This Section explores the current organisations that own and manage social housing in Geelong. The Section helps to answer the question ‘what opportunities do these organisations offer to the City of Greater Geelong to help increase the supply of social housing in Geelong’?

As shown in Section 6 ‘Supply of Social Housing in Geelong’ the Department of Health and Human Services (DHHS) is the largest provider of social housing in Geelong.  In addition there are several Registered Housing Agencies which own and manage community housing.  The future development of social housing will require that the City work closely with both DHHS and Registered Housing Agencies.

Both Commonwealth and State Governments have designating Registered Housing Agencies as the preferred providers of social housing and therefore the recipients of supply side subsidies. Importantly in Victoria Housing Associations are the registered agencies that will have access to the greatest share of supply subsidies and will be able to implement growth strategies rather than individual projects.

Opportunities for the State Government to work us

The role of DHHS specifically and the State Government in social housing policy generally is crucial to the future supply of social housing in Geelong.

The State Government Homes for Victorians program sets the highest priority for public housing as the redevelopment of aging public housing estates and the renewal of public housing communities which are affected by high concentrations of disadvantage and related social problems.

The Public Housing Renewal Program aims to redevelop approximately 2 500 public housing dwellings across Victoria with a minimum of 10 percent increase in the total number of social housing dwellings ^[16]. Geelong does not appear to be under consideration for the Public Housing Renewal Program despite the fact that more than 50 percent of Geelong’s public housing is concentrated in three suburbs (Corio Norlane and Whittington) and more than 50 percent of these dwellings are either beyond or close to the end of their economic life.

While previous neighbourhood renewal programs have brought improvements to Corio Norlane and Whittington market forces have been insufficient to complete the process of renewal^[17]. The State Government has unfinished business in these areas.

In 2016 a proposal was presented to DHHS by a Registered Housing Association (RHA) to continue the process of community renewal in Norlane based around the following four key strategies:

• Providing assistance to those in greatest need from the Norlane community (particularly the elderly)
• Delivering a tenant focused place-based management service to help ensure best housing outcomes for each household
• Improving both neighbourhood amenity and the quality of public housing by building new social and private housing on public housing sites and implementing an improvement program for existing public housing
• Financial investment targeted to the above three strategies to achieve the overall goal of strengthening the community and ensuring long term sustainability.

This approach was based on internationally recognised good practice and presented a commercially viable option for DHHS.  DHHS was required to:

• Transfer vacant lots (where public housing had been demolished) to the RHA for redevelopment as private and new social housing with a number of the social housing dwellings returned to DHHS in payment for the land; and
• Enter a 10 year management agreement on all of the other public housing in Norlane (approximately 400 dwellings) under which the RHA would assume responsibility for all costs and commit to an improvements program to be implemented over 3 years.

Homes for Victorians might provide an opportunity to renew this initiative potentially based on a three-way partnership involving DHHS Council and a Registered Housing Association facilitated by the new emphasis on encouraging participation by local government and developing strategic partnerships to grow the supply of social housing.

Without the City’s leadership it is unlikely the renewal of Geelong suburbs with high concentrations of social housing will occur.

Opportunities for us to work with Registered Housing Agencies

Registered Housing Agencies

Registered Housing Agencies are not-for-profit organisations that provide and/or manage affordable rental housing for low income households. They are registered under the Housing Act 1983 as either Housing Associations or Housing Providers and are regulated by the Victorian Registrar of Housing Agencies.

Registered Housing Agencies seek to balance affordability for tenants and financial viability for the agency in a fair and transparent way. The rent paid by tenants enables Registered Housing Agencies to largely pay for the costs of maintaining and managing the agency’s rental housing.

Registered Housing Associations

Registered Housing Associations are larger more complex businesses with the skills expertise and resources to manage maintain and grow a viable social housing portfolio. They develop new housing through construction purchase or acquisition using a mix of government funds and private sector investment.

RHA’s also manage housing properties owned by them or leased from other parties such as the Director of Housing. Victorian Policy is that 75 percent of their social housing tenants must come from the Priority list of the Victorian Housing Register.  There are currently 10 Registered Housing Associations (RHAs) in Victoria which own and manage affordable rental housing for lower income households.  Six RHAs currently operate in the City of Greater Geelong (refer to Section 6.4 for more details).

Business Model of Housing Associations

The business model of Housing Associations is different to most charitable organisations and is based on three principles:

• Each and every project must be financially viable. The cost of development or acquisition must be fully funded by a combination of equity capital grants and debt.
• Each and every project must be financially sustainable. The costs of managing a dwelling over its lifetime (including lifecycle maintenance) and the costs of finance (if debt is part of the capital funding) must be fully funded by operating revenue. This implies that any shortfall between rental revenue and total operating costs must be met by an operating subsidy.
• A Housing Association must build sufficient risk margins into its project feasibilities and annual budgets to cover all risks and maintain sufficient liquidity to take up development opportunities as they arise.

Housing Associations therefore have some similarities to private developers except that they reinvest all surplus funds in future social housing and retain their properties in the social housing sector in perpetuity.

Registered Housing Providers

Registered Housing Providers primarily manage rental housing portfolios for other parties such as the Director of Housing (DoH). Some housing providers own properties however their growth is small scale compared with housing associations. Housing providers often specialise in particular client groups which may include disability housing aged tenants and youth housing ^[18]. There are currently 29 Registered Housing Providers operating in Victoria.

