The federal government’s Housing Australia Future Fund (HAFF) bill is expected to pass through parliament this week, after the Greens party announced their support for the bill yesterday. The bill is one of the Labor government’s key 2022 election commitments and will establish a $10 billion fund to secure an ongoing pipeline of funding to increase the availability of social and affordable housing. The HAFF sets up a framework to provide an ongoing level of government support to make transactions viable in their initial stages and is expected to catalyse investment in the community housing sector.
What are the aims of the HAFF?
Subject to enabling legislation, the HAFF will be initially credited with $10 billion as soon as practicable once established. Investment proceeds generated by the HAFF will support the government’s commitment to delivering 30,000 new social and affordable rental homes within the fund’s first five years. This will include 4,000 homes for women and children impacted by family and domestic violence or older women with low incomes at risk of homelessness.
Over the same time period, the fund will also provide:
- $200 million for the repair, maintenance and improvement of housing in remote Indigenous communities;
- $100 million for crisis and transitional housing options for women and children impacted by family and domestic violence and older women at risk of homelessness; and
- $30 million to build housing for veterans who are experiencing homelessness or at-risk of homelessness.
The federal government has pledged that the HAFF will spend at least $500 million on social and affordable housing each year, regardless of the fund’s performance and returns received, to address a range of “acute housing needs” for Indigenous communities, women, children and veterans (amongst other groups). According to the bill’s explanatory memorandum, “acute housing” refers to crisis housing offered to cohorts at risk of, or who are already experiencing, homelessness. This includes short-term and emergency housing, medium-to-long-term transitional housing and specialist services in relation to housing.
The Greens’ support for the HAFF legislation comes following delays from drawn out negotiations since the bill was first introduced in February, particularly in relation to a key impasse around freezes or caps on rent increases. While the deal now struck with the Greens does not include provision for rent freezes, the federal government announced yesterday that $1 billion will be invested in the National Housing Infrastructure Facility (NHIF) to support new homes. Together with $2 billion of immediate funding committed to the Social Housing Accelerator in June, this represents $3 billion of funding additional to the HAFF to support the community housing sector.
How will the HAFF be administered?
The HAFF will be administered by the National Housing Finance and Investment Corporation (to be renamed Housing Australia) (NHFIC), which also currently administers the NHIF. The explanatory memorandum provides that the remit of both NHFIC and the NHIF will be expanded to allow NHFIC to directly support social and affordable housing and deliver the government’s social and affordable housing programs by leveraging its existing capabilities and relationships with institutional investors, the community housing sector and state and territory housing authorities.
The HAFF will be able to make grants, and will enable NHFIC to make grants and loans, in relation to acute housing needs and social and affordable housing. Any disbursements from the HAFF will require government approval.
The Future Fund Board will be responsible for deciding how to invest the HAFF, with responsible Ministers to issue an investment mandate to provide strategic guidance on the Australian government’s expectations. An independent statutory advisory body (the National Housing Supply and Affordability Council) will also be established to develop housing policy and advise the Australian government in relation to the HAFF, with its roles to be set out in separate legislation.
What is the HAFF’s expected impact on social housing development?
Except for post-GFC social housing initiatives, investments in social housing developments have been sparse since 1996 and have not been increasing at a rate commensurate to population growth. The HAFF presents significant new opportunity for funds to be injected into social and affordable housing and to unlock institutional and bank capital in the community housing sector.
A key challenge to enabling greater investment in social and affordable housing at scale in Australia has been attracting institutional capital providers. By securing a perpetual level of government support to make initial stages of transactions viable, the HAFF offers a framework under which the social and affordable housing sector can mature in scale and sophistication. It also presents key opportunities to ensure sufficient scale and aggregation of social and affordable housing projects, though success will likely also require appropriate alignment and flexibility in transactions between community housing providers, institutional capital providers and government.
It is expected that the bill will pass through the Senate later this week, with further details of legislation to be shared.
HSF has extensive experience acting for both government and the private sector on social and affordable housing transactions involving grants, loans or other agreements. Please reach out to our key contacts if you have any queries.