How we grow from 10’s of homes to 100’s or 1,000’s

Sep 5, 2017 | Documents

The National Affordable Housing Consortium in Australia has more than one vehicle. They have a research development company, a property management company, a shared equity enterprise and a company for new business.

Mike Myers says that moving from simple delivery partnerships to build homes has meant the NAHC have had to grow different arms of their organisation. They’ve also had to develop policy partnerships because, he says, everyone needs to be connected into one approach to build capacity.

“We have to change so that together we can make a difference.”

They have the same problems with housing in Australia that we have here. Affordability stress is rising, the rental sector is not growing fast enough while social housing growth and home ownership rates are falling. Sound familiar?

Mike says the gap between the social housing safety net and the general market is too great for many tenants to bridge without some intervening steps that provide real alternatives.

Applicable lessons for capacity development

Australia-wide over three quarters of all community housing sector homes are provided by Tier 1 providers who typically manage some 1,850 dwellings each. Although most of these homes remain in state ownership, sector-owned assets are expanding. Tier 1 providers grew their total assets by 74% to $7.5 billion between 2010 and 2015. At least 23,000 new affordable homes have been built by Australian community housing providers since 2008.

Development of other emerging industries in Australia, such as renewable energy, superannuation, and out-of-home care provide some applicable lessons for capacity development for community housing providers. Lessons such as policy continuity and directional clarity being of paramount importance. And that stability and growth relies on Government subsidies being adequate, appropriate and assured.

They also show the potential contribution of specialist institutions to support key industry requirements, such as a custom designed financial intermediary to facilitate access to low–cost funds. The significance of fit-for-purpose and responsive regulatory frameworks also impact on capacity development. Designated agencies within Government also play a critical role to steward and champion an industry at an emergent phase of its development. Government-industry collaboration fosters effective industry development.

Mike Myers had considerably more to say at the conference and his comprehensive presentation can be found here.

He closed his presentation by commenting “Everyone in this room needs to be connected with each other to make sure we can get the change we need.”

“As individual organisations you will be able to create partnerships and alliances to drive ground-up reform. Whether that is in a specific location, or to meet a specific need. Think beyond the usual–who else has an interest in solving this issue.”

Time is short in the world of housing

Time is short in the world of housing and we’ve all been here before, says Kay Saville-Smith. Her presentation followed Mike Myers’.

She says we didn’t get here overnight. We’ve had around 25 years of stripping out the housing system in New Zealand and we now have a systems failure.

“The community housing providers that you represent have an important place in dealing with two dilemmas – how to get proper affordable housing for those who struggle to make a home for themselves and secondly, how to build houses that work because they’re priced and built right, are resilient and are homes. We can talk about beds, but really we mean homes and they need to go together.”

“We operate in a world of very big trends and these are structural – your people will be aging in place but also our community is aging. We have a tenure revolution and we are seeing home ownership rates sliding very fast. It’s even surprised me- and I’m a glass half empty person.”

And the final trend is the targeting by the building industry of high value housing, not the lower quartiles that New Zealand used to target. This means there’s an empty space and that’s where community housing providers sit – and there’s virtually no one else in this area now, says Kay.

She wants to reinforce the contextual dynamism within which the sector works and that makes it difficult to look to the future.

“We’ve had to deal with issues around tax and charitable status; ebbs and flows – mainly ebbs in funding; and changes from Government to focus on emergency housing and stock transfers that aren’t really our agenda, and a focus on segments rather than building a housing system.

“There’s a simplistic view from Government that supply side and planning for housing is easy.” But, she says, unless the housing is properly targeted they won’t meet the needs of the groups we need them to work for.

“Housing is not ice cream – we make choices that stay with us for many generations.”

She says the view of the community housing sector is that it lacks scale and expertise and that we are well-meaning amateurs. It’s a classic stereotypical story. That the community housing sector struggles to procure successfully and that the struggle reflects significant deficiencies in the community housing sector of:

·not enough scale

·not entrepreneurial enough

·not commercial enough

·inexperienced

·unprofessional –‘talented amateurs’

Kay went on to debunk this stereotype as she discussed her research on procurement in the sector, pointing out that the problems that we have lie somewhere else.

What the research has shown is that the community housing sector can and does procure effectively, especially when capital funding is available.

“When you’re procuring housing you have to take a lot of considerations on board.”

Kay pointed out that when community housing providers are doing new builds they have three imperatives that nobody else has. They have to build affordable houses for the most low income and vulnerable people. Secondly, those people are likely to be spending more time in those homes than any other people because that’s the nature of their lives and they need good, secure housing. Thirdly, they have to maintain long-term commitments for their tenants and the stock they commission.

This BRANZ funded research found that what made procurement work were three things:

A shared values-based commitment between the community housing provider and suppliers of the new build based on mutual respect of each other’s needs and an understanding of what each party bought to the arrangement while ensuring a fair deal for all parties.

Openness, clarity of expectations, and transparency about limits of resources – based on understanding what is really important, what can and cannot be compromised; and clear project management, risk and appropriate sequencing of decisions.

And vigilance – taking responsibility for relationships, actively looking at the market and building costs, while monitoring delivery, resolving risks and issues and collaborating to optimise outcomes.

“It’s easy to say it’s their problem if the quality is not right but the reality is that you have to take responsibility for this as it’s your house. You are doing it on behalf of others and you need to take that vigilance.”

The barriers to scaling up and good procurement lie beyond the community housing sector itself. “It’s very difficult to scale up if you have limited or uncertain funding.”

And the fact that community housing providers have uncertainty in funding makes them more vulnerable to high house costs as it tends to fuel building costs.

Kay also points out that there’s uncertainties in the Income Related Rent Subsidy even if you know what your revenue flow is. “There’s a situation where we are always chasing money, emergency housing one day, something else another, that destabilises our focus, becoming more ineffective as we spend our time chasing the fund rather than developing the housing.

There are some conversations that are needed, she says.

The main point in scaling up critically for the community housing sector, therefore, is funding. “It’s not about capability it’s about capacity — and that’s about funding.”

Kay says the sector needs to procure new builds and present our very unique position. We need to work with the building industry in new and creative ways positioning ourselves for the future.

And finally, we need to understand the boundaries of partnership so we don’t just end up being an agent for someone else running their agenda.

ENDS

While in New Zealand, Mike Myers was interviewed by Kim Hill on Saturdays. You can hear this podcast here.

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