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Tackling Australia’s Housing Crisis: Learning from the UK’s success

Mar 06, 2024

Maha Momeni

National Sector Lead, Social Infrastructure

Developing sustainable solutions to Australia’s housing affordability crisis requires more than government initiatives alone. It takes innovative thinking and preparedness to collaborate and develop constructive cross-sector partnerships.

The great Australian dream of owning a home has become unattainable for far too many people. This has led to homelessness, financial struggles, and mental health issues. While having safe and secure shelter should be a basic human right, more than 122,000 Australians were homeless in 2021, including 17,000 children*.

Our governments have provided financial assistance to community housing providers, loan support, grants, and financial incentives to property investors. They have also committed to supporting the development of up to 20,000 affordable homes over the next five years under the National Housing Accord. But with our projected population growth and urgent need for up to 500,000 more social and affordable homes according to welfare and housing groups, some urgent alternatives need to be considered.

The United Kingdom has successfully implemented a public-private sector Joint Venture, otherwise known as The Partnership Model, as an effective means of generating a greater supply of affordable housing.

The UK discovered the most efficient way of achieving these positive outcomes was through well-constructed public-private sector partnerships. Four key methods were identified, including:

  • Subsidy from Government Grants valued at £11.5 billion over five years from 2021 to 2026, facilitating the delivery of 180,000 new affordable homes,
  • The sale of Public Land enabled the development of 170,000 homes, with 20 per cent dedicated to affordable housing,
  • Housing Association surpluses contributed to social housing maintenance and development, and
  • The Private Sector “Planning Gain” requires a targeted 35 per cent of all developments to include affordable housing.

Two key enablers played a crucial role in the UK's Partnership Model, Homes England - the government department responsible for facilitating the delivery of the country’s housing needs - and independent Housing Associations. These two agencies collaborated with homebuilders to form mutually beneficial Joint Ventures. Importantly, these Joint Ventures were consciously constructed to include mutual respect, trust, equality, transparency, and clear lines of communication to achieve outcomes needed to support the greater good.

A key success factor in these partnership arrangements was the appointment of an independent Joint Venture supervisor to oversee the projects, ensuring each party delivered on their promises fairly and according to the partnership agreement. This resulted in positive steps being taken towards solving the housing crisis in the UK with more affordable and quality homes being developed for the more vulnerable members of the community.

The Partnership Model was a game-changer for the UK housing market. With Australia’s housing challenges being remarkably similar, the New South Wales and Victorian governments have recently implemented the idea of Joint Ventures and public-private sector partnerships, respectively.

Maha Momeni, National Sector Lead, Social Infrastructure at Arcadis Australia says while it is early days for these Joint Ventures in Australia, if well executed, these partnerships will make a significant impact on the future of housing affordability.

“A fair, sustainable, and well-constructed Joint Venture has the potential to deliver myriad positive outcomes, including:

  • Increased supply - Public-private partnerships can increase the supply of affordable housing units, which may be less feasible if undertaken by either sector individually,
  • Financial support - The private sector can bring in additional financial resources, reducing the burden on public funds and taxpayers,
  • Efficiency and innovation – Private sector involvement can introduce innovative construction techniques, designs, and technologies to lower construction costs,
  • Expertise and experience - Partnerships can benefit from the private sector's experience in real estate development, project management, and market knowledge.
  • Risk sharing - Partnerships can distribute risks more evenly, making it more attractive for private developers to invest in affordable housing projects more often” she says.

But how can we push the boundaries further to satisfy the immense need for people to have a roof over their heads?

Momeni highlights the rising popularity of Subscription Living in Australia as another potential solution to help generate housing supply. As we dive further into the shared economy, this interesting new market opportunity has gained momentum, with economic and social changes rendering home ownership further out of reach for many people.

The model offers an affordable living experience that is flexible, practical, geographically appealing, convenient, and social. The apartments are fully furnished with all the necessary amenities, utilities, and lifestyle services, for a fixed monthly fee, with no large upfront deposits or long-term commitments. The model is also environmentally sustainable as it promotes sharing resources and reduces the need for single-use items.

Momeni says it is a great solution for those seeking a stress-free, all-inclusive lifestyle option without the high price tag.

“Subscription living is community living at its best. It is ideal for those seeking ultimate flexibility, you can live in various locations from one month to the next for a fixed monthly price which is appealing for the growing digital nomad movement or those on a budget.

“Many of these accommodation facilities provide great lifestyle choices too such as excellent locations for city workers, gyms, co-working spaces, social gathering opportunities and all the other services you’d expect to find such as utilities and cleaning,” she adds.

Resolving the affordable housing crisis is not an overnight process. The public sector, private industry and investors must come together to find collaborative and workable solutions that will open the door for all Australians to have access to safe, secure, affordable, and sustainable housing. This is not only a matter of economic importance but also of basic human dignity and social equality.

To read more about reshaping our approach to the housing affordability crisis, read Arcadis’ white paper on ‘Designing Solutions for Affordable Housing in Australia Through Partnerships.’

*Australian Bureau of Statistics - 2021 Australian Census


Designing Solutions for Affordable Housing in Australia Through Partnerships