Is community housing set to feature in Waterloo Estate Rebuild?

26 May 2016 | Posted In: 129 – Winter 2016, 132 – Winter 2017, Community Housing, Housing Types and Issues, | Author: Hal Pawson

Community housing set to feature in Waterloo Estate Rebuild?

An important community housing input to the Waterloo Estate Renewal project looks likely. Hal Pawson explains that in replacing the estate’s rundown public housing, a community housing organisation may be brought in to manage the newly built low rent properties.

Triggered by the December 2015 NSW Government announcement of a new station nearby, the Waterloo Estate is set for a huge revamp over coming years. Existing public housing units will be replaced by an equal number of new low rent flats built to modern standards, with all current residents entitled to one of these replacement homes. To pay for this, valuable surplus land freed up on the site will be sold for private housing development so that the rebuilt estate will have a greatly increased number of homes, overall.

The Waterloo project is part of the NSW Government’s state-wide Communities Plus estate renewal program. Under this model private developers partner with community housing providers to replace outdated estates with new low rent homes, alongside properties built for market sale. With Waterloo tenants having a ‘right to return’, these ‘returning’ (or remaining) residents are likely to find their new homes managed by a community housing provider rather than by the State Government’s Department of Family and Community Services (FACS). Why would the Government choose to do this and what will it mean for tenants?

What are community housing organisations?

Community housing organisations, or CHOs, are not-for-profit bodies set up to build and manage affordable rental housing. Like public housing, CHO properties are generally rented out at 25% of tenant income (unless that income exceeds an equivalent ‘market rent’ for that property). For landlord and tenant responsibilities, CHO tenancy agreements are also similar to those in public housing.

Important in ensuring CHOs maintain a good standard of service and efficient operation is their supervision through national regulation. Under this system the NSW Registrar of Community Housing keeps a watchful eye on all listed CHOs operating within the state, periodically checking that each organisation is ‘compliant’ with clearly defined minimum standards. This level of external scrutiny is unmatched for public housing.

In NSW around 30,000 tenants rent their homes from CHOs compared with around 110,000 renting a public housing property from FACS. Although there are hundreds of individual CHOs across Australia, most have only a handful of properties. The bulk of CHO tenancies are managed by a few larger organisations. In Sydney, these more significant players include Bridge Housing, St George Community Housing (SGCH) and the Women’s Housing Company.

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What happens when public housing tenancies are ‘transferred’ to community housing?

Across NSW, many renting from CHOs are former public housing residents whose tenancies have been ‘transferred’ to a CHO at some time over the past 10 years. When this happens, tenants are normally protected against any loss of existing rights.

For Waterloo tenants who see their current public housing tenancy transferred to a CHO on the rebuilt estate, the State Government has indicated that lease length (unlimited or fixed-term) and other terms and conditions (such as whether pets are allowed) will remain unchanged. Rents will also be set at an equivalent level to what would be charged in public housing, leaving tenants’ net income after rent payment unaffected by the change of landlord.

Why are governments wanting to expand community housing?

Both in NSW and in other states, governments have actively promoted the expansion of community housing over the past 10-20 years. This has happened for several reasons. The most important is the view that CHOs have the potential to provide a more personalised and responsive tenancy management service than public housing providers. The better results achieved by CHOs are reflected in the higher rates of tenant satisfaction recorded by CHOs compared with public housing landlords. In NSW, for example, the latest figures show 79% of CHO tenants ‘satisfied with overall landlord service’ compared with only 65% of public housing tenants.

One reason that CHOs are rated more highly by tenants is that they can afford to spend a bit more on housing services. This is partly because low income CHO tenants are eligible for Commonwealth Rent Assistance (CRA). This is a Centrelink benefit that can be claimed to top up the rent a low income CHO tenant can pay, without any reduction in their net income, as compared with what their situation would be as a public housing tenant. For a CHO, the ability to have tenant rent payments topped up through CRA means the organisation’s rental income can be about 50% higher than what it would be for a public housing provider managing the same estate with the same tenants. This puts a CHO in a better position to keep its housing in a good state of repair and/or to invest in new affordable housing.

As a charitable organisation, a CHO can also benefit from tax concessions such as GST-exemption. This means CHOs can make tenants’ rents go further when it comes to buying in property repairs or other tenant services.

Another reason that some governments have chosen to transfer public housing to CHOs is because, being non-government organisations, CHOs are less bound by restrictions on borrowing funds to invest in new housing that can add to overall affordable housing supply. A local example involved the 6,000 social housing dwellings built by the NSW Government between 2009 and 2012 as part of the Commonwealth Government’s economic stimulus program to counter the risk of recession due to the 2008 Global Financial Crisis. In return for receiving the 6,000 new homes, CHOs committed to taking out debt to build an additional 1,200 affordable rental properties over the following decade.

However, this kind of deal can work only with significant government help – in this case provided by transferring ownership of the 6,000 new properties to CHOs at no charge. Although community housing finances are slightly stronger than those of public housing departments, the difference is nothing like enough to enable CHOs to build new or replacement social or affordable housing properties without additional government support or ‘subsidy’ of some kind.

Unlike public housing departments, there’s a certain amount of competition between larger CHOs looking to be chosen by Government as a partner organisation on estate renewal or other housing development projects. Governments believe competing helps to keep CHOs ‘on their toes’. This connects with a bigger argument that, by moving away from a social housing structure overwhelmingly dominated by a single public housing provider, expanding the number of viable CHOs will benefit tenants and the wider community through a more competitive system.

Differences in powers

There is one significant difference between CHO powers compared with those of a public housing landlord. Although seldom used, CHOs in NSW have the legal authority to end a tenant’s lease without needing to jump through the same legal hoops as the public housing authority. Some have argued that this is an important aid in dealing with serious antisocial behaviour.

A similar difference in powers exists between public (council) housing and not for profit housing in England. English housing associations (the equivalent of our CHOs) likewise have ‘no cause eviction’ powers not available to councils. Although rarely used by English housing associations, the existence of these powers has understandably led to anxieties among English public (council) housing tenants facing possible transfer to housing association management. Recognising these concerns, associations looking to take on former council housing have often contractually guaranteed no use of these powers for transferred estates.

Here in NSW a similar pledge could possibly be offered by any CHO in line to take on ex-public housing tenants in NSW. Alternatively, a similar safeguard could be included in any new legislation the government might enact to underpin future transfers.

Looking to the future

The NSW government has recently announced plans for another batch of public housing transfers to CHOs, state-wide. A decision on whether the low rent part of rebuilt Waterloo estate will be part of these plans should be revealed in coming months.

Hal Pawson is Professor Housing Research and Policy and Associate Director at the City Futures Research Centre, UNSW

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