Monthly digest on housing affordability and homelessness – Oct/Nov 2019

Nov 29, 2019

This is a monthly digest of interesting articles, research reports, policy announcements and other material relevant to housing stress/affordability and homelessness – with hypertext links to the relevant source.

Are micro-houses the solution to Britain’s homelessness crisis? [The Guardian, 27 Oct] Last year, Britain’s homeless numbered some 320,000 people, up 4% on the previous year. Some UK charities are turning to new ways of helping to get people off the streets, including micro-housing. For example, back in 2015, the YMCA developed a group of 36 quality homes of just 26 sqm, factory built at a very modest construction cost of £30,000 each. These homes, similar in square metres to an average sized hotel room (including bathroom), are designed for rental to single occupants. Tenants tend to stay for 2 to 5 years, as a stepping-stone to something bigger and more permanent. Micro-houses, typically modular and factory built, are designed to maximise the usability of their small footprint and come in a variety of formats (some even smaller and less expensive than the YMCA homes described above). Although obviously not right for everyone, they do seem to fulfil a need for many, at least on a transitional basis.

‘Meanwhile use’ properties offer potential as a short-term solution to social housing needs [ABC online, updated 1 Nov] The concept of “meanwhile use” comes about as close as any to that ideal of providing a tangible benefit at no (or nominal) cost to the person or entity providing the benefit. In this case, while a vacant former aged-care home (Beecroft House, in Sydney’s north) awaits redevelopment, a portion of it has been lent for use as a temporary women’s shelter – for women over the age of 55 experiencing homelessness or financial instability. The property would otherwise have stood vacant while it’s going through the planning cycle. This meanwhile use is designed to bridge the gap between crisis accommodation and permanent living. Professor Peter Phibbs, head of urban and regional planning and policy at the University of Sydney, supports meanwhile use. The concept could also apply to vacant land set aside for some future (long-dated) use, such as a new transport corridor or road widening proposal, though the meanwhile use period would need to be sufficiently long to justify the extra costs of any necessary site works (including connecting essential services), installing movable (modular, prefabricated) housing units on the site, and removing them at a later date when the land is required for its intended permanent use. Launch Housing in Melbourne has recently embarked on the first stage of the Harris Transportable Housing Project, which will create 57 tiny (relocatable) homes on vacant VicRoads land ultimately destined for road widening.

Cages, pods and containers: Eight homes highlighting cities’ housing strains [Sight magazine online, 1 Nov] The author of this article notes: “A critical shortage of affordable housing in cities across the world has forced many people to tap such unexpected resources as shipping containers and concrete pipes just to put a roof over their head”. At least 150 million people around the globe are homeless, according to UN data, and more than 20% of the world’s population lack adequate housing. To coincide with the UN’s “World Cities Day”, the author describes 8 dwelling types which highlight how cities around the world are coping with the crisis of housing affordability. The housing solutions range from the more familiar, such as granny flats, to ideas which in an Australian context may seem quite bizarre (illustrating the desperate plight of those concerned), including cage homes, sleeping pods, live-in guardians and egg houses.

Apple commits US$2.5b to address California’s housing crisis and homelessness issues [yahoo! News, 5 Nov] Apple has just announced a US$2.5b commitment towards easing California’s housing affordability crisis. This includes $1b for an affordable housing investment fund, $1b for a first-time homebuyer mortgage assistance fund and $300m in Apple-owned land, to be made available for affordable housing. A further $200m will go to support new, lower-income housing in the Bay Area, including $150m for a Bay Area housing fund and $50m for vulnerable populations, specifically to address homelessness in the Silicon Valley area. The initiative, in partnership with California’s Governor and community-based organisations, is expected to take some 2 years to be fully utilised, depending on the availability of projects. Apple’s announcement follows similar ones from other US tech giants, including Facebook’s commitment of US$1b to tackle affordable housing mainly in California, Google’s US$1b investment aimed at easing the Bay Area housing crisis and Microsoft’s US$500m commitment to an affordable housing fund in the Seattle area. While the tech giants’ respective commitments are in one sense laudable, cynics might say the major tech companies are, at least in part, the cause of the housing affordability crisis, as their highly paid employees gentrify neighbourhoods which were previously affordable to lower paid workers. See also this article from The Urban Developer.

