Policy options for stimulating private sector involvement in affordable housing across Australia: operationalising and implementing viable new options (stage 5)

Summary

This project develops a 'how to' manual for housing departments with regard to implementing favoured affordable housing finance options.

Project Number: 60099
Research Theme: Housing_Affordability
Project Leader: Hall, Jon
Funding Year: 2001
Research Centre: Sydney

Description

This project operationalised the outcomes of a commercially focused AHURI project Policy Options for Stimulating Private Sector Investment in Affordable Housing Across Australia. The project was concerned with providing a blueprint and supporting additional financial analysis for the implementation of the outcomes (i.e. policy proposals for new private funding models) of Stages 1 to 4 of the above-mentioned Consortium project. The three Consortium project reports clearly established that: housing affordability problems have intensified significantly in Australia over the past 15 years; the bottom end of the rental housing market is failing abjectly in meeting rising demand; existing housing subsidies provided through both the CSHA and the social security system (Rent Assistance), although making a vital continuing contribution to housing affordability, are inadequate (at current and prospective overall volumes of support) by themselves to deal with the worsening situation and that:- the only feasible alternative is to attract and leverage a large volume of private investment (especially from the institutions) into affordable housing provision to supplement provision under existing patterns of investment and subsidy flows.

If $3 or $4 of private investment can be leveraged for every $1 of extra subsidy, then the supply of affordable housing will increase substantially by comparison to directly contributing that $1 to Rent assistance (RA) or public housing through the CSHA. Stage 3 of the Consortium project produced a short list of four models for achieving this degree of private sector leverage. Each model or option met stringent criteria of efficiency, equity, cost effectiveness for government and feasibility. The Consortium also committed to Stage 4 which aimed to develop the electronic models that will quantify the gross and net subsidy costs to the Commonwealth and States if they implement the preferred option set out in the Stage 2 and 3 reports.

This project takes the Financial Model developed for the Consortium project, to the operational stage, in a form required by government central agencies, Commonwealth and State Housing Authorities and institutional investors, so that they can be readily implemented when the appropriate policy settings (including new subsidy arrangements) are in place. This Model incorporated a debt option and a rent assistance option and was modified to include a capital funding option as well. More specifically, this project aimed to develop the policy options in order to satisfy line authority and Commonwealth and State Treasury requirements for approval of new joint public-private sector funding arrangements, and to provide a clear path for implementing the new arrangements.

This project endeavoured to enable private sector funding options to be operationalised by provision of the following deliverables: the current detailed financial Model being extended to also include a capital funding option and provided to relevant SHA's; an extension of the financial and risks analysis report prepared for the Stage 4 Consortium Report including comparisons with capital funding options; a decision diagram with a specification of the content and documentation required at each decision point such that line agency and Treasury approval processes will be satisfied); a manual of "how to" raise private sector finance for SHA's; detailed implementation report and budget; and training materials for SHA's and a training workshop.

More Information

Other: A manual for raising non-grant funding for social rental housing
101KB PDF Document

Final Report: No. 036: Policy options for stimulating private sector involvement in affordable housing across Australia: operationalising and implementing viable new options
3.71 MB PDF Document

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