Requirements to be a Registered Housing Associations in Geelong

Increasing the number of social housing properties in the City of Greater Geelong necessarily requires that a Registered Housing Association develops and/or acquires properties for use by social housing tenants.  Registered Housing Associations will need to:

• Obtain land at less than market price with subsequent development by the RHA and/or
• Purchase completed dwellings at less than market price for example from a developer.

RHAs may purchase properties from a developer as part of negotiated arrangements for including social housing involving Council.  To ensure that the planned number of dwellings are used for social housing and to provide developers with greater certainty a Registered Housing Association will need to agree price terms and conditions for example as part of a Section 173 Agreement.  This may be challenging for some housing agencies in the absence of an ongoing reliable funding program.

For Council to effectively negotiate with developers it will require an appropriate working relationship with one or more Registered Housing Associations which understand local needs and context.

The challenge for the City of Greater Geelong will be to exercise greater control over the planned development of social housing in a way which ensures that developments are implemented as planned.  This will require the City of Greater Geelong obtaining commitments from developers and RHAs which are secured by appropriate contractual and organisational arrangements.

Potential benefits of attracting a Registered Housing Association to Geelong

One option is to establish a new Housing Association which is mainly Geelong focused and which has its head office in Geelong. There are a number of potential benefits of a Geelong based Housing Association including:

• A more planned approach to social housing including funding programs (which include multiple sites)
• Greater understanding of local need for social housing in terms of location dwelling size etc.
• Greater certainty that funding for social housing would be kept in the Geelong Region
• A greater focus on the Geelong region leading to the identification of more sites suitable for social housing
• A visible presence and influence engendering greater community support
• An enhanced working relationship with local property developers and local government
• An enhanced working relationship with DHHS
• Enhanced collaboration with a range of support services for tenants

The involvement of a Geelong based RHA is more likely to result in a more even distribution of social housing across the whole region rather than in the outer suburbs of the City of Greater Geelong where land is cheapest.

Our opportunities to work with private developers

Private developers potentially have a significant role to play in the future supply of social and affordable housing in Geelong over the next 25 years.  As noted above recent amendments to the Planning and Environment Act 1987 authorise Local Government to negotiate with developers for the supply of social and affordable housing.

The development industry will deliver the 70 000 new dwellings projected for Geelong over the next 25 years and that negotiations with developers will represent a major opportunity for provision of social housing.  This will necessarily require the involvement and commitment of a Registered Housing Agency to acquire dwellings from the developer.

Negotiations between developers and the City are voluntary.  It is important that the City understands and acknowledges the business model of developers and the potential impact of negotiations on expected commercial returns and business risks.

Several developers have indicated that they are willing to provide good quality social housing provided it does not erode profitability to the extent that developments are rendered non-viable. Developers require as much certainty as possible clarity about what is negotiable assurances that all developers will be treated equally (level playing field) and that the City will seek to expedite the planning process.

Within this context the City may develop principles for the provision of social housing by developers for example:

1. Commercial viability - the cost to the developer should not exceed the value uplift in the land value generated by the development approval.  That is the aim is to capture a proportion of the value uplift as a contribution to the cost of providing new social housing and not render the project non-viable.
2. Design and location - the scale design and finish of the social housing should be compatible with the surrounding streetscape and not detract from the general amenity of the neighbourhood.  The location of social housing will take into consideration the needs of social housing tenants in terms of social infrastructure transport retail education and employment opportunities.  Social housing dwellings provided should be consistent with an evidence-based model of good practice that demonstrates social economic and environmental sustainability.
3. Timing of delivery - social housing should be delivered progressively in accordance with an agreed program in multi stage developments.  Social housing should be available when there is adequate social infrastructure available for social housing tenants.
4. Certainty of transfer- the party identified as the owner and manager of the social housing (e.g. Registered Housing Agency) will guarantee the acquisition of the housing and the operational capacity to manage the dwellings in accordance with recognised good practice.
5. Guidelines and information – The City will provide guidelines and information for developers to assist in negotiations   in the context of the voluntary nature of the planning controls.

Implications for our Social Housing Plan

The City of Greater Geelong has acknowledged the need to increase the supply of social housing in the region for several years and has attempted to establish social housing within newly developing areas as well as within existing urban areas including through neighbourhood renewal.  These attempts have met with limited success. 

The City now has the opportunity through changes to the Planning and Environment Act to exercise more influence in decisions relating to the development of social and affordable housing.

Importantly the expected growth in housing overall in the City of Greater Geelong 2018 – 2041 provides significant opportunity for negotiations with developers to increase the supply of land for social housing that can then be managed by a registered Housing Agency.

In summary:

In order to facilitate an increase in the supply of social housing in Geelong the City of Greater Geelong will need to:

1. Establish a collaborative partnership with DHHS with an Agreement which leads to a more planned approach to addressing existing stock as well as possible future developments
2. Ensures that a Registered Housing Association commits to growing social housing in Geelong and maintains a substantial presence in Geelong.  If an existing RHA cannot make a significant commitment then a new Housing Association will need to be established
3. Exercise greater control over Agreements between RHAs and developers
4. The enhanced involvement of local government may be expected to provide a more planned orderly and coordinated approach to the development of social housing in the future within a particular region

A planned approach could see a more even distribution of social housing across the whole region rather than in the outer suburbs of the City of Greater Geelong where land is cheapest.  A Geelong based Housing Association would provide a suitable vehicle for contributions of land and cash from Council increasing borrowing capacity enhancing confidence in long term planning.