URBANXCHANGE FORMER KINGSWOOD GOLF COURSE 179 - 217 CENTRE DANDENONG ROAD DINGLEY VILLAGE
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URBANXCHANGE
FORMER KINGSWOOD GOLF COURSE
179 – 217 CENTRE DANDENONG ROAD
DINGLEY VILLAGE
AFFORDABLE HOUSING REPORT
October 2020TABLE OF CONTENTS
Executive Summary ......................................................................................................... 5
1. Overview ................................................................................................................. 10
2. Background ............................................................................................................ 11
3. Definitions and Strategic Context......................................................................... 13
3.1 Affordable Housing in the Planning and Environment Act 1987 ......................... 13
3.2 Affordable Housing in the Planning guidelines ...................................................... 15
3.3 City of Kingston......................................................................................................... 16
3.4 Identifying and Targeting Needs ............................................................................. 17
4. Demographic Overview ......................................................................................... 19
4.1 Overview of the City of Kingston ............................................................................ 19
4.2 Projecting forward .................................................................................................... 22
5. Ministerial Guidelines on Affordable Housing ................................................... 24
6. Value of Affordable Housing Methodology and Analysis. ................................. 29
7. Affordable Housing Options for the site .............................................................. 32
Attachment 1 - Overview of Australian Housing ........................................................ 34
October 2020 1List of Tables
Table 1 - Affordable housing models against target groups ............................................ 7
Table 2 – Governor in Council Order for income ranges July 2020 ............................... 15
Table 3. Housing tenure in the City of Kingston compared with Greater Melbourne ..... 22
Table 4 – National Housing Supply Council forecasts of household types .................... 23
Table 5 – Application of the Ministerial Guidelines ........................................................ 24
Table 6 - Purchasing capacity of households based on 2020 GIC Orders .................... 29
Table 7 – Possible household spread to meet housing need. ....................................... 30
Table 8– Difference between market cost to deliver housing and average affordable
household availability ............................................................................................. 31
Table 9. Home ownership rates by age and income, 1981 and 2016 (%) ..................... 35
Table 10. Percentages of households that own home outright, by age group ............... 36
Table 11. Percentage of 20-34 year olds who are the head of their household ............ 36
Table 12. Australian cities, housing tenure .................................................................... 37
Table 13 – Change in housing tenure in Australian Capital Cities from 2011 to 2016
census data ............................................................................................................ 37
Table 14 - Income per week per age group Melbourne ................................................. 38
List of Figures
Figure 1 - Income ranges to affordable housing models and depth of subsidy ............... 18
Figure 2 - City of Kingston five year age groups compared to Greater Melbourne, 2016
(source id consulting) ....................................................................................................... 20
Figure 3 - Household types City of Kingston against Greater Melbourne, 2016 (source id
consulting) .......................................................................................................................... 21
Figure 4 - Bedrooms per dwelling in the City of Kingston, 2016, source id consulting... 21
Figure 5 - Home ownership rates via age groups (%) ......................................................... 35
July 2020 2Glossary
ABS Australian Bureau of Statistics.
Affordable Section 3AA of the Victorian Planning and Environment Act 1987 contains the
Housing following definition of affordable housing:
For the purposes of this Act, affordable housing is housing, including social
housing, that is appropriate for the housing needs of any of the following—
(a) very low income households;
(b) low income households;
(c) moderate income households.”
(2) For the purposes of determining what is appropriate for the housing needs
of very low income households, low income households and moderate income
households, regard must be had to the matters specified by the Minister by
notice published in the Government Gazette.
Affordable Affordable design – compact lots and housing that can be delivered by the
by Design market at an affordable price point, and with sustainable design features that
result in lower running costs
AHURI Australian Housing and Urban Research Institute.
Bond To raise money at lower rates from the wholesale bond market for not-for-
Aggregator profit community housing providers. It also allows Registered Housing
Associations to borrow at lower rates.
Build to Build to rent – developers and their financiers build dwellings and, instead of
Rent selling them, retain them to let to tenant households. Rents may be set at
market rent or, for affordable and social housing, at an appropriate discount to
market rents. The NRAS was a build to rent model.
CRA Commonwealth Rent Assistance is a non-taxable, income supplement
payment added to the pension, allowance, or benefit of eligible income
support customers who rent in the private rental market. RHAs are considered
to be part of the private rental market, but state-owned public housing is not.
Deductible Deductible gift recipient status means that donations to recipients are tax-
gift deductible by the donor.
recipient
GIC A Governor in Council Order setting out very low, low and moderate
household income levels is published and updated annually in the
Government Gazette
Key worker An employee who provides a vital service, especially in the essential services,
health, or education sectors.
LPPF Local Planning Policy Framework
NBESP Nation Building Economic Stimulus Packages comprising the Social Housing
Initiative, which resulted in the construction of approximately $1.5 billion in
low-income housing in response to the 2007/2008 global financial crisis. This
programme has ended and no more funding is available.
NHFIC National Housing Finance and Investment Corporation. Established by the
Federal Government to manage the Bond Aggregator and other federal grants
related to affordable housing.
NFP Not for profit.
Nightingale The Nightingale apartments are sold to owner occupiers. The apartments are
Model sold at a discount to market and the initial discount received from market is
preserved as a percentage for future purchases to receive the same discount
to market via a covenant.
October 2020 3NRAS National Rental Affordability Scheme. A subsidy paid to private landlords for
10 years when dwellings are rented to eligible tenants at less than 80 per cent
of market rent.
Public Public or social housing that is owned or leased by the State Governments of
housing Australia
Registered Registered housing agencies are not for profit organisations that provide
Housing affordable rental housing for low-income households, registered as either
Association Housing Associations or Housing Providers under State Housing Act.
(RHA)
Housing Associations and Providers are independent companies that are
overseen by a skills-based board.
