Subsidised affordable rental housing: lessons from Australia and overseas

Abstract

A supply of affordable rental housing is essential to allow households to transition out of scarce public and social housing and into the private rental sector. Affordable rental options are essential for those households already in the private rental sector who are struggling to pay market rents. This report explores the lessons that can be learnt from the National Rental Affordability Scheme (NRAS) (discontinued in 2014), which sought to stimulate the supply of affordable rental housing for low-and moderate-income earners. Drawing on evidence from comparable international programs for subsidising rental housing supply, the report makes recommendations on how to design and fund a new scheme to deliver the supply of affordable rental housing required in Australia. Key findings  By June 2015, NRAS had delivered 27,603 dwellings with a further 9,980 to be delivered, 76 per cent of which were in major cities. Dwellings were delivered across a variety of housing types including apartments (39%), separate houses (22%), studios (17%) and town houses (22%). The variety of dwellings delivered was a very positive outcome.  Dwellings were delivered in suburbs with a range of socioeconomic characteristics and with generally good-quality transport infrastructure. The allocation decisions were a combination of financially feasible project applications and state government directed housing priorities, and the approach worked well in delivering quality spatial outcomes. AHURI Limited also gratefully acknowledges the contributions, both financial and in-kind, of its university research partners who have helped make the completion of this material possible. Disclaimer The opinions in this report reflect the views of the authors and do not necessarily reflect those of AHURI Limited, its Board or its funding organisations. No responsibility is accepted by AHURI Limited, its Board or funders for the accuracy or omission of any statement, opinion, advice or information in this publication. AHURI journal AHURI Final Report journal series is a refereed series presenting the results of original research to a diverse readership of policy-makers, researchers and practitioners. Peer review statement An objective assessment of reports published in the AHURI journal series by carefully selected experts in the field ensures that material published is of the highest quality. The AHURI journal series employs a double-blind peer review of the full report, where anonymity is strictly observed between authors and referees.

A negotiator's tool: An Affordable Housing Calculator for voluntary agreements

“…Consequently, affordable rental projects are largely limited to government or community housing provider management. Apart from a brief period in which a centre-left federal government implemented a National Rental Affordability Scheme (NRAS) that conferred tax rebates to property owners in return for charging rents at or below 80% of market rents (Rowley et al, 2016), there has been little discussion about ways private investors or private developers could contribute to affordable rental housing.…”

Paying for affordable housing in different market contexts

“… the effectiveness of not-for-profit delivery models (Milligan, Gurran et al 2009)  a triple bottom line evaluation of specific affordable housing project outputs (Wiesel, Davison et al 2012)  the suitability and potential of different affordable housing financing mechanisms and investment options (Lawson, Milligan et al 2012;Milligan, Yates et al 2013;Lawson, Berry et al 2014, Newell, Lee et al 2015Muir, Moran et al 2017)  affordable housing provider strategic positioning and business models (Milligan, Hulse et al 2013, 2015  the efficacy of affordable housing subsidy models (Rowley, James et al 2016)  the capacity of the affordable housing industry to expand (Milligan, Martin et al 2016;Milligan, Pawson et al 2017). …”

“…Several of recent policy and program level strategies of state governments in particular are examined in the other reports associated with this Inquiry (see Rowley, James et al 2017;Gurran, Gilbert et al forthcoming). However, while many innovations and demonstrations have been attempted, no comprehensive and durable response has yet been achieved (Milligan, Gurran et al 2009;Rowley, James et al 2016;Milligan, Pawson et al 2017).…”

“…A 2016 officials' report on innovative financing of affordable housing also contains details of Australian, state and territory government strategies and initiatives aimed at increasing the supply of housing, including housing affordable by lower income groups (AHWG 2016b: Appendix D). around 12,000 dwellings short of its target (Rowley, James et al 2016). Importantly, it was envisaged that NRAS would trigger market development of a new residential asset class for institutional investors (Plibersek 2008), although this had not eventuated by the time of the scheme's termination.…”

“…Importantly, it was envisaged that NRAS would trigger market development of a new residential asset class for institutional investors (Plibersek 2008), although this had not eventuated by the time of the scheme's termination. Implementation problems and political cycles have been blamed for NRAS's discontinuation, which disrupted the development of private-sector investor confidence in co-investing in affordable housing Rowley, James et al 2016). …”