City Chats: A holistic approach to community housing

New ways of financing and developing housing projects are essential if Australia is going to meet the demand for affordable housing into the future.

‍That’s the view of three community housing experts who recently participated in City Collective’s City Chats panel discussion on the topic A holistic approach to community housing.

‍Managing Director of Housing Choices Australia Michael Lennon said he had seen public housing projects fail dramatically in the UK, where he witnessed residents celebrating when their community housing towers were demolished just 25 years after they were built.

‍“You can say we’re going to build this cheap and stack them high and try to get a lowest unit cost, but it will come back to bite you very heavily, in a financial sense, but also in the behaviours you get in those places,” Lennon told event attendees.

‍“So if you are going to do this as a civil society, you do it to a reasonable standard.

‍“The test for us is are you prepared to live in these dwellings, and they should be at least as good as their surrounding environment, so you take away the stigma.”

Lennon advocates for a public-private hybrid model, which incentivises the creation of quality, sustainable developments.

‍“These models came from Germany and northern Europe who never had public housing models, they had locally-based models sitting between government and market.

‍“The obvious thing is if you’re spending your own money and you have a great big pile of commercial debt you don’t do stupid things … you have to generate revenue, you have to repay the debt.

‍“The problem is you can’t provide subsidised housing without subsidy … the capital required to build isn’t generated by the income streams created once it’s operational.

‍“You can do things with tax concessions, cheaper finance, contributions of land, but fundamentally you have to bridge that gap between the net income streams and the capital that has to be serviced.”

‍Architect Justin Kearnan from City Collective believes the build-to-rent model, which involves developers building units with a view to leasing rather than selling them, could work in Australia, as it has in the US. The problem, he says, is Australian banks.

‍“The biggest difference between the US and Australia in that model is the banks, and how they lend in that space,“ Justin said.

‍“When you look at the banking sector in Australia, there are 16 AAA rated banks in the world, and four of them are here.

‍“So your access to capital from the banking sector here is really hard. Until we can get our heads around how secure and safe the model is, there’s not going to be much change here.

‍“Public-private partnerships are really the only option.”

‍SA Housing Authority Chief Executive Michael Buchan said governments need to come together to meet Australia’s community housing need.

‍“The reality is that this conversation has to take place at all three levels of government,” he said.

“Local government plays its part in terms of planning initiatives … state government in terms of their role in housing, they still have a significant housing stock, which is a huge asset to throw at the challenge.

“But equally where does the real money come from? It tends to come from the commonwealth … that real leadership in terms of transformational subsidy is probably going to come from the commonwealth government.”

‍Lennon believes another option is long-term, mixed renting between social community renters and market renters. He says there are a number of changes required for this to be possible on a large scale, including better access to finance, the provision of subsidised and underutilised government land, and a relaxation of the regulatory environment.

‍“This is happening in Redfern in Sydney and there are three sites in Melbourne, so this is one of the things in SA that we might start to explore.”

‍Listen to this discussion in full on the City Chats podcast on Apple Podcasts, Spotify, Google or search on your favourite podcast player.