Registered RHAs are classed by government as organisations that:
Housing • own, manage and develop affordable rental housing;
Provider • provide housing support and assistance to clients;
(RHP) • are viable businesses partnering with government and the community;
and
• have met registration criteria and meet ongoing regulatory compliance
against performance standards.
Housing Providers are managers of housing portfolios (not developers)
Rent to Buy Rent to buy – the homes are offered at a reduced rent for a minimum of five
years and let on assured short-hold tenancies for a fixed term. The model
being adapted in Australia is that, after five years of renting, the tenant has
first option to purchase the dwelling at price agreed at the commencement of
the five years. If the tenants do not want to buy, the landlord can retain the
property as rented housing or sell it on the open market.
Restricted Restricted or Affordable purchase – price controlled housing that is made
Purchase available for purchase by those on defined incomes. The key principles are
that:
• The dwelling must be offered for sale at or below the appropriate price
• The dwelling must be offered for sale to eligible buyers
• The discount for affordable housing for the first purchaser is preserved
for future purchasers, either in perpetuity or for a fixed period of time.
SEIFA Socio-Economic Index for Areas, produced by the ABS.
Shared Financing arrangements where the equity required for home ownership is
equity shared between the occupant (often a former tenant) and government or a
schemes NFP community housing provider.
Social Social housing is an umbrella term that covers both public and community
housing housing. Its provision usually involves some degree of subsidy.
SIA Social Impact Assessment under the Planning and Environment Act.
July 2020 4Executive Summary
AS Residential Property No1. Pty Ltd (ASRP1) is seeking the development of 179
– 217 Centre Dandenong Road Dingley Village otherwise known as the former
Kingswood Golf Course (site). The site sits within the City of Kingston. ASRP1 is
seeking to redevelop the site into a residential precinct and affordable housing
has been identified as a necessary requirement. So what are the delivery options
and how many dwellings of this type will be required?
Given that the development of the site is expected to take 10 years, whatever
mechanism is agreed on to create affordable housing must have the flexibility to
respond to changing political, legislative, economic and funding environments.
The State Government’s Homes for Victorians position paper provides a clear
definition of affordable housing:
Affordable housing is housing that is appropriate for the needs of a range
of very low to moderate income households, and priced (whether [through]
mortgage repayments or rent) so these households are able to meet their
other essential basic living costs.
The definition as supplied in Homes for Victorians is also defined in Section 3AA
of the Victorian Planning and Environment Act 1987 which contains the following
definition of affordable housing:
(1) For the purposes of this Act, affordable housing is housing, including
social housing, that is appropriate for the housing needs of any of the
following—
(a) very low income households;
(b) low income households;
(c) moderate income households.
(2) For the purposes of determining what is appropriate for the housing
needs of very low income households, low income households and
moderate income households, regard must be had to the matters specified
by the Minister by notice published in the Government Gazette.
The Victorian Government, under section 3AB of the Planning and Environment
Act 1987, has specified income ranges for Greater Melbourne with respect to
affordable housing.
It is on this basis that the provision of affordable housing is being considered for
the site.
Whatever affordable housing solution/s are offered should be supported by
demographic data to ensure that the proposal offered is robust and supportable
by an independent review. The key highlights are:
• Home ownership rates among 25-34 year olds has fallen from more than
60 per cent (1991) to 45 per cent (2016). For 35-44 year olds, home
ownership has fallen fast – from 74 per cent in 1991 to around 62 per cent
today – and home-ownership is also declining for 45-54 year olds.
October 2020 5• City of Kingston has an ageing population and is under represented in 20
– 34year olds
• Household income levels in the City of Kingston in 2016 compared with
Greater Melbourne shows there was a similar proportion of high income
households (those earning $2,500 per week or more) as well as a similar
proportion of low income households (those earning less than $650 per
week) but a lower percentage of moderate income earners.
• Housing tenure shows that Kingston has a higher proportion of outright
ownership and mortgage properties compared to Greater Melbourne but a
lower percentage of properties for rent.
The City of Kingston recognises that affordable housing matters. Although it
does not have a fixed percentage of dwellings to be delivered as affordable
housing within new developments, it does seek housing that is appropriate and
that will add to the diversity and quality of housing stock in the area. ASR1 has
submitted comments to Council on its Draft Social and Affordable Strategy.
Council in these circumstances is faced with a number of complex matters for
resolution:
• How do you grow the population of those aged between 20 and 34 years?
• How do you ensure a range of dwellings that are appropriate for the
projected ageing community?
• How do you increase affordable housing outcomes to allow for both the
current young and projected ageing community?
There are a number of affordable housing mechanisms for consideration; these
include:
Rent to buy – These homes are offered for rent to eligible tenants/purchasers
for a rolling 1 year period for five years and are let on assured short-hold
tenancies for a fixed term with an agreed purchase price. The model being
adapted in Australia is that, after five years of renting, the tenant has first option
to purchase the dwelling at a price agreed at the commencement of the five
years. If the tenants do not want to buy, the landlord can retain the property as
rented housing or sell it on the open market.
Affordable purchase – Price-controlled housing for purchase that is accessible
to purchasers on defined incomes. The key principles are that:
• The dwelling must be offered for sale at or below the affordable price
• The dwelling must only be offered for sale to eligible buyers
• The discount for the first purchaser of the affordable housing is preserved
for future purchasers.
Shared equity – The essential feature of a shared equity model is that the
purchaser shares the capital cost of buying a home with an equity partner,
July 2020 6thereby enabling households to buy a home with a lower income level than
would otherwise be required.
Build to rent – Developers and their financiers build multi-unit buildings and,
instead of selling the units, retain them to let. Rents may be set at market rent
or, for affordable and social housing, at an appropriate discount to market rents.
Social housing – This housing is owned by a state government or by a
Registered Housing Association (RHA) or Registered Housing Provider (RHP).
