Developing Affordable Housing

The funding, delivery, and management of affordable housing is complex. It involves multiple players within different operating contexts, and a range of different legislative and regulatory frameworks, funding arrangements, corporate structures, economic influences, and competitive environments.

To assist the key stakeholders to better understand each other’s business models, operating constraints, and how they can work together to deliver more affordable housing, CHIA Vic has developed the following resources.

Understanding Affordable Housing and Section 173 Agreements

In 2018, the Victorian Government made amendments to the Planning and Environment Act 1987 which enabled local governments, community housing organisations and developers to negotiate Affordable Housing outcomes as part of the planning approvals process. These voluntary Affordable Housing Agreements are generally referred to as Section 173 Agreements.

CHIA Vic and the Municipal Association of Victoria (the MAV) joined forces to create a suite of resources on how to develop Section 173 Agreements. These resources are for the local government, community housing and development sectors, and are based on an enhanced understanding of the requirements of each of the sectors. The resources outline:

• What constitutes affordable housing
• The constraints, needs and strengths of the community housing and local government sectors
• The practicalities of implementing the legislation
• Options for brokering affordable housing outcomes
• How local government and community housing can work together

In addition to the full project report, this suite of resources also includes a fact sheet on the community housing sector, fact sheet for developers, fact sheet for local government, and toolkit for planners.

Download the full suite of resources here

Using Council Land for Affordable Housing

These resources are designed to assist community housing organisations and local councils to work through which option will best suit their needs, and to understand the implications of their choice for project partners. The full report Options for delivering Affordable Housing on council land examines:

• Models to release council land – gifting land (including ‘air rights’), sale of land at a discount, leasing land, and joint venture or partnership.
• Mechanisms to secure the council contribution – Registered Housing Agency Ownership, assets placed in a special purpose vehicle (SPV) such as a housing trust, legal agreement (including section 173 agreement), and mortgage instrument.

A number of summary resources are also available:

• Four page summary which provides an overview of the report.

• PowerPoint presentation which summarises the full report.

• Fact sheets on some of the options examined – gifting land, leasing land, joint venture or partnership arrangement, assets placed in a special purpose vehicle (such as a housing trust), and mortgage instrument.

Download the full suite of resources here.

Affordable Housing through the planning system

These resources are designed to assist community housing organisations, local councils and other landowners to work through which option will best suit their needs, and to understand the implications of their choice for project partners. The full report Options for Delivering Affordable Housing through Planning System examines:

• Models to deliver an Affordable Housing contribution – gifting land or dwellings, sale of land or dwellings at a discount, leasing land or dwellings, affordable home ownership and monetary contribution.
• Mechanisms to secure the Affordable Housing contribution – planning controls, Registered Housing Agency Ownership, assets placed in a special purpose vehicle (SPV) such as a housing trust, legal agreement (including section 173 agreement), and mortgage instrument.

A number of summary resources are also available:

• Four page summary which provides an overview of the report.
• PowerPoint presentation which summarises the full report.
• Fact sheet on some of the options examined – gifting land or dwellings, leasing land or dwellings, monetary contribution, assets placed in a special purpose vehicle (such as a housing trust), and mortgage instrument.

Download the full suite of resources here.

Developing Affordable Housing on Leased Land

One of the ways local councils and other landowners, such as charities, support the delivery of affordable housing is through contributing land to an affordable housing project led by a community housing organisation (CHO). In many cases the third party landowner does not want to relinquish title to the land, and would prefer to provide a long-term lease to the CHO at a peppercorn rent.

To assist CHOs and landowners such as local councils to draft a lease that works for both parties – one that enables the CHO to apply for funding and debt while protecting the interests of the landowner, the funder, and the CHO – CHIA Vic led a project to develop two template agreements:

• Agreement for Lease (AFL) Template – agreement between the landowner and CHO whilst the housing is being developed. The AFL pre-commits the parties to enter into a lease once the development is complete, and is designed to be used together with the Head Lease template.
• Head Lease Template – lease agreement between the landowner and CHO to manage the ongoing use of the housing after construction has been completed.

Both documents include guidance notes on when and how to use the templates.