary supply of affordable housing in exchange for negotiated development bonuses
  It is industry’s experience that many current development bonuses offered do not allow for a product that can be reasonably offered to a target market in a given area. Any development bonuses granted to assist with the supply of affordable housing must be nominated by, and agreed to by, the developer. Incentives for developers could include bonuses on heights, plot ratio and density requirements, car parking, a faster planning process or other planning scheme concessions, all of which should be guaranteed through relevant project specific planning provisions after a develop agrees to undertake a project, to ensure the project is financial.
• Innovative funding mechanisms
  Government agencies should offer innovative funding mechanisms, such as low interest, low docs home loans and shared equity ownership options, for low income earners. Deferment on the payment on the full market value at the time of purchase assists with making the product more affordable.
• Increasing the opportunity for ‘joint venture’ partnerships Governments can partner with a willing developer to build and manage a project where there is a component of affordable housing that must be made available with strict arrangements around the management of homes into the future to avoid profiteering.
• Provision of tax concessions for developers
  Tax concessions should be offered to developers willing to agree and provide an affordable housing component to their development. Relevant tax concessions could be provided in the form of stamp duty or other concessions such as sale price on the land or an exemption from state based infrastructure contributions and other relevant property taxes.

Background

• HIA’s efforts to promote housing affordability are founded in that every Australian should have access to a home and an acknowledgment that throughout an individual’s life their housing requirements will change which can affect the type of housing an individual seeks.
• HIA’s ‘Housing Continuum’ describes the variety of housing that make up the housing supply chain in Australia and sets out these housing types by tenure and delivery mechanisms (i.e. government, not for profit, private).
• Housing affordability is improved as a consequence of an adequate housing supply at an appropriate price for each cohort of the housing continuum.
• Many builders and developers contribute to ensuring sustained levels of housing affordability by offering diversity in product, including housing for the low and moderate income end of the market. Yet overall housing supply in each segment of the continuum has fallen short of underlying demand for many years.
• Commonwealth and State Government funding of public and not for profit managed rental housing has not kept up with community needs for many decades.
• Governments are increasingly shifting the burden of funding new subsidised affordable housing to the private sector rather than funding public housing from general rates and taxes.
• State and local governments are increasingly looking towards affordable housing quotas on new developments to solve their own targets for public housing.
• Housing quotas (whether for levies or constructed dwellings) are a tool used in some Australian planning systems as a means of subsidising public housing units or not for profit managed rental housing units.
• The provision of public (social) housing is the responsibility of government and should be adequately funded by using general revenue, not by placing a cost burden solely on new home buyers.
• The provision of affordable subsidised rental housing takes some pressure of public housing demand and provides much needed support for households requiring financial assistance.
• Affordable housing levies or quotas require the provision of housing in exchange for the granting of rezoning or development consent.
• The requirement is usually met by either payment of a monetary contribution to the consent authority, providing a defined ‘quota’ of subsidised affordable housing within a project or negotiating additional floor space or other development entitlements to offset for the provision of subsidised affordable housing.
• Housing is largely a private sector activity and, as such, is driven by market forces. Many developments and builders already contribute towards providing affordable housing, based on their price positioning at the lower end of the market.
• Inclusionary zoning policies and affordable housing quotas add costs to an already over-taxed and over-regulated housing product.
• These policies are flawed and inequitable as any costs incurred by new housing to subsidise a particular form of housing must invariably be borne by the new home buyers, who are often least able to afford this impost. This approach perversely further exacerbates housing affordability problems along the whole housing continuum, rather than relieving pressure on supply.
• One off, limited responses to the supply of subsidised affordable housing provide minimal relief to what is a much larger housing supply issue that requires a whole of community solution.

Policy endorsed by HIA National Policy Congress: May 2007; Re-endorsed 2013; Amended 2015 & 2020.