RHA/ RHPs who will typically seek to develop and build units or apartments and
retain ownership of the apartments to rent to eligible tenants.
The application of these models for affordable housing to income groups is
shown below.
Table 1 - Affordable housing models against target groups
Category Model Target Group
Assisted home • Shared equity • Moderate income earners –
ownership 25-39 years
• Rent to buy
• Affordable purchase
Below market • Build to rent • Low to moderate income
rental earners – 20-45 years
Public,
• Public/state housing • Low to very low income
community or groups – all age groups –
and associated
indigenous particularly the ageing
renewal
housing community and those with
programmes
disabilities
• Housing
Associations,
including bond
aggregators
Consideration should be given to assisted affordable purchase and rental.
Based on mature markets overseas, the assisted purchase and affordable rental
options are likely to gain traction in Australia and help with the supply of housing
across the housing spectrum. These mechanisms will require only partial
government funding to achieve outcomes. Given the changing political
environment and the long period over which the development will take place, the
affordable housing should be flexible to reflect the changing environment and
seek to deliver as close to five per cent of the proposed dwellings as affordable
dwellings.
The five percent of dwellings has been nominated based on the following
precedence:
• Precinct 15 (City of Hobsons Bay) 5% (in planning controls)
• East Village (City of Glen Eira) 5% (S173 agreement)
October 2020 7• Fishermans Bend (City of Melbourne and City of Port Phillip) - 6% (in
planning controls)
• City of Knox 5% (City of Knox, Affordable Housing Action Plan)
• City of Moreland 5% (City of Moreland Affordable Housing Action
Plan)
It is proposed that the development of the site will facilitate the development of
the equivalent of 5% of the site’s total dwellings as affordable housing. However,
given the changing economic and policy environment associated with affordable
housing five options are provided as possible solutions for the delivery of
affordable housing. The five options for delivery of affordable housing are
outlined below.
The provision of 5% affordable housing that provides for a diverse range of
affordable housing outcomes that will provide opportunities to low to moderate
income earners in the 20 – 45 year age groups who have been identified as the
groups most requiring affordable housing in Kingston.
1. Rent to Buy will have 5 year lease followed by an option to purchase at
the original price within affordability requirements. That is the purchase
price will be no more than 30% of the income of the GIC Orders for
moderate income orders at a 5% yield. The Rent to Buy will be offered
for sale to people who meet the Governor in Council (GIC) Orders. The
occupiers will need to show proof of income and sign a Statutory
Declaration noting they meet the required income criteria. If the option
is not executed at the completion of the 5 years the apartments will be
first offered to Registered Housing Association for a period of 90 days
at the same price. If no Housing Association or Provider purchases,
then the apartments will be offered to the market for sale to people who
meet the GIC Orders at the original price.
2. Affordable housing for purchase with covenants. Purchase will be
restricted to people who meet an agreed criteria for a price deemed
affordable via the GIC Orders at the time of purchasing. The affordability
remains via a series of covenants for future purchasers – as per the
Nightingale model.
3. Affordable housing as shared equity, whereby the home buyer shares
the capital cost of purchasing a home with an equity partner. This allows
lower income home buyers to buy sooner. The Shared equity will be
offered for sale to people who meet the GIC Orders. The occupiers will
need to show proof of income and sign a Statutory Declaration noting
they meet the required income criteria.
4. Build to rent. Developers and their financiers build multi-unit properties
and, instead of selling the units, retain them to rent to qualified GIC
households. Rents may be set at no more than 30% 1of income for low
to moderate income earners.
1
Gabriel and Yates, AHURI, 2006. Rents for low income
July 2020 85. The developer makes available land/dwellings to a RHA that can be
developed to provide 5% affordable housing of the total number of
proposed dwellings. It is important that any solution can be
commercially supported and meet requirements for the development
and lifecycle of affordable housing for a RHA.
The delivery of the affordable housing outcomes of 5% of the dwellings should
be delivered in a timely manner with the whole precinct. To allow the developer
sufficient time to establish the project and ensure that the affordable housing is
not isolated in the first stages of the project but also to ensure that the affordable
housing is not left until the final stages of the project a milestone by which the
affordable housing plan should be presented to Council needs to be established.
On this basis it is recommended that prior to the issue of the Statement of
Compliance for stage 3 the Developer must identify the parts of the Parent Title
Land on which the affordable housing will be delivered and the nature of the
options of the affordable housing tenure. The Developer must ensure that the
affordable housing obligation has been met prior to 90% of the dwellings are
complete.
To establish the value of the affordable housing based on the sale of property at
a discount tables 6, 7 and 8 of this report calculate the value. The value of the
affordable housing contribution is $3,300,000.
October 2020 91. Overview It is noted that this report is an update of the previous report produced in June 2017. Changes in Regulatory Frameworks There have been a number of changes in the regulatory frameworks in recent years and since 2017. Affordable housing has now been defined by the Victorian Government and included with the Planning and Environment Act. The definition and inclusions are included in section 2 of this report. Release of the 2016 Census data from the ABS In addition, Council has updated the following relevant documents: • Council Plan 2017-2021 • City of Kingston Positive Ageing Plan 2014-2019 • Municipal Public Health and Wellbeing Plan – 2018-2021 Key matters that have changed between the previous proposal Affordable Housing Report, Kingswood Golf Course Redevelopment, June 2017 and this current report. Given the substantial change in the regulatory framework for affordable housing and discussions of affordable housing within both Federal and State discussions, the report has been rewritten to reflect this changing environment. Outcomes The inclusion of affordable housing, as defined by the Victorian Government and included in the Planning and Environment Act, provides clarity on the eligibility criteria of residents for affordable housing. The Victorian Government has provided some funding to Housing Associations, but funding continues to be on a grant basis that is irregular in nature. Changes to the previous report This report has been rewritten based on the Victorian Government’s current affordable housing context, including the definition within the Planning and Environment Act and the changing environment in which affordable housing operates. Prior to 2018 the Victorian Government did not have a defined position on affordable housing. July 2020 10
2. Background
ASRP1 is seeking to have the site rezoned and permitted to allow for residential
development. ASRP1 is preparing to submit a development application and
wishes to include an affordable housing strategy for the whole project. The work
undertaken to date shows a possible development yield of some 825 dwellings
across the redevelopment. The redevelopment is envisaged to take 10 years.
