Affordable build to rent project wins award

A Queensland community housing provider is ‘over the moon’ after winning an UDIA’s Affordable Housing award for what it has dubbed Australia’s first truly affordable build to rent project.

Churches for Christ Housing Services took out the award for its 50-dwelling townhouse complex in Kallangur, in Brisbane’s northern suburbs. The development, which includes a community centre, was built on well-located land gifted to the organisation by local philanthropists Ian and Neva Handy.

CoC Housing Services General Manager Frances Paterson-Fleider says the successful partnership of local philanthropists, funding by their parent organisation Churches of Christ in Queensland, and a local builder National Construction Management (who they had used previously) who was willing to provide a fixed price for the project, all assisted to make it affordable.

Frances says her organisation was delighted at the win, particularly knowing it was competing against property heavy weights like Grocon.

The award ‘recognises outstanding product that’s pricing is aligned with the selected target market and has considered issues such as ongoing operating costs, sustainability, its integration with the local community, and quality finishes amongst other criteria.’

The UDIA noted that the townhouses, ‘deliver well considered design, construction quality, and diversity of product focussed around a community centre and adjacent open space. The development considered both lifecycle costs and practical sustainable initiatives within a tight budget. The project received strong market acceptance from individuals and families in need of safe and quality accommodation at an affordable price.’

‘This was an amazing outcome for Churches of Christ and our Housing team,’ Frances says. ‘I believe every staff member had a role to play in this achievement – whether direct or supporting processes or holding the fort while staff worked on this.

‘Thank you everyone – a remarkable achievement to be recognised by our peers and most importantly, transforming the lives of another 50 households.’

Life post NRAS

Since mid-2017, CHIA has been talking to the Commonwealth Department of Social Services about the impending wind down of the National Rental Affordability Scheme (NRAS).

Athough 198 incentives will expire in 2018, there are still 1,850 incentives still to be delivered  so the overall pool of active NRAS dwellings will not actually fall until 2020.

After 2020, the rate of NRAS expiries will ramp up to a peak of 9,178 in 2024. By 2026, a total of 36,721 will have left the system.

Community housing organisations currently hold about 40 per cent of al  NRAS incentives. Those NRAS subsidies are worth $140m pa plus a rental stream of between $210m and $500m. This is significant, given the 2017-18 Report on Government Services noted the total income from social housing rents was about $600m a year.

CHIA’s suggestions for easing the transition included:

a reduced rate NRAS (say $5,000) for another few years to encourage investors to keep the dwellings as affordable
putting any ‘handed back’ NRAS incentives into a pool and offering them to landlords to maintain expiring properties in the scheme [no cost to budget]
an ‘availability subsidy’ to take the place of NRAS to enable Community housing organisations to offer rental subsidies for  particular groups, such as single aged renters or family violence survivors.

NRAS exits

Calendar Year Number of Dwellings By State or Territory
ACT NSW NT QLD SA TAS VIC WA Total
2018 67 5 24 7 95 198
2019 32 433 181 179 59 286 50 1,220
2020 157 271 323 262 128 96 131 1,368
2021 393 380 12 1,080 515 153 261 266 3,060
2022 746 457 150 2,696 517 150 1,296 352 6,364
2023 93 605 125 2,499 806 25 1,356 1,110 6,619
2024 542 1,140 188 2,845 1,078 321 2,143 921 9,178
2025 60 1,188 532 603 240 98 501 891 4,113
2026 361 2,008 50 2 596 1,584 4,601
Total 2,384 6,549 1,057 10,232 3,623 1,537 6,034 5,305 36,721

 

 

 

 

 

 

 

 

DSS has kindly shared some unpublished data on the NRAS incentives held by community housing organisations that will expire year by year, state by state. The bulk of the community housing owned NRAS properties are in Queensland.

In support of the Treasury amendment

The Community Housing Industry Association has backed the objectives of the Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax and Other Measures) Bill 2018.

In a submission supporting the amendment, CHIA contends that the main benefit of the housing-related measures in the Bill will be to facilitate institutional investment in long-term residential rental housing.

The bill will limit access to tax concessions for foreign investors, and provide incentives for investors to increase the supply of affordable housing, including by offering individuals the opportunity to invest in residential property via Managed Investment Trusts rather than by becoming a landlord.

You can download the submission here.

Investors keen on Build to Rent

Institutional investors are extremely interested in Build to Rent (BTR) as a new investment class, a forum of community housing, local government, financiers and Development Victoria heard this week.

Alexandra Notay, from Places for People Capital UK, outlined the UK’s experience in developing Build to Rent as a new investment class that has interested funders keen to tap into a low, long-term and stable cashflow that will hedge against inflationary pressures and diversify their portfolios.

Large BTR investors in the UK include Australian super funds, she says.

Places for People has a social agenda to provide appropriate, well-located housing for disadvantaged tenants. It has diversified its housing activities to include a range of for-profit business arms, including a chain of gyms, with profits being funnelled back into affordable housing. BTR is a key part of its business model, with the organisation developing several large-scale, mixed tenure projects.

Like Australia, the UK has experienced a huge increase in house prices that has ensured many will rent for life, Ms Notay says, and BTR can offer those people secure, quality and affordable tenancies.

‘Whatever stage in life people are at, we want to be able to support them,’ Ms Notay says.

Build to rent product is fundamentally different to properties that are built to sell, she says. It involves a change of mindset with design implications for large scale developments that are never intended to be broken up to be sold individually and a need to consider the life-cycle of the build.

They also need to factor in other social aspects of housing, such as hedging against the rise of loneliness and depression.

Mike Myers from the National Affordable Housing Consortium, says that institutional investors in Australia are still wary of the fledgling BTR market here and are more likely to invest overseas. However, Mr Myers says the Federal Government’s National Rental Affordable Scheme was a great model that could be tweaked for the private sector to use for BTR, if the government was willing to support it.

CHIA CEO Peta Winzar says if the NHFIC’s $1b infrastructure fund could be used to fund BTR, ‘that would be a game changer’.

Ms Notay’s presentation was made possible by the NAHC, the Affordable Housing Industry Advisory Group and the Community Housing Industry Association of Australia (CHIA).