Realising genuine Affordable Housing in Build-to-Rent projects

Whilst the community housing sector has been delivering single-entity owned social and affordable ‘build-to-rent’ (BTR) developments for decades, the private sector owned, market priced BTR sector can also support genuine Affordable Housing outcomes if appropriately structured.

In Victoria there are two key ways in which a percentage of apartments could be provided at a discount to market rent to lower to moderate income households within a privately owned BTR development:

  • Attraction of government or social impact investment to support viability of providing discounted rents. This could include low-cost development finance, tax concessions, or annual subsidies. Involvement of a registered housing agency is expected to support government investment with new programs like the Commonwealth Housing Australia Future Fund requiring community housing sector involvement.
  • Agreement as part of the Victorian planning scheme amendment and/or permit process to the renting of a percentage of apartments at a discount to households that earn below the Planning and Environment Act 1987 ‘Governor in Council’ published Affordable Housing income bands.

In both instances there are key questions that need to be addressed when considering incorporating Affordable Housing within privately owned Build-to-Rent projects:

  • What percentage or number of dwellings will be provided?
  • What is the appropriate discount to support affordability? How is the difference between market rent and the discount expected to be met?
  • Who are the target tenants and how will their eligibility be confirmed?
  • What is the appropriate type and mix of dwellings? How will they be integrated?
  • What length of time will the dwellings remain as discounted dwellings?
  • Who will manage the property and the tenancies?
  • What process will be put in place to ensure accountability for the delivery is achieved over time?

These questions are particularly pertinent to agreements negotiated under the Planning and Environment Act as once the certificate of occupancy is issued it is typically harder to maintain oversight over Section 173 Agreement requirements that relate to the operation of a building.

Affordable Development Outcomes has extensive experience considering these questions and structuring site-specific Affordable Housing strategies for BTR developments across Melbourne.  Our strategies have been supported through planning panel review and approval processes with many now in the construction phase.

In absence of State Government guidance, each project and agreement need to be carefully considered to ensure it achieves the objectives of the developer entity whilst also ensuring the agreement will deliver a genuine Affordable Housing outcome.  In some cases this means a higher discount for lower percentage of dwellings, or a different term of use or dwelling mix is required. It critically requires acceptance that dwellings will remain in private ownership due to the BTR structure. As this is a shift from previous agreements that focussed on sale to housing agencies it requires different factors to be taken into account.

Once delivered the projects we have advised on will deliver integrated, genuinely affordable, targeted Affordable rental housing for lower to moderate income households who would otherwise either not be able to afford to live in that location or would be paying a considerable amount of income on rent. Our strategies also provide for appropriate oversight of delivery to support local council’s to feel confident that planning agreements for Affordable Housing will result in outcomes being achieved for the agreed term.

There is great opportunity for inclusion of genuine Affordable Housing within market-led and delivered build-to-rent developments in Victoria and across Australia. The realisation of this requires careful consideration of a range of factors beyond just a discount to rent. Having specialised advice early can support project thinking and in the case of Victoria, planning support.

Whilst the numbers of Affordable Housing dwellings that may be delivered in Build-to-Rent projects won’t solve the crisis, they can provide another important and more affordable housing choice for households currently locked out of certain markets or living in housing stress.

Affordable Development Outcomes welcomes the opportunity to work with landowners and Councils to determine the optimal Affordable Housing component within a market based Build-to-Rent development. Contact us to discuss how we can assist.

Scroll to Top