Further development of the masterplan sees the ASRP1 seeking to deliver a high
quality residential environment that will incorporate a variety of dwellings types
and sizes.
It is noted that the Victorian Government’s Homes for Victorians provides
definitions of Affordable Housing. The Planning and Environment Act and
associated notes indicate that the implementation of affordable housing is
voluntary.
Cities provide a multitude of services and opportunities to their residents and the
most fundamental of these are access to adequate housing and employment.
Having a diverse range of dwelling types, tenures and price points throughout a
city is essential so that all members of the community can find housing
appropriate to their needs and within their household income.
A shortage of affordable housing (including affordable rental housing) is a
constraint on economic growth and can prevent lower income households from
fully participating in economic and social opportunities.
This can occur when people are priced out of living in inner and middle ring
areas and are forced to choose between commuting long distances to the job-
rich city centre, or potentially foregoing employment altogether if they cannot
obtain a job locally. There is evidence of fierce competition for local jobs in
growth areas, where the ratio of jobs to households is lowering over time2.
Moderate to lower income householders who wish to but are unable to purchase
their own dwelling are faced with either applying for public housing or renting
privately. The supply of public housing units within Australia is unlikely to
significantly increase in the foreseeable future and will continue to be allocated
to the most disadvantaged households. However, as our population continues to
grow, and the disparity in growth between housing prices and wages endures,
the number of low to moderate income households unable to access affordable
and suitable housing is expected to keep rising. This is reflected in an
increasingly long list of people waiting for limited public housing resources.
For our cities to function in the most efficient and equitable manner, they must
be able to provide all residents with housing that enables people to fully
participate in the job market, make stable education arrangements for their
children, and maintain social connections.
Our economic growth and productivity will be affected if employers cannot draw
from the widest possible pool of potential employees because an increasingly
2
Jane-Frances Kelly and Paul Donegan (2015) City Limits: Why Australia’s Cities Are Broken and How We Can Fix
Them
October 2020 11large sector of the population is unable to travel to their workplace within a reasonable time and at a reasonable cost. So poor housing affordability has both economic and social implications that have an impact on the sustainability of metropolitan areas. July 2020 12
3. Definitions and Strategic Context
The Victorian Government’s 2017 released Homes for Victorians provides a clear
definition of affordable housing being:
Affordable Housing is housing that is appropriate for the needs of a range
of very low to moderate income households, and priced (whether mortgage
repayments or rent) so these households are able to meet their other
essential basic living costs.
It goes further to define:
Public Housing
Housing owned and managed by the Director of Housing. The Government
provides public housing to eligible disadvantaged Victorians including
those unemployed, on low incomes, with a disability, with a mental illness
or at risk of homelessness.
Community Housing
Housing owned or managed by community housing agencies for low
income people, including those eligible for public housing. Community
housing agencies are regulated by the Government.
Social Housing
Social housing is an umbrella term that includes both public housing and
community housing. Its provision usually involves some degree of subsidy.
Section 3AA of the Victorian Planning and Environment Act 1987 contains the
following definition of affordable housing:
(1) For the purposes of this Act, affordable housing is housing, including
social housing, that is appropriate for the housing needs of any of the
following—
(a) very low income households;
(b) low income households;
(c) moderate income households.
(2) For the purposes of determining what is appropriate for the housing
needs of very low income households, low income households and
moderate income households, regard must be had to the matters specified
by the Minister by notice published in the Government Gazette.
3.1 Affordable Housing in the Planning and Environment Act 1987
In 2018 the Planning and Environment Act (the Act) was amended to include a
new Objective to “facilitate the provision of affordable housing in Victoria”, and to
include a definition of affordable housing as described above.
October 2020 13These amendments to the Act also included changes to clarify that responsible
authorities can enter into voluntary Section 173 agreements with developers for
the provision of affordable housing.
This affordable housing framework established under these reforms also
introduces two new instruments and a range of support guidance and
educational material.
The first instrument is the specification of the income levels associated with very
low, low and moderate-income households for affordable housing that is not
social housing. A Governor in Council Order setting out these income levels has
been published and will be updated annually in the Government Gazette (refer to
Table 2 – Governor in Council Order for income ranges for the current rates)3.
The second instrument is the Ministerial Notice relating to the specified matters
referred to in section 3AA(2), which lists the following as “matters to which regard
must be had for the purposes of determining what is appropriate for the housing
needs of very low, low and moderate income households:
• Allocation
• Affordability (in terms of the capacity for very low income, low income
and moderate income households that it is intended for)
• Longevity (in terms of the public benefit of the provision)
• Tenure
• Type of housing, in terms of form and quality
• Location, in terms of site location and proximity to amenities,
employment and transport
• Integration, in terms of the physical build and local community
• The following official estimates of housing need:
o Australian Bureau of Statistics Community Profiles
o Census profiles for Victoria
o Department of Health and Human Services Rental Report
o Metropolitan regional housing plans to guide housing growth
o Public housing waiting list (Victorian Housing Register list)
o Victoria in Future data tables.
The Victorian Government, under section 3AB of the Planning and Environment
Act 1987, has specified the following income ranges for Greater Melbourne with
respect to affordable housing that is not social housing:
3
Note that this is different to the income limits set for social housing set by the Director of Housing, which are published at
www.housing.vic.gov.au.
