One of the reasons for the housing crisis in Australia is the significant lack of both social housing and affordable housing. According to the Everybody’s Home campaign, and many other housing experts, there is a social housing shortfall of more than 500,000 homes. Discontinuing the National Rental Affordability Scheme (NRAS) means Australians will lose access to 36,000 affordable homes by 2026. The growing pressure on governments to facilitate building more social housing and affordable housing is prompting people to ask how to become an affordable housing developers in Australia.
In this blog, we look at what is meant by affordable housing and the steps developers need to take if they are looking to invest in affordable housing.
What is affordable housing?
Affordable housing is subsidised rental housing for people in low-income households, including working people. It can encompass a range of housing types including:
- in-fill housing
- secondary dwellings
- boarding houses
- supportive accommodation
- residential flat buildings or residential developments – with community housing providers, public authorities, and joint ventures
- group homes.
Australia doesn’t have a common definition for affordable housing across local, state and federal jurisdictions and government programs. Generally, renters of affordable housing have their rents capped at between 75% and 80% of the market rent for that home. The rent difference is funded through a variety of government funding programs. The idea is that renters do not face rental stress – which occurs when rents go above 30% of gross income.
Affordable housing is an alternative for low income workers. While paying reasonable rent, affordable housing tenants are encouraged and supported to move back into the private rental market or home ownership.
Affordable housing is different from social housing. For more information on the difference between social housing and affordable housing and why both forms of housing matter read this 2023 paper by the Australian Housing and Urban Research Institute (AHURI).
Guidelines for assessing and administering affordable housing vary in each Australian state. For example, guidelines for how to become an affordable housing developer in NSW are outlined in the State Environmental Planning Policy (Affordable Rental Housing) 2009.
What are the requirements for affordable housing in Australia?
The requirements for affordable housing in Australia vary from state to state.
In NSW the requirements for how to become an affordable housing developer are covered in the State Environmental Planning Policy (Affordable Rental Housing) 2009 (SEPP). Like in other states, the legislation facilitates the effective delivery of new affordable housing by providing incentives such as expanded zoning permissibility, floor space ratio bonuses and non-discretionary development standards.
In all states there are requirements for affordable housing relating to land use zones, density, building heights, parking, solar access, and landscaping, as well as proximity to public transport, medical services and other community and support services.
In NSW, a home can only qualify as affordable housing under the SEPP if it is used for affordable housing for 10 years from the date of the issue of the occupation certificate and is managed by a registered community housing provider. Similar requirements may exist in other states.
Across Australia, affordable housing design must meet the Silver level accreditation against the national Livable Housing Design Guidelines. Affordable housing developments also need to comply with the National Construction Code.
How to become an affordable housing developer in Australia
1. Select a suitable site
Site selection is critical if you are looking at how to become an affordable housing developer in Australia. Developers are experts in site selection and may already have a site in mind for an affordable housing development. There are other sources of information and support to help developers select a suitable affordable housing site.
Local Councils have a great understanding of the land available for development or redevelopment in their area. Many councils have policies and programs to facilitate affordable housing for residents in their city or shire. They may also have land earmarked to sell or lease for housing. Community housing providers can also be a great source of knowledge and may have already identified sites in their area.
2. Design affordable housing that abides by all relevant legislation
For people wanting to know how to become an affordable housing developer in Australia an understanding of the national Livable Housing Design Guidelines is essential. Affordable housing must be accredited at a minimum of Silver level to meet seven core livable housing design elements. Incorporating these elements provides future flexibility and adaptability to avoid more costly home modifications that may be required down the track.
Developments must also comply with the National Construction Code and any relevant State Government development code and planning regulations. For example, in NSW there is State Environmental Planning Policy No 65— Design Quality of Residential Flat Development that may be applicable.
Affordable housing developments must also meet relevant local authority planning schemes. Generally, local Councils will assess a Development Application or facilitate Complying Development Consent.
3. Obtain a government grant
Housing is the responsibility of State governments in Australia. State governments have a range of mechanisms for people looking at how to become an affordable housing developer.
These range from providing incentives in areas such as floor space through State planning mechanisms such as NSW’s State Environmental Planning Policy (Affordable Rental Housing) 2009. Incentives are often obtained in negotiated planning agreements.
The Australian Government and local councils also have mechanisms and incentives to support affordable housing.
Sometimes governments make grants available to developers of affordable housing or to assist with upgrades of existing housing to be used as affordable housing. Check with the planning department in your state. A community housing provider will know the grants available for affordable housing. Increasingly grants are offered where a developer partners with a community housing provider.
4. Select a manager for the affordable housing
People looking at how to become an affordable housing developer in Australia need to think about who will manage the property and tenants once the development is built.
The management responsibilities are like any other form of rental housing such as setting and collecting rent, selecting tenants, signing contracts, carrying out property inspections and assisting tenants with requests. This is done in line with the relevant state residential tenancy legislation. In NSW this is the Residential Tenancies Act 2010.
In affordable housing programs there are specific requirements around levels of rent and tenant eligibility to comply with. You may wish to contact property and tenancy management out to a community housing provider, private real estate agent, or specialist property management service. For affordable housing properties developed under a State Government Affordable Rental Housing SEPP or similar mechanism, governments can require developers to use a registered community housing provider. This is the case in NSW.
There are a range of contractual arrangements you can use to engage a specialist tenancy and property manager. These include:
- fee for service – with or without risk sharing
- Affordable Housing Growth Program
- joint venture.
5. Team up with a community housing provider in your area
Partnering with an experienced community housing provider (CHP) can be an efficient and effective option for people looking to become an affordable housing developer in Australia. Combining expertise can deliver a project which neither partner can achieve by themselves.
CHPs are not-for-profit organisations that often work in specific geographical areas. You should work with a CHP that is registered with the national regulatory body. CHPs are registered into one of three tiers. Tier 1 CHPs are large organisations that offer property and tenancy management as well as development expertise. For a full list of CHPs visit the Registrar’s website.
6. Rent out each home and continue to support your tenants’ needs
People requiring affordable housing are often struggling with balancing work, family and bills.
Community housing providers are experts in property and rental management but also in connecting tenants to support services.
At Home in Place, we believe affordable housing provision is more than providing a roof over people’s heads. We are industry leaders in providing wrap around services that help sustain tenancies and help tenants to be actively engaged in their communities. We have many well established partnerships in place to provide this support.
Partner with Home In Place
Home in Place is a Tier 1 registered community housing provider that specialises in affordable housing as well as social housing and disability housing. Over 35 years we have grown to become one of Australia’s largest and most regarded providers of affordable housing and other community housing. We now manage more than 7,800 properties in NSW, Queensland, Victoria and New Zealand. Around 11% of our portfolio is in affordable housing.
Key to our success is the many partnerships we have with governments, developers, builders and community services agencies, providers and charities.
Home in Place has been selected by governments to deliver and manage a range of affordable housing and other community housing projects including the NSW Government’s Social and Affordable Housing Fund program. We delivered almost 500 social housing and affordable housing homes across 19 sites in the NSW Central Coast and Hunter Regions. The program involved partnerships with investors, developers and builders, and was delivered on time and on budget.
Read more about our development expertise and recent developments here.
We’d love to work with people looking at how to become an affordable housing developer in Australia. Contact us today.