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Revitalising social and affordable housing

 The Urban Development Institute of Australia (NT) believes there are some excellent opportunities to significantly enhance the availability and variety of social, affordable and market housing while at the same time stimulating the Northern Territory economy through changing the way we deliver this product.

The housing continuum starts with social housing, characterised by very low rents (tenants are generally on benefits and not working), progresses to affordable (under 75% of market rents for low to moderate income earners) and then into the private rental market sector and home ownership.  Social housing is owned/managed by the Northern Territory Department of Housing and relevant Non-Government Organisations (NGOs), which are in the process of becoming Community Housing Providers (CHPs) under the National Regulatory Scheme for Community Housing.

So how does the government increase the quality, quantity and diversity of social housing stock in a time of tight fiscal restraint but overwhelming need?  UDIA (NT) believes there is significant potential to achieve this, and produce benefits for the NT Government, the community housing providers, the development industry and the community, through transferring housing stock out of the public system.

Experience both interstate and in the NT has shown that new high density developments which include a blend of social, affordable and commercial market housing product provide significantly better social outcomes than concentrations of social housing.  The NT development industry currently has the capacity and ability to deliver innovative product in this space, which is designed to meet market needs (for example one and two bedroom units).

The NT Government 2016-2017 budget indicates an annual maintenance expenditure of about $28,000 on each social housing property.  This expenditure could be eliminated by expanding the head leasing program and transferring suitable tenants out of degraded properties and into privately owned but head-leased stock to allow for degraded stock to be demolished and new, fit-for-purpose stock developed.

There are good examples from interstate and overseas of quality, freehold housing stock being transferred in sufficient numbers to NGOs to enable them to leverage off their balance sheet whilst obtaining GST credits (an automatic 10% saving), attracting Commonwealth incentives and philanthropy and partnering with developers for cost-effective, real social housing growth.

Other potential initiatives include:

-       Allocating Department of Housing or other NTG-owned infill urban development sites to CHPs under a grant of freehold land with a statutory charge or under a deferred sale arrangement.  This would allow the CHP to pay the government’s book value of the property and have a mortgage secured on the land (thereby retaining the value on the relevant NTG Department’s balance sheet).  There would be a deferred payment arrangement until after the completion of the development, when rentals and sales commence, and a fixed long-term low interest rate.

 

-       Amending the current Community Purpose Zoning regulations to provide for freehold grant of land for genuine social housing with the Minister’s interest secured by a Statutory Charge.  This would permit far greater financial leverage and attract philanthropy.

 

-       Requiring all new land release developments to provide 15 percent of land for social housing purposes.  This could be facilitated by:

O The developer receiving a 15 percent price reduction to compensate;

O The CHP paying the developer for its share of the infrastructure costs plus an administrative margin (provides some cash up front); and

O The Minister’s interest being secured on the social purpose land with a Statutory Charge

Double stamp-duty payments would be avoided and the CHP and developer would work collaboratively to incorporate the desired allotment into the masterplan.  This approach would create real financial leverage which, combined with the CHP’s GST advantages, would mean significantly more social and affordable housing could be built.

 

To support the growth of Community Housing Providers in the NT, the Government needs to transfer good quality, freehold housing stock in sufficient numbers to enable the CHPs to leverage off their balance sheet, obtain GST credits (see above) and attract Commonwealth incentives and philanthropy.  A social housing portfolio of approximately 300 houses would be sufficient to ensure each CHP can operate sustainably.

 

Every transfer of 300 houses from Government stock to a Community Housing Provider would save the taxpayer $8,400,000.00 annually in maintenance costs.  The economy would be stimulated through greater activity in development and construction and additional, quality social and affordable housing stock would be generated at no additional cost to the NT taxpayer.