Earlier today the Minister for Housing alerted us that the Housing Australia Future Fund (HAFF) would be passing today. It was announced late this morning by the Prime Minister Anthony Albanese that the HAFF has passed Parliament.
As a trade for the agreement, the Albanese government agreed with the Greens to an additional $1billion to be invested in the National Housing Infrastructure Facility to support new homes.
This is over and above the $2 billion social housing funding to States and Territories and $3.5 billion in bonuses and funding for States and Territories to work towards their housing target to achieve the 1.2 billion housing target over in 5 years.
The agreement will also lock in a $500m floor in annual funding rather than a “ceiling” and an early review date of 2026 instead of 2029. This is important as it means the HAFF can be modified as it is operating to ensure there are no unexpected barriers.
The HAFF Legislation is the enabling legislation for NHFIC and the Minister for Housing to start the fund and determine powers of allocation. There is still further work to be done to determine the project types and processes involved in distributing the funds as capital to pay for operating expenses once the projects are up and running. It is important to note that this also means the projects will need to identify their own construction capital. UDIA National has been working with Treasury and NHFIC since the first drafting of the HAFF to identify the best possible investment for the funds.
Critically, the Government has stipulated that the HAFF funding needs to be for affordable and social housing projects that are managed and ultimately owned by Community Housing Providers (CHP). They want to ensure the money stays within the community housing system. We have been working through the most effective ways to release the funding, so that private providers can help deliver the HAFF projects for and with CHP partners.
This means that it will be some time before HAFF funding will flow, but that is not the only housing delivery mechanisms initiated by the Government. The HAFF and the negotiations should be seen as part of the wider Government suite of initiatives which in total encompasses the following:
- A new national target to build 1.2 million well-located homes*;
- A $3 billion New Homes Bonus, and $500 million Housing Support Program;
- A $2 billion Social Housing Accelerator to deliver thousands of new social homes across Australia;
- A National Housing Accord which includes Federal funding to deliver 10,000 affordable homes over five years from 2024 (to be matched by up to another 10,000 by the states and territories);
- An investment of an additional $1 billion in the National Housing Infrastructure Facility to support more homes;
- Up to $575 million in funding already unlocked from the National Housing Infrastructure Facility, with homes under construction across the country;
- Increasing the maximum rate of Commonwealth Rent Assistance by 15 per cent, the largest increase in more than 30 years;
- An additional $2 billion in financing for more social and affordable rental housing through the National Housing Finance and Investment Corporation;
- New incentives to boost the supply of rental housing by changing arrangements for investments in Build-to-Rent accommodation;
- A $1.7 billion one-year extension of the National Housing and Homelessness Agreement with states and territories, including a $67.5 million boost to homelessness funding over the next year;
- The development of a new National Housing and Homelessness Plan;
- States and Territories committing to A Better Deal for Renters;
- States and Territories supporting the national roll out of the Help to Buy program, which will reduce the cost of buying a home;
- Helping more than 67,000 people into home ownership through the Home Guarantee Scheme since being elected, and recently expanding program eligibility.
UDIA notes that despite the recent support given by the Greens, they have not given up on pursuing their ‘rental freeze’ agenda – they will no doubt try to keep it going but are not going to hold up the HAFF in the process.
It is equally important to pay attention to the *new target of 1.2 million homes announced by Government the previous month. It is a critical part of the entire housing initiative and relies on Governments across the nation being able to unlock a mix of at-market, affordable and social housing. The HAFF and CHPs on their own will not achieve this target so it will be vital that HAFF projects have mixed tenure elements to avoid isolating social and affordable households from the broader community.
That means the passing of the HAFF carries with it the opportunity for UDIA states to carve out significant incentives that will enable mixed tenure projects. The States now have about $3.5 billion in bonuses and incentives for overachieving their housing targets ($3bn – quite hard given it means building more houses than ever (240,000 pa), by a factor of 20% on our highest average delivery) and money for enabling infrastructure ($500 million).
As noted above, over and above that funding, there is now $3 billion specifically for social housing available to the states/territories. The National Housing Accord will also deliver 10,000 affordable houses through NHFIC, independent of the HAFF measures and is available now to projects. These do not rely on HAFF legislation and are already being initiated.
UDIA National will continue to coordinate with Treasury and NHFIC on the design of the Investment Mandate which will be the ultimate arbiter of how the $10 billion in funds is allocated. We expect they will move relatively quickly and expect to see drafts hit the public domain soon.
We will keep you updated.