“No one will be left behind”: how government’s social housing model could play out at public housing towers

Could the state government’s “ground-lease” social housing model, as seen in recent developments such as those in Prahran, provide the formula for what’s to come at the 44 soon-to-be-demolished public housing towers across Melbourne?

Residents living in high-rise public housing towers across North Melbourne, Kensington and Flemington are among the many who remain anxiously in limbo after the state government announced it would redevelop their homes by 2051.

While renewal of the towers, which were built in the aftermath of World War II, has been widely welcomed, residents’ fears of displacement during the redevelopment process have yet to be appropriately addressed by Homes Victoria.

Further, concerns around the prospect of public land being sold to developers, and vulnerable residents being priced out of housing in the government’s transition from public to “social housing” are also ongoing.

Currently, there are 10,000 people living across the 44 towers but after all the sites are rebuilt, the government said 30,000 people were expected to be housed, along with a boost of 10 per cent more social housing across the sites. However, it is reported that 11,000 homes would be provided for public housing tenants, with 19,000 other residents “in a mixture of social and market housing”.

Housing definitions, albeit rather technical, are important in this discussion and are all too often misunderstood, and many would argue understandably so, too, in a world where “social housing” has become the new term of choice for government.

“Public housing” is owned and managed by the state and rent is typically determined at 25 per cent of income. But recent trends show the government is increasingly keen to abdicate from its role as a landlord, with next to no new public housing having been built in Victoria for some time. It’s also been on decline nationally in recent decades.

Then there’s “community housing”, which is owned and managed by a housing organisation. While rents and conditions can vary depending on the provider, rent is typically understood to start at around 30 per cent of income.

And finally, there’s “affordable housing”, which is generally understood to mean housing for essential service workers who can’t afford to live close to where they’re employed. As a rule of thumb, it’s usually considered affordable if it costs less than 30 per cent of gross household income and eligibility limits apply.

Why are these distinctions important? Well, with the waiting list for public housing (or the Victorian Housing Register as it’s now known) having outpaced investment for some time, affordability remains a key issue for many of our most vulnerable. So, too, does who owns and manages the housing – government, or community housing provider?

While the government’s decision to group both public and community housing together under the umbrella term of “social housing” has sought to simplify the situation, many would contend that it has only added to the confusion.

But moving away from the technicalities, what could all of this mean for the future of housing in this state in the wake of the government’s major announcement regarding the high-rise towers?

The short answer is we still don’t know, and we may not for some time until development agreements are in place. However, what might be considered a useful exercise is to look at what the government is currently doing in this space.

Steve Bevington is the managing director of Community Housing Limited (CHL) – a not-for-profit organisation working with two separate consortia alongside Homes Victoria on “ground-lease model” housing projects in various locations across Melbourne, including Prahran, Brighton, South Yarra, Hampton East, Port Melbourne, and Flemington.

CHL operates among a large group of organisations in the community housing sector, which today manages around 25 per cent of all social housing in Australia.

It’s an industry that Mr Bevington said had helped ensure that the “quantum of social and affordable housing” hadn’t decreased nationally over the past 25 years, despite public housing going in the opposite trajectory.

He told North West City News there were many benefits to community housing providers financing, constructing and managing social housing, namely boosting supply irrespective of which political party was in government.

“Really what’s been happening over the past 25 years is there has been a movement where the community housing sector has grown in comparison to the public housing sector and it reflects the level of investment,” he said.

“The national agreement as far as housing goes was you [state governments] charge these rents, and you make it work. And we’ll [Commonwealth] give you a grant under the national housing and homelessness agreement and you can add more stock. But as time has gone on, that funding has just been eaten up in maintenance and what’s happened along the way is that stock has declined.”

“Some governments want to invest [in housing], others don’t want to invest. Public housing is not popular with one side of the politics, and it’s more popular with the other side of politics and so you have this kind of stop-start type of funding stream.”

“The community housing sector has a consistent mandate; essentially, we have to put our hearts, souls and any surpluses we have into generating more housing. That’s the reality. And over 25 years, that’s what’s happened. The community housing sector has filled the breach.”

Under the “ground lease” model, public land is leased from Homes Victoria to a consortium, which finances, designs, and constructs new housing. The community housing provider, such as CHL, manages and maintains the sites for 40 years, before handing the land, and dwellings back to the government.

A render of the CHL development at Bangs St, Prahran.

Across seven projects spanning from Hampton East to Flemington, Mr Bevington said more than 2700 new dwellings, made up of social, affordable, specialist disability and market rental homes, were currently being provided under the model to create “homogenous communities” complete with a range of new shared facilities and services.

The units being provided are more modern, energy-efficient, flexible, and accessible in comparison to the aging public housing stock, which is notoriously too hot and too cold, and leaves its residents further out of pocket in utility bills.

While community housing tends to work at slightly higher “income adjustable” rents to that of public housing, Mr Bevington said residents were no worse off thanks to more liveable housing, lower expenses, and the ability to access Commonwealth Rent Assistance.

He also argued there was greater accountability in the community housing sector as it was heavily regulated by the Victorian Housing Registrar, where any issues or complaints could be directed, as opposed to a local MP under the public system.

The ground-lease framework is one which many predict will be replicated across the 44 public housing towers, and while Mr Bevington wasn’t able to weigh into making a similar prediction, he did say it made for a good act to follow.    

“What you could say is there is a model which is live already in evidence, and one can look at the progress of that and see how future tenants might assess whether the tower redevelopments are a good plan or not,” he said.

The projects are a part of the government’s “Big Housing Build”, which it says will collectively construct 9300 social and 2900 affordable homes and create 10,000 jobs over four years.

Many have questioned its ability to meet such lofty targets given current economic restraints and skills shortages, but Mr Bevington said the same pressures didn’t necessarily apply to the community housing sector.

“There are various taxation advantages to being a charity that allow us to build a bit more cheaply, and one of those is that as long as you charge rents at no more than 75 per cent of market rate then you don’t have to pay GST on your properties,” he said.

“This is a very affordable way of developing projects because you’ve got market rentals which we can charge higher for at the market rate and that subsidises the social and affordable rental, so in the end it’s going to cost the government less to run it through a model such as this.”

Mr Bevington added that while sourcing interim housing for displaced residents during development was a matter for government, all residents at projects he was involved with were given first choice to return to the newly built homes. Some had even been employed during construction.

He’s adamant that under this model, “no one will be left behind”.

“Under this model, there is a greater ability to create more housing. The problem with that is that it still requires public investment, and we spend our lives thinking up different ways we can generate housing.”

“That’s why in the end collectively all the different organisations around community housing sector are all vigorously and dynamically generating more housing projects and in the end the result is three times more community housing in the past 25 years and a 15 per cent or so loss in public housing.”

“In the end, you have to have an extremely motivated public housing department with continuously engaged staff all along the way to be able to add stock and the net product is it hasn’t happened. It’s actually declined.” •