Cheaper and longer-term finance for affordable and social housing
As part of a suite of measures to reduce pressure on housing affordability, two measures that are targeted at lowering the cost of finance for affordable and social housing were announced.
National Housing Finance and Investment Corporation
The Government will establish the National Housing Finance and Investment Corporation (NHFIC) to operate an ‘affordable housing bond aggregator’ that will provide finance to community housing providers by aggregating their borrowing requirements, and issuing cheaper and longer-term bonds than conventional bank finance to the wholesale market.
National Housing Infrastructure Facility
The NHFIC will also administer a $1 billion National Housing Infrastructure Facility to provide funds to local governments from 1 July 2018 in the form of concessional loans, grants, and other financial instruments for building infrastructure that supports new and affordable housing.
BDO welcomes these measures as a long awaited boost to the community housing sector. This will especially be so in jurisdictions where local governments have not invested in lower cost housing for some time, and community housing providers have been confronted with rising costs but capped rent with limited government support.
The success of these measures will depend on how much ‘red tape’ is built into the system, the speed at which the funding will translate to bricks and mortar, and whether the system will be supported by better policy settings in housing supply and rent assistance. Further, if executed effectively, the infrastructure facility, which is a based on a proven UK model, may have the potential of not only supporting increased housing supply, but also delivering better quality communities.