July 2020 14Table 2 – Governor in Council Order for income ranges July 2020
Very low income Low income range Moderate income
range (annual) (annual) range (annual)
Single adult Up to $26,090 $26,091 to $41,750 $41,751to $62,610
Couple, no dependents Up to $39,130 $39,131 to $62,620 $62,621 to $93,920
Family (with one or two Up to $54,780 $54,781 to $87,670 $87,671 to $131,500
parents) and dependent
children
Various supporting material has also been prepared by the State Government to
assist with the application of the legislative reforms. These include an example
(template) Section 173 Agreement for affordable housing, and guidelines for
seeking and negotiating the agreements.
These latter guidelines suggest a 4 step process to the negotiation agreements,
as follows:
1) Preparation of the strategic basis by the responsible authority.
2) Pre-negotiation between the responsible authority and landowners, and
also potentially the end recipient of the affordable housing and a broker.
The key focus should be on the responsible authority clearly articulating
the proposed affordable housing outcome they are seeking.
3) Negotiation between the parties to discuss the viability of including an
affordable housing component within the development, the end
recipient’s capacity to support the outcome, and the method and terms
by which the affordable housing will be delivered.
4) Delivery of the affordable housing by the landowners.
3.2 Affordable Housing in the Planning guidelines
The Victorian Government’s Planning Guidelines for Golf Course Land
Conversion to Other Purposes June 2020, notes that in considering the
redevelopment of golf courses to other uses, affordable housing should be a
consideration, in particular:
• Clause 16 Housing – These policies recognise planning should provide
for housing diversity and efficient provision of supporting infrastructure,
ensure long-term sustainability of new housing and provide land for
affordable housing.
• Step 4: Document site values, constraints and opportunities …. “ a range
of dwelling types including affordable housing”
• Step 7: Deliver a quality outcome ….Where a redevelopment proposal
seeks to include housing development, the strategic response should
encourage the provision of affordable housing
This report addresses the provision of affordable housing outcomes as
anticipated in the Ministerial Notice relating to the specified matters referred to in
section 3AA(2) of the Act, which lists the following as “matters to which regard
must be had for the purposes of determining what is appropriate for the housing
October 2020 15needs of very low, low and moderate income households.”
3.3 City of Kingston
Council does not currently have a comprehensive policy or strategy position on
affordable housing that defines the affordable housing outcomes it is seeking. By
way of example, a comprehensive policy position can be seen in the City of Port
Phillip’s In Our Backyard: Growing Affordable Housing in Port Phillip 2015-2025
and the City of Knox’s Affordable Housing Action Plan.
It is understood that Council is in the process of developing a strategic position
on affordable housing for the municipality.
Council Plan 2017-2021
The Council Plan sets out the five goals that support the city’s vision as well as
the outcomes that City of Kingston will seek to deliver in the next four years. It is
noted that none of the goals are specifically dedicated to affordable housing,
although the issue is referenced.
In support of the community, the Plan notes that:
We will continue to lobby and work towards: …
Calling for positive changes on key social issues including affordable
housing, disability services, family violence and problem gambling …
The accompanying document, the Annual Action Plan, also mentions affordable
housing as part of its first goal:
Goal 1 – OUR WELL-PLANNED, LIVEABLE CITY SUPPORTED BY
INFRASTRUCTURE TO MEET FUTURE NEEDS
1.1.1.6 – Develop an Affordable Housing Implementation Plan to work
with State Government, Housing Associations and developers to increase
the availability of affordable housing
City of Kingston Positive Ageing Plan 2014-2019
Council’s Positive Ageing Plan has eight key priorities. Priority three discusses
housing, with two objectives being:
§ 3.1 To provide leadership and advocacy in identifying housing initiatives
which reflect the needs of an ageing population.
§ 3.2 To support older people to ‘age in place’ either in their own homes or
in residential care.
Municipal Public Health and Wellbeing Plan – 2018-2021
The Municipal Public Health and Wellbeing Plan sets out the goals that support
the City of Kingston’s strategy to increase the health and wellbeing of its
residents during the next three years. Of particular note is:
Priority 4 – A liveable Community
July 2020 16Objective 4.2. Increase the availability of affordable housing Draft Affordable Housing Strategy ASRP1 acknowledges that Council has a Draft Affordable Housing Strategy. The Strategy has made a number of positive elements including adopting the Planning and Environment Act definition and acknowledgement that multiple tenures exist to achieve affordable housing outcomes. However, ASRP1 does not support the value capture mechanism for the delivery of affordable housing. Value capture as outlined in the Strategy is only successful if a policy requiring the implementation of value capture is known at the time a land parcel is transacted. Developers will typically have regard to all known costs when determining the price of a land parcel. If the value capture policy is in effect, a reduced land price can be offered to account for the future value capture cost. If the value capture policy is not in effect, no such allowance is made and an increased price is offered for the land parcel. The value capture policy should have regard to the date a land parcel is transacted. If the land is transacted prior to the implementation of the policy, value capture should not be applied. Further the Panel Report for Hobsons Bay C88 (Precinct 15), concluded that the capturing of value uplift was not justified and recommended that the wording proposed by the developer be included in the relevant planning controls. 3.4 Identifying and Targeting Needs There are a variety of affordable housing delivery models available to meet the housing needs of different income groups, as conceptually illustrated in Figure 1 below. The level of government subsidy associated with each model is proportional to the income band and therefore the capacity of the household to pay market rent or mortgages. Figure 1 provide a simple conceptual framework for considering the relationship between income groups, tenure types and the relative level of government subsidy that might be needed for each model to be applied to affordable housing outcomes. October 2020 17
Moderate Income Assisted Home
ownership (eg
(80 – 120% of area shared equity,
median income) discount purchase,
Level of Government Subsidy
low deposit)
Other below market rental
(ie discounted and or
Low Income (50 – income related rent)
80% of area median
income
Public, Community and Indigenous
Housing
Very Low Income
(less than 50% of Crisis Housing
area median income)
Figure 1 - Income ranges to affordable housing models and depth of subsidy
July 2020 184. Demographic Overview
An overview of the demographics of the Australian housing market is provided in
Attachment 1. The specifics of the broader market and how they are reflected in
the City of Kingston are noted below.
