sustaining affordable housing - prof. peter phibbs, urban research centre , university of western...
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Professor Peter Phibbs, Urban Research Centre , University of Western Sydney This paper is one of a series of papers that are being prepared for the ACT Sustainable Futures program. A presentation on this issue was part of the Economics and Administration Workshop on May 4th 2009. One opportunity for the ACT may be the adoption of a new form of tenure that is becoming increasingly popular in the USA – the Community Land Trust (CLT) [pp 6-7]TRANSCRIPT
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Sustaining affordable housing
A paper for the ACT Sustainable Future Program –
ACT Planning and Land Authority
Professor Peter Phibbs
Urban Research Centre
University of Western Sydney
This paper is one of a series of papers that are being prepared for the ACT Sustainable Futures Program. A presentation on this issue was part of the Economics and Administration Workshop on
May 4th 2009.
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1. Introduction
A key issue of sustainability within our cities is the provision of housing that is affordable for the population. It is not possible to build a sustainable city if the social and economic networks in the city are disrupted because of people leaving the city in search of more affordable housing. A variety of research has highlighted the challenges for city economies of not having access to important workers (sometimes called key workers) such as police, nurses, bus drivers, cleaners, hospitality staff because they have left cities in search of cheaper housing (see for example, EPIC Dot Gov, 2004). Hence affordable housing relates to two of the elements of sustainability –social and economic sustainability. Any serious effort at planning for a sustainable city requires a variety of strategies to help deliver a range of affordable housing opportunities. However, in delivering this affordable housing it is important to learn from the mistakes of past affordable housing policies, as well as confronting a variety of emerging challenges. These particular challenges include:
• Producing an affordable product when land and building costs are highly priced. • Addressing the social and demographic issues of an aging population. • Ensuring lower socio economic groups are not disadvantaged by the quality or location of
the developments. • Reconciling lower income needs of occupants with the social fabric of existing
neighbourhoods. • Ensuring homes are energy efficient, aesthetically pleasing and constructed quickly to cope
with heightened demand.
Addressing the multi‐layered issues of affordable housing is a complex responsibility for providers, planners and governments alike.
This paper firstly defines what is meant by affordable housing. It reviews the recent housing affordability experience of the ACT and highlights the approaches of various state governments in generating affordable housing. Finally it suggests a variety of possible strategies that the ACT could adopt, discussing the various challenges discussed above.
2. What is affordable housing?
Housing affordability is often defined by the use of the 30/40 rule – housing in unaffordable when households at the bottom 40% of the income distribution, when adjusted for household size, are paying more than 30% of their gross household income on housing costs. Households in this category are said to be in housing stress,
The recent AHURI project on Housing affordability (Yates, Milligan et al 2007) outlined why housing affordability is a problem. They nominated five key issues:
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i. Not all of the risks associated with housing affordability problems are borne by individual
households. Many are borne by society.
ii. Some of the coping strategies employed (such as frequent moves) can contribute to a lack of social cohesion.
iii. Intergenerational equity is compromised by the increasing disparities between those who gain access to home ownership and those who do not.
iv. Processes of gentrification that have pushed much affordable housing to the fringe in urban areas have contributed to spatial polarisation. Resultant difficulties in recruiting labour have the capacity to constrain economic growth.
v. Housing affordability problems have the capacity to make it more difficult to manage the economy as a result of the increased sensitivity of at‐risk households to policy changes.
3. What has been the recent history of ACT housing prices?
Housing prices in the ACT have followed the trends in many Australian capital cities, with a strong increase in prices as interest rates came down in the last five years but with a decrease in the last twelve months. Figure 1 and Figure 2 show the ABS price series for project homes and established houses in Canberra which highlight this trend.
Figure 1: Project Homes Price Index ACT 2002‐2008
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Source: ABS Cat No 6416.0
Figure 2: Established Houses Price index 2002‐2008
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Source: ABS Cat No 6416.0
Figure 3: Rental Yields Australian Capital Cities
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Whilst Canberra rents have not increased as sharply as other capital cities, especially Sydney they were starting from a high base. Figure 3 shows that Canberra rental yields (gross rent/value of the property) are amongst the highest in the nation.
These high housing prices and rents are putting pressure on low and moderate income households and restricting entry to the home ownership market for many households.
