Australia will become home to an Affordable Housing Register that will unlock the private sector to participate in affordable housing in an effort to solve the nation’s housing crisis.
Non-profit organisation Housing All Australians (HAA) and digital property exchange platform PEXA will drive the register, which will bring together local government, the real estate industry, developers and private investors to create, invest in and manage affordable housing.
HAA Founder and Executive Director Robert Pradolin said all homes on the register would be rented out at well below market rate for a period of 30 years.
He said the register would serve as a centralised platform and repository for recording the affordable housing commitments, while providing governments with the ability to transparently monitor the compliance of all stakeholders.
The register ensures developers, property owners and tenants uphold their obligations, such as the committed period of below market rent, to guarantee the long-term affordability of the homes created.
“This unlocks the private sector to participate in affordable housing, with a transparency that’s never been offered before in the world, in my view,” Mr Pradolin said.
“At the moment, the government is funnelling all of the affordable housing towards the not-for-profit sector because they are controlled by the housing registrar, and government can be certain that the affordable housing will be kept affordable.
“What the affordable housing register will do is provide a transparency and compliance mechanism that will allow the private sector to manage affordable housing, while government keeps an oversight in the long-term and the housing is kept affordable for the time of the commitment.”
Mr Pradolin said the model would work nationwide, as every town in Australia had a council, a real estate agent or property manager and developers.
The register will seamlessly integrate with HAA’s Progressive Residential Affordability Development Solution (PRADS), which enables the creation of affordable housing without relying on government subsidies or funding.
With PRADS, the private sector works with government to create additional value within housing developments, which is then used to subsidise affordable housing.
This additional value can be created in various ways, such as increasing development density or through negotiated outcomes of rezoning applications.
The resulting affordable housing obligations are secured on title, with rents set below market rates for at least 30 years, allowing developers to sell the affordable housing to investors, while the government maintains oversight, through the AHR, to ensure the affordability is maintained for the agreed period.
Mr Pradolin said investors would pay less for the homes and after 30 years be able to sell them at market rate.
“The percentage return is exactly the same for the investor for an affordable home as a normal market home,” he said.
“The only difference is the reduction in price is offset by the additional value that’s created when the council and developer says, ‘I’ll give you increased height’.”
Mr Pradolin said the register and this model of providing housing made a lot of sense as a self-managed super fund.
PEXA Group Chief Executive Officer, Glenn King, described the register as an important step toward ensuring transparency on affordable housing commitments.
“At PEXA, we are driven by our purpose and there’s no greater purpose for us than applying our technology capabilities to help resolve Australia’s urgent housing crisis,” he said.
“If we do not collectively solve this issue it will challenge the future prosperity of our country.
“This is a societal problem that requires true collaboration between business and the public sector, and it’s this kind of ‘out of the box’ thinking being driven by organisations, like HAA, that will pave the way for innovative, new solutions to Australia’s housing challenges.”
The register will be a national platform, but will be trialled in Melbourne first, with City of Port Phillip, the City of Yarra, and the City of Melbourne staff playing pivotal roles in the pilot working group, which is expected to conclude early next month.
Melbourne Lord Mayor Sally Capp said she strongly supported the initiative.
“The AHR will help magnify the outcomes from the City of Melbourne’s affordable housing strategy,” she said.
“By unlocking private sector capital, we can offer affordable housing for essential workers that is closer to their workplaces, strengthening our local communities.”
Municipal Association of Victoria Chief Executive Officer Kelly Grigsby said local government held a vital responsibility in this process and industry collaboration was important.
“The PRADS approach is another constructive way to support productive partnerships between the development industry and local government which, over time, could generate substantial quantities of affordable housing,” she said.
“We also believe the AHR will fill a significant gap, helping councils monitor voluntary agreements with developers over the long term.”
Mr Pradolin said the introduction of the AHR will replace the outdated Excel spreadsheets most councils currently use to keep track of the voluntary affordable housing agreements.
The AHR can be used in the build-to-sell and build-to-rent markets.
Christian Graham, who is the head of build-to-rent platform HOME, said developers were eager to collaborate with local governments to ensure ongoing compliance and affordability in negotiated housing.
“HOME owns and manages affordable housing in one of our BTR communities and, subject to regulatory incentives, we believe more should be done in this space,” he said.
“Through the transparency and oversight provided to government by the AHR, we now have a tool that supports the BTR operator managing its entire portfolio.
“This is a significant innovation for our sector.”