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Further to our last update on the Housing Australia Future Fund (HAFF), the Commonwealth Treasury has released an exposure draft of the Housing Australia Investment Mandate Amendment (Social Housing, Affordable Housing and Acute Housing Needs) Direction 2023 (Investment Mandate). The Treasury is seeking feedback on the Investment Mandate and accompanying explanatory statement by close of business on Wednesday 8 November 2023.

What is the purpose of the Investment Mandate?

The purpose of the Investment Mandate is to establish the Housing Australia Future Fund Facility (HAFFF) and the National Housing Accord Facility (NHAF).

The HAFFF and NHAF will:

  • increase the availability of social and affordable housing;
  • collectively support 20,000 social homes and 20,000 affordable homes in Australia over the next 5 years; and
  • encourage private sector investment in projects that involve social and affordable housing.

The HAFFF will support the delivery of:

  • 20,000 social housing homes, including 4,000 homes for women and children impacted by domestic and family violence, and older women at risk of homelessness; and
  • 10,000 affordable homes for frontline workers including, but not limited to, police, nurses and cleaners.

The NHAF will enable the Commonwealth to support an additional 10,000 dwellings available as affordable housing.

The HAFFF and NHAF will achieve this by providing loans and grants for projects that increase the supply of social and affordable housing through financing received from the HAFF and National Housing Accord.

Housing Australia will have primary responsibility for establishing and operating the HAFFF and NHAF.

What are the eligibility requirements?

The eligibility requirements for receiving finance from the HAFFF or NHAF are broadly the same.

To be eligible for a loan or grant under the HAFFF or NHAF, an entity must satisfy the following requirements:

  • the project is a HAFFF or NHAF project;
  • the entity is an eligible proponent;
  • the loan or grant is consistent with Housing Australia’s financing function under the Housing Australia Act 2018 (Cth) which requires that Housing Australia only make loans and grants to:
    • constitutional corporations engaging in activities, functions, relationships or business that improve housing outcomes1;
    • States or Territories for the purpose of improving housing outcomes; or
    • entities that are improving housing outcomes specifically for people located in a Territory, Aboriginal and Torres Strait Islander people, members of the Australian Defence Force or aliens;
  • in the case of a loan, the risk that the loan will not be repaid does not exceed an acceptable level; and
  • the project delivers value for money.

What is a HAFFF or NHAF project?

A project is a HAFFF or NHAF project if:

  • it will deliver housing located in an Australian State or Territory; and
  • all dwellings are or will be HAFFF or NHAF construction compliant, which means:
    • the dwellings comply with the energy efficiency standards in the National Construction Code 2022 (NCC) (including that the housing has an energy efficient rating of 7-stars or more) or for NHAF projects, the energy efficiency standard applicable in that State or Territory; and
    • the dwellings comply with the liveable housing design standards in the NCC (including that the housing includes features that are designed to improve accessibility and usability for occupants and visitors, including older people and people with mobility limitations).

Who is an eligible proponent?

Eligible proponents relevantly include:

  • various State, Territory and local government bodies;
  • a registered community housing provider; and
  • a HAFFF or NHAF special purpose vehicle (with at least one of its members being an eligible proponent e.g. a community housing provider).

What is the criteria for financing decisions?

A project may be financed under the HAFFF or NHAF through loans or grants or a combination of both.

In making a financing decision, Housing Australia must consider the matters set out in section 28J or 28V (as applicable), which includes (among other matters):

  • the extent to which a project would increase the availability of social and affordable housing, and addressing acute housing needs, including in regional, rural and remote Australia on an equitable, as needs basis;
  • whether finance under the HAFFF or NHAF is needed to encourage private sector participation in financing the project;
  • whether finance under the HAFFF or NHAF would complement, leverage or support other State or Territory finance or activities; and
  • where the project proponent is a HAFFF or NHAF special purpose vehicle, the extent to which underlying eligible members will be involved in the project.

Are there any reporting requirements?

Housing Australia will be required to report quarterly to the Minister on all HAFFF and NHAF projects that are approved from the program’s commencement. This will allow the Minister to determine whether decisions made by Housing Australia are consistent with the overall purpose of the HAFFF or NHAF, or whether further directions are necessary.

Key takeaways

We consider there to be three key takeaways:

  1. The Investment Mandate reinforces the key role of registered community housing providers in the delivery and operation of social and affordable housing – along with the National Regulatory System for Community Housing (NRSCH).
  2. In welcome news for institutional capital providers and financiers, the Investment Mandate supports the “CHP SPV” financing structures that have been adopted in recent subsidy and ground lease transactions – though applicants would be minded to carefully consider the Investment Mandate requirements as well as those under State and Territory laws as they develop transaction structures.
  3. While there is no detail on the process that Housing Australia will run to identify projects that will receive financing and the considerations which Housing Australia must take into consideration when making financing decisions are broad, the overriding requirement to ensure that the project being financed delivers value for money will require Housing Australia to conduct a robust evaluation process in relation to projects. Housing Australia will need to navigate this requirement as it seeks to move quickly to address the housing crisis.

Next steps

Interested parties can submit responses to the Treasury up until close of business Wednesday 8 November 2023.

The exposure draft and further information regarding the submission process is available on the Commonwealth Treasury website.

Herbert Smith Freehills 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.


  1. A constitutional corporation is a financial or trading corporation formed in Australia or a foreign corporation that does business in Australia.

Key contacts

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Nicholas Carney

Global Co-Head of Infrastructure, Sydney

Nicholas Carney
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Lucy McCullagh

Partner, Head of Finance, Melbourne, Melbourne

Lucy McCullagh
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Erin Wakelin

Partner, Sydney

Erin Wakelin