4.1 Overview of the City of Kingston
Whatever affordable housing solution/s are offered should be supported by
demographic data to ensure that the proposal offered is robust and supportable
by an independent review. The key highlights are:
• Home ownership rates among 25-34 year olds has fallen from more than
60 per cent (1991) to 45 per cent (2016). For 35-44 year olds, home
ownership has fallen fast – from 74 per cent in 1991 to around 62 per cent
today – and home-ownership is also declining for 45-54 year olds.
• City of Kingston has an aging population and is underrepresented in 20 –
34year olds
• Household income levels in the City of Kingston in 2016 compared with
Greater Melbourne shows there was a similar proportion of high income
households (those earning $2,500 per week or more) as well as a similar
proportion of low income households (those earning less than $650 per
week) but a lower percentage of moderate income earners.
• Housing tenure shows that Kingston has a higher proportion of outright
ownership and mortgage properties compared to Greater Melbourne but a
lower percentage of properties for rent.
The 2016 Census data from the ABS provides a summary of the demographic
profile of the City of Kingston. The ABS Census data shows:
Age Characteristics
The figure below shows five age groups in the City of Kingston in 2016
compared with Greater Melbourne. What is clearly evident is that Kingston is
disproportionally represented in the older age groups (65+) and needs to provide
appropriate housing opportunities for those aged between 20 and 34 years of
age to attract them to Kingston.
The decreasing percentage of the population between 20 and 34 supports the
need for affordable housing that is available for purchase. It is clear that Council
does not have an adequate diversity of housing stock across its municipality to
support young people entering the home ownership market.
October 2020 19Figure 2 - City of Kingston five year age groups compared to Greater Melbourne, 2016 (source id consulting) Income Analysis of individual income levels in the City of Kingston in 2016 compared with Greater Melbourne shows similar proportions of people earning a high income (those earning $1,750 per week or more) and a lower proportion of low income people (those earning less than $500 per week). Overall, 12.4% of the population in the City of Kingston earned a high income, and 36.3% earned a low income, compared with 11.9% and 37.8% respectively for Greater Melbourne. Analysis of household income levels in the City of Kingston in 2016 compared with Greater Melbourne shows there was a similar proportion of high income households (those earning $2,500 per week or more) as well as a similar proportion of low income households (those earning less than $650 per week). Overall, 23.3% of the households earned a high income and 16.9% were low income households, compared with 22.9% and 16.7% respectively for Greater Melbourne. Household Types with Dwellings The household types for Kingston compared to Greater Melbourne identify the higher proportion of lone person households and a similar proportion of couples without children are shown Figure 3 - Household types City of Kingston against Greater Melbourne, 2016 (source id consulting). When the household types are cross referenced with the size of dwellings as demonstrated in Figure 4 the size and scale of dwellings is not reflectiove of the community need. There is a small representation of smaller dwellings that are typically used by those aged 20 – 34 years of age. July 2020 20
Figure 3 - Household types City of Kingston against Greater Melbourne, 2016 (source id
consulting)
Figure 4 - Bedrooms per dwelling in the City of Kingston, 2016, source id consulting
Household Tenure
It is noted that, in the 2016 Census, the housing tenure across the municipalities
included:
October 2020 21Table 3. Housing tenure in the City of Kingston compared with Greater Melbourne
Tenure Kingston Greater
Melbourne
Owned 33.1 29.0
Mortgage 35.2 34.3
Rent 24.5 28.8
The demographic data suggests that to achieve a more diverse community
Council needs to increase the number of moderate income earners who
are aged between 20 and 34 years of age. Housing needs to be made
available to allow moderate income earners to live in the City of Kingston.
Fundamentally, the City of Kingston does not offer affordable housing or a
diversity of housing types and this is a major deterrent for those aged
between 20 and 34 years of age who are establishing their first dwellings.
The demographic data suggests that there is a need to supply housing
that is appropriate for 20 – 34 year olds on moderate incomes. The
housing should be available for both rent and purchase.
4.2 Projecting forward
Accurate predictions on the growth of household formation relative to income
has not been available since the Abbott Government ceased the work of the
National Housing Supply Council. Prior to its closure, the National Housing
Supply Council forecasts were accurate. The National Housing Supply Council
2nd State of Supply report (2010), indicates that not only is there a negative
amount of affordable housing for all people in the first three deciles (that is 75%
of the population) of income, but that what housing is available to them is likely
to be occupied by people with higher incomes.
The projections of national underlying demand by household type (’000
households, with percentage of increase in brackets), 2009 to 2029, medium
household growth scenario are shown below:
July 2020 22Table 4 – National Housing Supply Council forecasts of household types
Household 2012 2013 2014 2019 2029 Trending
Two 2,689.4 2,767.0 2,793.7 2,820.9 2,960.4 3,228.4
parent (31.5%) (30.7%) (30.5%) (30.2%) (29.2%) (27.5%) ê
family
Single 973.6 1,010.6 1,021.2 1,030.8 1,081.0 1,212.6
parent (11.4%) (11.2%) (11.1%) (11.1%) (10.7%) (10.3%) ê
Family
Couples 2,318.5 2,475.6 2,527.6 2,578.7 2,813.1 3,170.5
no (27.2%) (27.5%) (27.6%) (27.6%) (27.7%) (27.0%) è
children
Lone 2,210.8 2,396.8 2,463.3 2,531.6 2,896.5 3,712.8
person (25.9%) (26.6%) (26.9%) (27.1%) (28.6%) (31.6%) é
Group 337.7 355.9 361.3 366.4 389.8 435.7
(4.0%) (4.0%) (3.9%) (3.9%) (3.8%) (3.7%) ê
The conclusion to be drawn from this table is to expect a rapid increase in
lone person households, mostly at the expense of family households. To
support the increase in lone households there needs to be smaller
dwellings that are affordable to meet the need.
