1. Affordable Rental Housing
Steve Bevington Managing Director Community Housing Limited Group, Australia

2. Common myths about home ownership and renting
In rich countries everyone owns their home?
There does not appear to be a correlation between wealth of a country and the size of home ownership and rental sectors
Everyone wants to be a homeowner?
It depends on the overall housing system, availability of long-term tenure, ability to plan around housing costs and options for wealth generation
Home ownership offers people a better life?
It depends on whether the home owned fits with livelihood, study and family needs and whether the cost of ownership can be afforded.

3. Why do people rent?
Provides housing for those without sufficient income or equity to secure home ownership
Flexibility in managing household budget
Accommodates transitory periods in people’s lives from single to family sizes without taxes associated with home ownership
Supports mobility for work and study
Reduces the level of financial commitment to maintain accommodation
For lower income workers allows more disposable income for needs of family
For higher income families allows more diverse options for wealth creation

4. Rental Housing in Europe, Asia and South America
The proportion of rental housing compared to home ownership varies:-
In Europe for rental housing in 2007 compared to home ownership was 29% ranging between 60% in Switzerland to 2% in Romania. Renters occupy 89% of housing in Berlin and 41% in London.
In Australia the proportion of rental housing is also 29% of the housing market.
Accurate figures are much harder to secure for Asia to assess the size of the rental market. It is 11% in India but in cities such as Bangalore- 55%. In Thailand it is 13% but 41% in Bangkok.
It varies greatly South America. In Brazil the rental market is 25% whilst in Sao Paulo it is 20%

5. Issues impacting rental housing affordability
Economic factors
Public policy/Institutional factors
Land supply and planning policy
Housing design and size
Housing construction costs and methodology
Tenure
Financing

6. Role of not for profits in the provision of affordable rental housing
Long-term affordability is the focus and ability to cater to the lowest income group and those in highest need
Able to attract private finance and leverage existing stock
Be a conduit between private and public sector
Strong community support
External supports, financing, subsidies
Responsive localised services
Maximising long term social outcomes
Neighborhood revitalization

7. Not for profit rental housing sector in Europe
In UK 35% of the market is rental housing evenly split between social and private rental.
In Sweden over 500,000 homes have been built by tenant and owner co-ops.
Housing cooperatives form over half the housing stock in the country. Municipal Housing Companies, owned by local Councils, provide another 800,000 units of housing
In the Netherlands, nearly 600 housing associations provide about a third of the housing market.

8. Not for profit rental housing sector in the UK
1,700 English housing associations employing over 133,000 staff managing 2.4 million homes in the sector
Around 400 associations manage over 1,000 properties
Around 59 groups with more than 10,000 properties under management account for 44% of homes in the sector
Source: Department of Families, Housing, Community Services and Indigenous Affairs Report

9. Affordable rental housing in Australia
The Housing system in Australia is one of the least affordable in the world. 89% live in cities with 40% in the two largest cities, Sydney and Melbourne. Both are amongst the top five least affordable cities in the world.
Australia has steadily reduced its investment in affordable rental housing so that it now represents just 4% of the stock:-
The number of affordable rental housing dwellings declined by more than 40,000 from 372,000 in 1996 to 330,000 in but has risen to 421,000 in 2013.
Demand for public housing is estimated to rise by 28% or about 93,000 houses by 2023
220,000 additional affordable housing dwellings needed to be built between 2010 and 2020.

10. Not for profit rental housing sector in Australia
Currently there around 700 community housing providers in Australia managing 66,000 tenancy (rental) units at 30 June (AIHW)
Australian governments have committed to develop, over time, a large scale not-for-profit sector comprising up to 35 per cent of social housing by 2014.
Develop a not-for-profit sector that leverages private finance against its assets as well as attracting Government subsidies may play an important role in achieving growth in stock
The public and not for profit housing system holds over $80 billion of assets
Over $2.64 billion of Commonwealth government funding is invested in the social housing system each year

11. Example: Community Housing Ltd
An Australian not-for-profit company delivering affordable housing to those on low incomes
Established in Australia in 1993 and has spread operations to South Asia, South- East Asia and South America
Focussed on developing housing options for those experiencing housing difficulty so they can enjoy stable lives, raise families, and engage in employment or study
A nationally accredited and registered organisation with more than 5,700 properties under rental management across Australia
Internationally operating in Timor Leste, Chile, Papua New Guinea and India. CHL aims to assist those who are disadvantaged by market failure by securing a pathway to home ownership or affordable rental accommodation.

