Not for profit: $210m public housing boost

Western Australia’s not-for-profit housing providers are about to benefit from a major policy shift by the state government in relation to public housing.

The government has pledged $210 million towards the community housing sector in an effort to outsource a portion of its public housing construction and property management.

Department of Housing and Works director of community housing, Glenn King, said the new policy was based on models in Europe, Canada and the US.

Mr King said the model would integrate community and public housing, although the emphasis would be on growing the community sector’s contribution.

“Being not for profits, they are able to, or should be able to, make equity contributions to the projects. They also get their GST recouped and their tenants get Commonwealth rent assistance,” he said.

“The idea is they should be able to deliver more houses.”

The government’s new funding package will be delivered over four years to community providers, who will be subject to regulatory conditions.

Foundation Housing Ltd has been identified as a growth provider, meaning it will be one of the major beneficiaries of the new funding program.

The organisation currently manages 600 tenancies and aims to reach 1,000 in the next year.

It has an existing $42 million capital works program in the pipeline and is planning to develop land bought in the East Perth and Midland redevelopment areas, as well as Koondoola and Clarkson.

Foundation’s chief executive officer, Kathleen Gregory, said much of the new construction projects would be undertaken through joint ventures with the Department of Housing and Works.

“We’re also looking at joint ventures with the private sector around LandCorp releases,” Ms Gregory told WA Business News.

Foundation generally contributes about 25 per cent equity to projects, sourced from its rental income.

Its new properties will be servicing key or essential workers, according to Ms Gregory.

“Those in the hospitality industry, on relatively low incomes, are finding access to affordable housing in close proximity to employment impossible to get. It’s particularly difficult in regional areas like the South West, in Margaret River and Dunsborough, Broome, and the mining towns,” she said.

Ms Gregory said Foundation was considering a number of different joint venture models, including leasing arrangements with property developers and purchasing properties during construction.

She said the community housing sector could utilise public housing more effectively than government.

“We can raise loans against properties and we can bring private equity into community housing. The Department of Housing and Works has this huge asset that they can’t leverage against,” Ms Gregory said.

“If they transfer some stock to us, they can generate significant money to put back into affordable and social housing.”

Another advantage the sector had was the smaller property manager to tenant ratio, she said, with a single manager overseeing 100 tenants, as opposed to 400 under the government system.

East Perth-based St Bartholomew’s House Inc is set to double its capacity as a result of the extra funding.

The organisation currently has 172 beds under management, with an increase to 371 proposed.

The majority of the new beds will be located in a new $27 million facility, to be built on a greenfields site in East Perth, adjacent to CityFarm Perth.

In addition, the organisation will redevelop its existing property to offer 38 affordable housing places.

Both developments are scheduled to be completed by November 2009.

St Bartholomew chief executive officer Lynne Evans said the new funding would generate significant growth for the organisation.

“It really provides us with the opportunity to rebuild St Bart’s on another site, which allows us to continue to operate as we are, without disruption,” she said.