‘On affordability’ [Architecture & Design, 5 Nov] ‘Tone on Tuesday’ (aka Sydney architect, Tone Wheeler) uses the occasion of this year’s Sydney Architecture Festival, whose focus is “housing affordability”, to examine what the term really means, and to question the extent to which the architecture profession can really do much about it for those most vulnerable. He notes that for those in the bottom two quintiles (ie. lowest 40%) of the household income distribution, things are pretty dire and that there is practically nothing they can afford, at least in terms of market-based housing. For them, the choice is to live way out on the fringes of our largest cities, or to rely on social housing, whose supply is patently inadequate to meet the demand. Wheeler concludes that meaningful inroads into the housing affordability crisis will not come from architectural design but from a drastic lowering of land costs, and a restructuring of financing and profit. Only government can bring this about, and he advocates that governments (federal and state) should offer up their land at heavily discounted rates (or free), for build-to-rent housing to help those most in need, rather than selling such land off for private development.

The First Home Loan Deposit Scheme: Housing affordability action – or just more busy work? [Pearls and Irritations, 6 Nov] Under a recently announced Australian Government initiative, qualifying first home buyers (FHBs) will from 1 January 2020 become eligible for a government guarantee that will enable them to access a mortgage with a 5% deposit rather than the normal 20%, at no extra cost to the borrower. The First Home Loan Deposit Scheme (FHLDS) was a last-minute promise by Scott Morrison during the most recent Federal election, and comes on the back of a decline in young adult home ownership from 51% to 40% over the past 20 years, down from 60% in the early 1980s. In describing the new scheme, and the history of publicly funded FHB schemes, author Prof Hal Pawson notes a number of FHLDS’ weaknesses, including its narrow ambit (eg. it does nothing to help the 1.3m Australians pushed into poverty by unaffordable rents), the fact that the scheme “does nothing to address the causes of housing unaffordability” and that it could be seen as more of a “palliative” – a form of “busy work”. See also First home owners plan a ‘drop in the ocean’ and unlikely to help those in greatest need, say economists (ABC online, 30 Oct]

Building to rent is now an asset class [AFR, 11 Nov] The build-to-rent (BTR) property sector is establishing a foothold in Australia, having become relatively well established in the US and increasingly so in the UK. BTR developments are designed for renting on a long-term basis, and are typically owned by institutional investors. The longer security of tenure that they offer tenants gives those tenants an experience similar (at least in terms of tenure) to home ownership, with all the benefits of being able to develop stronger community ties and put down roots, knowing they won’t be moved on by their landlord in the short term. The BTR concept has much to commend itself, both for investors and tenants, though there remain hurdles (including certain tax disincentives) to clear before the market takes off in Australia. BTR is unlikely to benefit those struggling with rental affordability unless the government incentivises developers appropriately (eg. with increased density allowances).

Top picks from this year’s Sydney Architecture Festival [Architecture & Design, 11 Nov] The theme of this year’s Sydney Architecture Festival (11 to 17 November) was “Making housing affordable”. To give a sense of what was covered, here is a link to the program. The main hypertext link above is a list of “top picks”, according to A&D magazine. It is unclear whether the papers presented will be made available publicly.

NHFIC’s second affordable housing bond issue increases total raised to more than $600m [NHFIC media release, 20 Nov] Australia’s government sponsored affordable housing bond aggregator, NHFIC, has just announced completion of its second bond issue in a year, bringing the aggregate amount raised by NHFIC to more than $600m – all from major financial institutions. These funds will be on-lent by NHFIC to community housing providers (CHPs) to help finance properties across Victoria, NSW, Queensland, WA and SA. As well as providing longer loan periods, the interest rate on these loans is significantly below the rates at which CHPs can typically borrow, factors which help the relevant CHPs put more money into building new homes. Writing in The Conversation, Professors Julie Lawson and Mike Berry from RMIT note that, with interest rates for government borrowing near zero, NHFIC’s impact could be maximised if coupled with more long-term public investment in housing – as is done in many European countries – to help bridge the large funding gap which (despite NHFIC’s current remit) still poses a major hurdle to expanding the supply of new social housing.

Legal & General to build 3,000 affordable homes annually in the UK [Guardian, 21 Nov] At last, some encouraging news for UK renters. At least one major UK financial institution, insurance and pensions company Legal & General, seems determined to invest in affordable housing. With a pipeline of 3,500 homes to be built over the next few years, and backed by a £750m investment, L&G is aiming by 2022 to be building some 3,000 affordable homes annually, and is helping to speed that up by adopting factory built modular techniques. L&G is focusing its efforts on the build-to-rent sector, as renting becomes more common in the UK. UK government figures show a 22% increase in the last year in the number of affordable homes, mostly new builds. Encouraging as recent trends are, they follow steep declines from 2010-11 in the rate of construction of new social housing.

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