Home / Research library / Browse reports by project / A private investment vehicle for the community housing sector

A private investment vehicle for the community housing sector

Summary

This research identifies options for retail investment in affordable housing. The feasibility of private sector investment in community housing depends upon the cost of acquiring properties and the after-tax income of tenants, which is largely a product of their Centrelink payments and any private income they earn on top of this. A level of government subsidy is typically required to make it financially feasible.

Project Number: 50022
Research Theme: Public_and_Community_housing
Project Leader: Burke, Terry
Funding Year: 2000
Research Centre: Swinburne-Monash

Description

This project aimed to identify an appropriate financial product and vehicle for raising retail private finance for investment in community housing either at a national or state level in Australia. There has been intense debate over the last decade on the most appropriate way for governments to support the provision of affordable rental housing for low income people. Part of the background to the debate has been the desire of the Commonwealth Government to encourage private investment into social housing.

The National Community Housing Forum, an organisation comprised of the key stakeholders from the community housing sector, had already initiated a number of investigations. These included:

a review of the literature (Elton & Associates 1998)
a review of financing arrangements in four European jurisdictions (Larkin and Lawson 1998)
research into operational arrangements for non-government housing associations in Europe (Larkin 1998)
conducting a round-table of non-government, government and private sector representatives on private investment in community housing (NCHF 1998).

This project aimed to directly build on all prior work and the support of the Macquarie Bank. By bringing together a collaborative team comprising housing economists from the academic sector and high profile industry representatives with substantial policy and practice experience, this project aimed to substantially progress the policy debate around private financing by:

summarising, analysing and publishing the lessons from the literature
developing and publishing an institutional framework for private investment in social housing
identifying and documenting an appropriate financial product and vehicle through which to channel private investment into community housing.

The main aim of this project was to identify an appropriate financial product and vehicle for raising retail private finance for investment in community housing either at a national or state level in Australia. More specifically it aimed to

Identify barriers to retail investors investing in low income housing and strategies to overcome those barriers.
Establish the potential of the private retail investment market and identify their investment requirements.
Identify policy levers available to State and Commonwealth governments which might increase the level of retail private investment in community housing.
Analyse the fiscal, administrative and economic implications of the models developed to raise retail private investment in community housing.