The growth in households in Capital Cities in Australia, particularly Melbourne, by
those in the 20 – 35 age groups in the moderate income range is shown in the
large increases in rental housing by private landlords from the 2011 – 2016 census
data. The 20 – 35 year age group is typically the age at which households are
formed.
The City of Kingston population and household forecasts present what is driving
population change in the community and how the population, age structure and
household types will change each year between 2020 and 2036.
The population forecasts suggest that the City of Kingston is going to grow from
a population of 165,947 in 2020 to a population of 186,967 in 2036, representing
an increase in population of some 12.67%.
This increase in population is also matched by an increase in the number of
households from 64,463 at 2016 census to a predicted 75,570 in 2031. The size
of households is expected to drop from 2.53 persons per household in 2016 to
2.47 persons in 2036.
The increases in age forecasts for the City of Kingston indicate a 6.4% increase
in population under working age, a 22.1% increase in population of retirement
age, and only 8.7% increase in population of working age.
This data further supports the need to provide housing to attract and meet
the needs of those aged between 20 and 34 years of age. A variety of
options of housing tenures are required that provide opportunity for living
including the size of dwellings and the capacity to rent or purchase at
affordable levels.
October 2020 235. Ministerial Guidelines on Affordable Housing
The purpose of the Victorian Government affordable housing reforms is to
encourage an increase in affordable housing through local councils seeking a
voluntary affordable housing contribution, as part of planning approval
processes4. The legislated definition of affordable housing and the associated
GIC Orders set out the income bands for individuals and households that the
State Government considers to be in need of affordable housing as described in
Section 2 of this report.
The current State government policy does not specify any maximum percentage
of an individual, couple or family’s income should be assumed as being spent on
housing costs. However, there is broad support for the concept that individuals
and households should spend no more than 30 per cent of income on housing
costs. The position of 30% was established by AHURI (Yates and Gabriel, 2006).
Section 3AA(2) of the Act includes reference to Ministerial Notice relating to the
specified matters and lists “matters to which regard must be had for the purposes
of determining what is appropriate for the housing needs of very low, low and
moderate income households.” The table below provides a response to the
matters in the Ministerial Notice as these maybe applied to on the site.
Table 5 – Application of the Ministerial Guidelines
Matter Urbanxchange s recommendation
Allocation The definition of affordability as set out in the
Act, section 3AA (ie very low, low and
moderate income earners) should be applied
in relation to any affordable housing
provisions at the site. The application of all
income categories is justified based on the
demographics and housing need in the
Kingston LGA.
It will be incumbent upon the operator of the
affordable housing to ensure that the
occupants meet the income eligibility criteria
as set out in the GIC Orders at the time the
occupancy is either committed or
commences. This can be achieved by
evidence of income accompanied by an
executed Statutory Declaration from the
occupier noting that they are within the
specified GIC Income criteria.
4
https://www.dhhs.vic.gov.au/delivering-social-housing-affordable-housing-contribution
July 2020 24Matter Urbanxchange s recommendation
Affordability (in terms of Occupants of the dwellings should pay no
the capacity for very low more than 30% of income on affordable
income, low income and housing costs. The affordability is for
moderate income occupants who meet the income eligibility
households that it is criteria as set out in the GIC Orders at the
intended for) time that occupancy commences. In this
instance the affordable housing is targeted at
moderate income earners.
The position of 30% was established by
AHURI (Yates and Gabriel, 2006) and has
been adopted by all levels of government and
the broader housing industry as an agreed
position.
Longevity (in terms of the The affordable housing should be provisioned
public benefit of the for 20 years as affordable housing. The value
provision) of any properties that are discounted on
completion to investors and Housing
Associations via the Planning Scheme should
remain within the Kingston Municipality.
The longevity of ownership to the actual site
cannot be in perpetuity as financial institutions
will not finance projects with this condition.
Nor, in some instances, of tenure type will
they consider beyond 25 years.
Tenure Urbanxchange suggests that the following
range of potential tenure solutions exist:
• Rent to buy (private)
• Build to Rent (either private or RHA)
• Affordable Purchase (e.g. capped
capital growth a-la Nightingale model)
• Shared Equity
• Social Housing
In addition, the possible long time frame (10
years) for implementation of affordable
housing within the project means that there
will be wider solutions for supply of housing
as time progresses – need to leave the ability
for these solutions to be applied.
Type of housing, in terms The housing should be tenure blind and meet
of form and quality silver standard in the Liveable Housing
October 2020 25Matter Urbanxchange s recommendation
Guidelines for town houses and if the
properties are apartments the Better
Apartment Design Standards.
The size of the dwellings needs to meet the
identified demographic need of smaller
housing for 20 – 34 year olds.
Based on the projected demographic need for
single person and smaller households (as
outlined in section 4.2, Urbanxchange
suggests the following:
• Up to 40% x 1 bedroom
• Up to 70% x 2 bedroom
Location, in terms of site The site is not well serviced by public
location and proximity to transport so affordable housing residents will
amenities, employment need to have their own means of transport. In
and transport addition, amenities are not within easy
walking distance of the site. This may
preclude the very low income households
from being housed in the redevelopment.
Integration, in terms of the It is premature to determine whether the
physical build and local housing format should be within a standalone
community building, integrated within a mixed tenure
building, or a blend of both outcomes.
