The government, community housing providers, not-for-profit sector and property industry are finding new ways to access funding to build new social and affordable housing, but the community housing sector is still looking for additional funds.
The government, community housing providers, not-for-profit sector and property industry are finding new ways to access funding to build new social and affordable housing, but the community housing sector is still looking for additional funds.
Chris Smith said new funding options for social housing in Western Australia must be given consideration given the priority waitlist of 2,000 and overall 25,000 eligible families in the state.
The Foundation Housing chief executive welcomed recent moves by business and the state government, but said an even greater commitment was needed across the community.
Foundation Housing was the first WA beneficiary of the National Housing Finance and Investment Corporation’s bond issue last month, allowing it to refinance its $35 million debt facility to build more than 50 new houses in the future.
The federal government established NHFIC in June 2018 to provide low-interest loans to community housing providers to enable them to build more properties.
The second bond provided a rate of 2.07 per cent for a 10.5-year loan, which, according to NHFIC, could save participating community-housing providers $50 million in interest payments over the next 10 years.
Mr Smith said the lower interest rate on the organisation’s debt with NHFIC would help it leverage its core portfolio to offset the capital cost.
“It will allow us to leverage $10 million in development capital so we would like to think by redeveloping existing sites or working with the government or other parties that we will be able to deliver 50 new homes as a result of that freed-up capital,” Mr Smith told Business News.
NHFIC chief executive Nathan Dal Bon said the corporation was pleased with the strong level of demand for its bonds from local superannuation funds, including Cbus and UniSuper, and offshore investors.
Mr Smith said while NHFIC made a vital contribution to the sector, Foundation Housing was seeking additional funding sources including asset transfers, capital grants or institutional investment.
Social enterprise The Big Issue’s Home for Homes initiative, which raises money for social and affordable housing, started in the eastern states in 2015 and expanded to WA in late 2018.
It involves working with property developers and individuals to add an optional caveat so people can donate 0.1 per cent of the sale price when they sell their property to Homes for Homes.
Once the money has been raised, an independent panel consisting of housing experts from WA evaluates bids from community housing providers.
The idea is based on an initiative from US property group Lennar, which has operated a similar program in the past.
Big Issue and Homes for Homes chief executive Steven Persson said it was increasingly the case that, once developers gave their buyers the opportunity to participate, many people wanted to make the contribution.
“Eighty per cent of people and rising do not take it off, they want to make a contribution knowing that they don’t have to make this contribution until they sell in seven, 10 years’ time,” Mr Persson told Business News.
LWP Group was the first developer in WA to embed Homes for Homes in their Ellenbrook development, which includes about 1,500 lots.
DevelopmentWA has also adopted Homes for Homes in its EOI process for the development of Montario Quarter in Shenton Park.
“If over 30 years, if only 5 per cent of the national market made a contribution towards the issue, it would raise well over a billion dollars, so if everyone made a contribution on a recurrent basis, because sale after sale, year after year, we could not only make a dent in the issue, perhaps we could actually control the issue completely,” Mr Persson said.
The state government has also committed to building more social and affordable housing, announcing in early December a $71.8 million increase for homelessness services and a $150 million Housing Investment Package to build more than 500 social or affordable homes and 70 to be refurbished.
The homelessness services funding will build two new Common Ground facilities, which provide a mix of permanent, affordable housing linked with dedicated support services.
Mr Smith welcomed these announcements but said there would still be a gap of close to 24,500 homes that needed to be built to meet the demand in the community.
He said he would like to see a commitment to transfer 2,000 or 3,000 of the 36,000 properties under the control of the Department of Communities to the sector.
This move, Mr Smith said, would give the sector the scale to deliver 600 new homes.
“It would also have significant cost savings for the state government in terms of how we run those properties at $5,000 surplus [and] they run them at a $15,000 deficit,” he said.
“The current savings the government could realise could be significant.”
