Revenue-gap subsidy ‘needed to underpin affordable housing’

POLICY and subsidy inconsistencies are contributing to the long-term decline in the supply of social housing in Australia, new research warns.

A report by the Australian Housing and Urban Research Institute (AHURI) says there is a “funding gap” between the revenue acquired through rents paid by low-income tenants and the cost of developing and maintaining high-quality affordable housing.

“Producing social or affordable housing with a component of private finance invariably generates a gap between the revenues recouped from sub-market rents and the recurrent costs of provision, including debt servicing,” the report says.

“There is, therefore, a longstanding case for a ‘revenue gap’ subsidy to support the provision of affordable housing.”

To better meet the affordable housing needs of low-income households, the report recommends, among other things, making public land available at below-market cost; keeping affordable housing in the not-for-profit housing sector to retain social benefit created; providing gap funding to reduce the need for private financing; and using needs-based modelling for investment decisions and to drive the allocation of subsidies.

The full report can be viewed here.