Draft legislation to widen social housing investment

The National Housing Finance and Investment Corporation (NHFIC) has widened the scope of its investments to allow finance to be used “to attract more private capital into the social and affordable housing sector”.

The changes follow the government’s announcement of a National Housing Accord that will bring together the superannuation, construction, and local government sectors to deliver 1 million new homes over the next five years.

Under the proposed amendments, up to $575 million of the NHIF fund will become available to invest in social and affordable housing, including “investment from superannuation funds and other institutional investors”.

“Widening the remit of the NHIF in this way will provide additional flexibility for that financing to be used to attract more private capital into the social and affordable housing sector to further help improve the returns available,” the NHFIC Act stated.

“The NHFIC Board must administer the NHIF in a manner that ensures access to the facility for social or affordable housing projects.

“The NHFIC must make reasonable efforts to identify projects, or potential projects from all States and Territories that could be suitable for funding under the NHIF.”

The NHFIC is responsible for overseeing the increase in supply of homes through the $1 billion National Housing Infrastructure Facility (NHIF), which provides concessional loans, grants, and equity finance for “housing-enabling infrastructure”.

The draft amendments are open for public consultation until 14 November.

The move builds on the government’s housing reform agenda, which includes the National Housing Accord that will provide $350 million over five years, with ongoing availability payments over the longer term to deliver an additional 10,000 affordable dwellings.

States and territories will also support up to an additional 10,000 affordable homes, increasing the dwellings that can be delivered under the accord to 20,000.

The 1 million housing target has been described as “ambitious” by economists, despite almost 1 million homes being built in the prior five-year period.

CoreLogic’s head of research, Australia, Eliza Owen, said it’s important to note that the past five years have been conducive to high levels of construction.

However, as interest rates rise, home prices fall, and supply-side constraints persist, the delivery of a million homes is not guaranteed and may be “more ambitious” than what was achieved in the past five years, she said.

In addition, the government earmarked a $10 billion injection towards establishing the Housing Australia Future Fund, which will be used to build 30,000 new social and affordable dwellings over five years as well as confirming its home guarantees remained unchanged.

The new home guarantee schemes that include the Morrison government’s First Home Loan Deposit Scheme (FHLDS), New Home Guarantee (NHG) and Family Home Guarantee (FHG) have seen a strong uptake, with some states doubling their proportion.

Recent data by the NHFIC revealed that Queensland experienced the strongest demand for the scheme, with the guarantees supporting one-fifth of new home buyers in the state in the last financial year.

[Related: Home guarantee uptake surges in Qld]