Assemble developer is rightly being criticised for reneging on its “affordable housing” permit condition and the State government is to blame. However, the use of the planning scheme to mandate “affordable” housing was doomed to failure from the start.
Local councils are attempting to issue permits for new developments that include some affordable housing component. But what is “affordable housing” and how can councils mandate it?
The housing affordability model generally takes one of these options:
- developers “gifting” properties to housing organisations, who then manage them
- rent-to-buy schemes for renters, and/or
- rent control
The Assemble outcome is for rent-controlled properties without a purchasing pathway. It should be noted that Assemble is a for-profit development company funded by industry super. That means the retirement incomes of ordinary working Australians are invested. They are also a builder for State governments of true, publicly-owned social housing.
The problems with these schemes is simple:
- Project feasibility is compromised. If I effectively give away 10% of my apartments, the other buyers will have to make up the financial shortfall
- It relies on ongoing housing agency capacity, funding and clients
- Upfront price, ongoing rent, and other cost vectors of housing are not fixed and changes to the basic economics can render these schemes uneconomic
- Renters can be locked in long-term to a housing solution that no longer suits them
Housing First, a social housing agency, is in the process of selling gifted properties and relocating the tenants. https://gdaystkilda.com.au/housingfirst-to-sell-homes-despite-resident-concerns/ There are no guarantees that social housing agencies can manage the properties as originally envisaged, forever. They themselves rely on government funding streams, which may change.
Rent controls presume rents are always increasing. If the mish-mash of housing policies actually work, the rents should fall. What happens then?
What happens to home buyers who lose their job? Partner up? Have a family? The two-bedroom apartment overlooking a cool bar is less attractive if your personal circumstances change, but you are locked into a long-term contract.
The situation is further confused, because the State government gave Assemble additional floors, in return for the “affordable” housing. It is no surprise that the State government proceeded with the development, as local councils’ influence over the planning scheme is substantially reduced due to “Better Decisions Made Faster” which cuts them out of the approval process to improve supply, which is the primary policy outcome.
If the State government wants social housing, it should pay for it. This is just another way that they are avoiding their obligations.
Multi-unit, off-the-plan developments come with risk. A rent-controlled or rent-to-buy financial model cannot insulate renters or owners from building quality or other amenity issues in a new development.
Mel Yuan for Brunswick 
Leave a comment