12. What can drive rental housing supply?
Establish Institutional framework to drive supply:
Effective regulation of housing provider system
Appropriate rental legislation
Stimulus to generate housing development through:-
planning incentives,
land supply,
government grants,
taxation relief
Rental subsidies
Financing guarantees

13. Introduce a regulatory code
A Code, registration and monitoring system covering:-
Delivery of housing services to tenants
Management of housing assets
How providers ensure housing supply and management meets the needs of communities it assists
Standards of governance
Standards of probity
Financial viability and management
Quality assurance and continuous improvement

14. Affordable rental housing programs
Affordable rental programs can be introduced through subsidies to reduce the cost of market rental either through direct Government provided capital grant programs or direct provision of housing.
Rental eligibility requirements are necessary to ensure that housing is allocated to those in greatest need.
Income adjusted or discounted market rent systems ensure affordability
Effective regulation of affordable rental providers ensures public confidence in the delivery of rental operations and allocation of subsidies
Rent to Buy programs allow tenants an affordable rent in order to save for a deposit and secure a home loan.
Shared equity allows a home owner to gain entry through owning part of a home and when income rises purchase the remainder. These need an equity partner — either a financial institution or a government-backed provider.

15. Housing management services
Organised and accountable systems for volume management of rental housing including
Tenancy allocation- accountable process for advertising, assessment of eligibility, matching stock to applicant and tenancy start
Rent setting and collection- locally focussed and accountable rent setting and collection practices supported by sophisticated business systems
Community engagement- community based engagement to ensure neighbour relations and low cost management practices
Asset management- sophisticated system of procurement; responsive and cyclical maintenance and disposal strategies

16. Affordable Housing Design
Using design to improve affordability-
By an appropriate arrangement of internal spaces to minimize unused space, limit unnecessary common parts, use room height to introduce mezzanine levels.
Modern built in furnishing to create dual use rooms
Use of lightweight construction materials to reduce the cost of expensive foundation engineering
Reducing cost of utilities by introducing solar hot water supply and solar panels for electricity supply
Using on site water capture and recycling water to reduce the cost of supply
Design for heat capture through thermal mass in cold climates and passive cooling in warm temperatures to reduce the cost of heating and air-conditioning

17. Successful design examples
Passive solar design- NSW, Australia
CHL designed and built 10 affordable housing units in an ecologically sensitive environment
Using ‘green’ building products such as aerated concrete Hebel panels and locally sourced hardwood weatherboards
Apartment building on periphery of Melbourne
In partnership with a community group who purchased the land and worked on Landscaping
Providing affordable rental housing for locals, including people with disabilities
Who will be informally supported by their families and the community

18. Construction- Low Cost Systems
Prefabricated housing
Housing is designed to suit the context and manufactured off-site in a factory via a production line
Can be ‘flat-packed’ to reduce transport costs
Low tech solutions
Procedures and processes are put in place to enable employment of a local labour force to construct housing
Appropriate technology, designs and contemporary materials are introduced for good quality outcomes

19. Low Cost Construction 1: Prefab Construction
Prefabricated housing offers the following advantages:
Housing is designed to suit the context and manufactured off- site in a factory via a production line process
Using modules to enable a variety of design responses
This ensures a quality controlled product and climate controlled work conditions
This is especially useful to counter adverse site conditions
Economies of scale result when a ‘critical mass’ of units is pre- fabricated, and the cost per unit is reduced to a competitive level; for smaller projects, pre-fabs may be too expensive
Delivery costs are minimised by designing units that can be ‘flat-packed’ for wall, floor and roof elements, thus saving Container space
Road access to the final site must be capable of supporting heavy transport vehicles delivering units
The modular units can be assembled on site using a local labour force under supervision
A training program is required initially but on-site assembly is a relatively simple process
CHL is constructing up to 200 units in Port Moresby PNG using pre-fabricated methodology

20. Low Cost Construction 2: Low tech solutions
Design housing prototypes that suit the local context
Include flexibility for different family groups and site conditions
Identify affordable materials to be used in construction; what can be sourced locally?
Generating local employment through a construction program-
Plan a Training program to develop a skilled workforce & offer Trades Certification for on the job learning, leading to future employment
Design a construction process to maximise local labour inputs and
This helps to build a ‘sense of ownership’ with future residents working on their own houses
Use modern building technology such as engineered footing design and steel roof frames to ensure housing meets criteria such as low maintenance; 40 year min. lifespan; thermal comfort
CHL is currently building 87 units in Suai, Timor Leste using locally made cement stabilised pressed earth bricks- employing local workers supervised by CHL

21. Delivered Front Line for Social Housing
Rental Housing Financing
Private investors investing into social and affordable housing projects through special investment vehicles
Capital grant from Government with balance provided by private partner using Equity contribution or conventional borrowing
Contribution by regulated providers leveraging equity in the existing portfolio
Private Funding
Government Grants
Equity Contribution
Direct development funding, borrowed from mainstream banking institutions, based on the return
Government Subsidies
Delivered Front Line for Social Housing
Rental subsidies payable by Govenment on properties tenanted to public at reduced rent.
Conventional
borrowing
Joint
Ventures
Donations
Philanthropic funding
Joint Ventures between private sector, not for profit and public sector