The affordable housing dwellings should be
tenure blind.
The location and type of dwellings will be
addressed prior to the issue of the Statement
of Compliance for stage 3.
The following official The data in section 4.1 and 4.2 and
estimates of housing need: Attachment 1 of this report indicate that the
need within Kingston is:
• Australian Bureau of
Statistics Community o For housing for those aged 20 – 34 years
Profiles o Housing for low-moderate income
• Census profiles for households
Victoria o Need for an increase in rental stock and
• Department of Health opportunities for younger people to enter
and Human Services home ownership.
Rental Report
July 2020 26Matter Urbanxchange s recommendation
• Metropolitan regional
housing plans to guide
housing growth
• Public housing waiting
list (Victorian Housing
Register list)
• Victoria in Future data
tables.
Proposed Affordable Housing Tenures
Affordable housing can cover many tenures, social rental, private rental, rent-to-
buy, low cost purchase and purchase. It is important to recognise that the various
tenure types will allow various sections of the community access to housing to
meet needs from low to moderate income earners.
Outlined below are the many tenure types that can be applied to affordable
housing.
Rent to buy – the homes are offered at a reduced rent, to eligible
tenants/purchasers, on a rolling 1 year period for five years and let on
assured short-hold tenancies for a fixed term. The model being adopted in
Australia is that, after five years of renting, the tenant has first option to
purchase the dwelling at a price agreed at the commencement of the five
years. If the tenants do not want to buy, the landlord can retain the property
as rented housing or sell it on the open market.
Affordable purchase. This can be achieved by two mechanisms one is a
form of price controlled purchase housing that is accessible to purchase by
those on defined incomes, the other is affordable by design.
The key principles of affordable purchase models are as follows:
• The dwelling must be offered for sale at or below a nominated
‘affordable’ price
• The dwelling must be offered for sale to eligible buyers
• The discount for affordable housing for the first purchaser is
preserved for future purchasers.
In Victoria, The Nightingale housing model has a transparent process to
documenting land purchase and development costs and, the purchase price
is based on the development achieving a return of 15 per cent.5 The initial
5 The formula for calculation of rate of return is:
Market Valuation (incl. GST) minus (Land plus {Development Cost excl. GST})
Market Valuation (incl. GST) X 100
October 2020 27incremental saving is retained via a formula for resales that is applied via a
covenant on title.
Shared equity. These arrangements cover the range of products, schemes
and initiatives that enable the division of the value of a dwelling between
more than one party. The essential feature of shared equity models is that
the buyer shares the capital cost of purchasing a home with an equity
partner, thereby permitting households to buy a home with lower income
levels than would otherwise be required. In simple terms, this umbrella
term is used to encompass government-backed and private sector-led
schemes based on arrangements whereby the purchaser enters into an
agreement with a partner to share the cost of purchasing a property.
Victoria currently does not have a shared equity scheme. However,
discussions for a national scheme are being investigated by Federal
Government agencies.
Build to rent. Developers and their financiers build multi-unit buildings and
instead of selling the units, retain them to let to tenant households. Rents
may be set at market rent or, for affordable and social housing, at an
appropriate discount to market rents. For affordable housing the rent should
be no more than 30% of the household’s income.
Social housing. This is owned by a state government or by a community
housing organisation. Community housing organisations are not-for-profit
corporations that own and/or manage community housing and are
registered by Federal and state housing regulators. Housing Associations
and Providers are independent companies that are overseen by a skills-
based board.
Tier 1 Housing Associations are seen by government as organisations that:
• Own, manage and develop affordable rental housing
• Provide housing support and assistance to clients
• Are viable businesses, partnering with government and the
community
• Have met registration criteria and meet ongoing regulatory
compliance against performance standards.
Social housing is unlikely to be utilised or be able to be accessed by the
demographic group that has been identified as in need in the municipality.
It is not the preferred mechanism but is a necessary consideration as part
of the wider affordable housing spectrum.
July 2020 286. Value of Affordable Housing Methodology and Analysis.
What is the value of the affordable housing contribution for the site? The
methodology is as follows:
• Step 1 - Identify the ‘purchasing capacity’ of single adults, couples and
families on very low, low and moderate incomes (ie the maximum price that
each type of household could afford to pay for a house, assuming that they
allocated no more than 30% of their income to mortgage payments)
• Step 2 – The basis of the development containing 825 dwellings, determine
the total number of dwellings that might be set aside for single adults,
couples and families on low to moderate incomes (based on 5% of all
dwellings being made available for affordable housing).
• Step 3 – Quantify the potential aggregate value of expenditure on housing
amongst low to moderate income households.
• Step 4 - Calculate the difference between the market price of housing and
the price that low-moderate income households can afford to pay and
quantify the affordable housing contribution.
Step 1 – Purchasing Capacity.
Table 1 below shows the ‘purchasing capacity’ of low to moderate income
households (single adults, couples and families) based on the current GIC Orders
as per Table 1 of this report - it sets out the maximum price that each type of
household could afford to pay for a house, assuming that they allocated no more
than 30% of their household income to rent/mortgage payments.
Table 6 - Purchasing capacity of households based on 2020 GIC Orders
Household purchasing capacity Very low Low Moderate
income income income
range * range range
Single adult (40%) $156,540 $250,500 $375,660
Household - Couple, no dependents (60%) $234,780 $375,720 $563,520
Family (with one or two parents) and $328,680 $526,020 $789,000
dependent children (0%)
* While calculations have been provided for very low income household types it is
recognised that no financial institution is likely to lend money to this group based
on their earning capacity and is not suitable for the affordable purchase options.
Step 2 – Potential affordable housing yield and mix.
There are many different ways that an affordable housing scheme might be
designed to deliver the 5% affordable housing as envisaged.
Table 7 below shows one possible scenario for this purpose.
October 2020 29You can also read
