Government releases details of Housing Australia financing

The government has released for consultation the criteria and type of finance that Housing Australia (the new name for the National Housing Finance and Investment Corporation) will offer as part of the Housing Australia Future Fund (HAFF) and National Housing Accord.

Housing Australia has the primary responsibility for delivering on the government’s commitment to deliver 30,000 social and affordable homes over five years. These include:

• 20,000 social housing homes, including 4,000 homes for women and children impacted by domestic and family violence and older women at risk of homelessness.
• 10,000 affordable homes for frontline workers including, but not limited to, police, nurses and cleaners.

Through the National Housing Accord, the body will also encourage private sector investment in projects that deal with these matters and support an additional 10,000 affordable dwellings over five years from 2024 through an availability payment model.

While the Housing Act passed Parliament last month, new details have now emerged of how the body will invest in social and affordable housing through the $10 billion fund.

According to a newly released fact sheet from Treasury, Housing Australia could offer loans, grants or a combination of the two to eligible project proponents to support social and affordable housing projects.

Grants can either take the form of upfront capital to support project financing at the project delivery stage or ongoing service payments for making housing available on agreed terms.

Housing Australia will seek applications for funding from eligible project proponents for HAFF and Accord financing through funding rounds and then assess these applications against certain criteria before offering successful projects financial support.

This financial support may include:

• Availability payments – Regular, ongoing payments to eligible funding recipients for a period of up to 25 years if housing is made available on agreed terms. According to Treasury, these will provide eligible funding recipients an “ongoing, government-backed income source to help close the gap between the commercial cost of developing, supplying and maintaining social and affordable housing and the rent they receive from tenants”.
• Concessional loans – Loans may be offered “on a highly-concessional basis”, including interest-free loans and on terms of up to 25 years, to provide upfront financing to eligible project proponents. “The loans may be available where required to support a project’s viability, and the amount will vary on a project-by-project basis,” Treasury said.
• Upfront capital grants – Where private financing cannot be sourced, upfront capital grants may be available to support some social housing projects. Treasury said it is intended that this financing type be prioritised for “smaller, regional or remote projects”.

Consultation launches

The government is now seeking views from interested parties on exposure draft amendments to the Housing Australia Investment Mandate Amendment (Social Housing, Affordable Housing and Acute Housing Needs) Direction 2023.

The amendment set out how Housing Australia will deliver its mandate in financing projects.

For example, it outlines that the body must take all reasonable steps to make loans or grants or enter into contracts to make loans or grants in order to make available a minimum of 1,200 dwellings in each state and territory within five years.

The body must also ensure that the risk that the loan will not be repaid “does not exceed an acceptable level” and that the project delivers value for money, in terms of the amount of housing delivered relative to the amount of government support provided.

In conjunction with the above, projects may wish to leverage support from other Housing Australia programs (such as the Affordable Housing Bond Aggregator or the $575 million National Housing Infrastructure Facility) or supplement with financing from the private sector.

What can be financed?

Eligible projects could include those that will increase available social housing or affordable housing (or both) through the construction of new homes, the purchase of newly built homes, the renovation of an existing residential dwelling that was otherwise uninhabitable or the conversion of a non-residential property to a residential dwelling.

However, dwellings built using Housing Australia funding must meet the energy efficiency standard (including a 7‑star energy efficiency rating as per the Nationwide House Energy Rating Scheme) and the livable housing design standard (which is designed to improve accessibility and usability for occupants and visitors, including older people and people with mobility limitations).

According to the government, the energy and living requirements must be met regardless of whether the state or territory in which the project will be undertaken has adopted the standards or not.

This aims to ensure that financed projects “minimise household emissions, lower energy bills, have long-term sustainability and accommodate tenants with differing needs” and can be utilised by a wide range of tenant occupants without the need for extensive renovations in the future.

Finance will only be provided to the following:

• Constitutional corporations engaging in activities, functions, relationships or business that improve housing outcomes.
• States and territories.
• Entities that are improving housing outcomes specifically for people located in a territory, Aboriginal and Torres Strait Islander people, members of the Australian Defence Force or ‘aliens’ (i.e. a person born outside of Australia who is not Australian).

Interested parties are being invited to comment on the consultation until 8 November.

New board member

Earlier this month, the Albanese government confirmed the appointment of the first Housing Australia board member since its rebranding.

[Related: ‘New era’ under Housing Australia commences: Julie Collins]