4. Can the planning system be used to promote affordable housing1?
Internationally, planning and land policies have played a critical role in establishing an effective affordable housing sector (Gurran et al. 2008). The urban and land use planning system can directly support affordable housing development by securing affordable housing in the right locations, having regard to accessibility and social mix. A range of specific levers can be used to achieve dedicated affordable housing in new development and during processes of major urban change or redevelopment. These are often called “inclusionary housing” policies and generally ensure that a proportion of housing, land, or money for affordable housing is secured during new development or redevelopment processes. These policies or approaches differ from jurisdiction to jurisdiction according to governance and legislative characteristics. Dedicated affordable housing opportunities can be procured during government led land development processes (for instance, the approach undertaken historically by the Netherlands); through pre determined zoning regulations (as occurs in many cities of the United States), through negotiated agreements (as in the United Kingdom), or as a target to be met by developers when new land is released for housing (as in Ireland) (see Gurran et al. 2008 for further information). Planning requirements for affordable housing are often supported by a range of voluntary planning incentives such as bonus development entitlements, concessions on development standards, or reduced fees. Some jurisdictions have attempted to rely solely on voluntary incentives to achieve affordable housing through the planning process although the evidence suggests that voluntary incentives are far less effective than mandatory requirements. When housing for fixed term affordable rental or for home purchase is secured through the planning process, ongoing preservation within the affordable housing sector may become important. Covenants or restrictions on resale to ensure that the affordable housing remains in the sector may be used to preserve the affordability component in perpetuity or for a defined period. More broadly, an efficient land use planning system should facilitate housing development, including affordable housing development, by ensuring an adequate and timely supply of land and smooth approvals for appropriate housing in the right location. A well functioning land release and planning system relieves affordability problems arising from artificial supply blockages, and assists housing developers, including affordable housing developers, by reducing the time and cost associated with securing planning approvals. While the Australian States and Territories have been comparatively slow to use their planning systems to directly support affordable housing development, much of the innovation in Australian planning has focused on broad systemic reforms to reduce the time and
1 This section relies heavily on Milligan et al (forthcoming)
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costs associated with housing development more broadly (e.g. using a standard residential code in NSW). A particularly interesting strategy has emerged in South Australia. The current affordable housing policy framework for South Australia stems from the 2005 Housing Plan for South Australia (Government of SA 2005). A key theme of that plan was to encourage a broader range of approaches to funding and delivering affordable housing. The centrepiece of the plan for affordable housing, and a first for an Australian jurisdiction, was setting of a target of 15 per cent affordable housing to be achieved in all major new developments, 5 per cent of which would be for households described as high need. Implementation of this target occurred through amendment of planning laws in 2007.
5. Dealing with affordable housing challenges
Producing an affordable product when land and building costs are highly priced The largest challenge is identifying effective strategies for producing an affordable product when land and building costs are highly priced. There are no easy solutions but instead a range of strategies should be considered. Whilst it is difficult to identify strategies that will work, it is fairly clear that reliance on demand side strategies such as first home buyers grants will not be effective. A key issue is to maintain increases in supply in response to underlying demand. A key issue here is to make sure that the planning system is efficient in delivering increases in supply. The other effective way to respond to shortages of affordable housing is through a supply response that favours the not for profit housing sector. Given that the profit margin for the development sector is in the order of 15%‐25%, an efficient non profit sector has the potential to deliver more affordable housing.
Following earlier piecemeal responses to affordable housing issues, the ACT Government released a wide ranging strategy to tackle housing affordability, the ACT Affordable Housing Action Plan, in 2007 (ACT Government 2007). The strategy reflected a fundamental rethink of the government’s role in promoting affordable housing, in the context of a high cost urban housing market with a near monopoly government land owner. It included an innovative range of demand and supply side interventions and regulatory mechanisms, with an emphasis on supply. The most significant components of the plan on the supply side are:
• Increasing land supply;
• Increasing land supplied at more affordable price points;
• Making the planning and land supply system more responsive; and
• Strengthening a not for profit housing provider, to enable it to deliver more affordable housing.
Turning specifically to the arrangements for a not for profit provider, the ACT Government has agreed to extend the influence of Community Housing Canberra (CHC), now trading as CHC
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Affordable Housing, in the Canberra housing market. The main support offered to CHC under the plan comprised:
• Transfer of title of 135 former public housing dwellings being managed by the Company to provide a land and asset base to CHC (asset value $40 million). The Company is expected to redevelop 75 per cent of the transferred assets within 5 years and 100 per cent within 7 years. The transferred dwellings are typically single family homes on large blocks in well located areas. Redevelopment will allow for dual and triple occupancy.
• Provision to CHC of a rolling development finance facility of $50 million at government borrowing rates for 30 years. The agreement also includes provision for deferral of interest payments for one year.
• Provision for CHC (and, potentially, other not for profit providers that enter the local market) to make direct purchase (i.e. not through market auction) at market valuation of LDA land on deferred payment terms (ACT Government 2007).
The overall target number of affordable dwellings to be supplied by CHC utilising these mechanisms is 1,100 new dwellings over 10 years.
One opportunity for the ACT may be the adoption of a new form of tenure that is becoming increasingly popular in the USA – the Community Land Trust (CLT). A CLT is a non‐profit organisation formed to hold title to land to preserve its long term availability for affordable housing and other community uses. A land trust will often receive private and public donations of land or use government subsidies to purchase land on which housing can be built. The homes are sold to lower income families but the CLT retains ownership of the land and provides long term ground leases to homebuyers. The CLT also retains a long term option to repurchase the homes at a formula driven price when homeowners later decide to move. The ten key features of a classic CLT include:
1. Non profit tax exempt corporation
2. Dual ownership – the CLT owns the land and other owners own the dwellings
3. Leased land –
4. Perpetual affordability – any subsidy is recycled
5. Perpetual responsibility
6. Open, place‐based membership
7. Community control
8. Tripartite governance – one third of the board represents people who lease land from the CLT, one third from the surrounding community and one third represents public officials
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9. Expansionist program
10. Flexible development.
Further details of the community land trust movement are available at the website of the national community land trust network (http://www.cltnetwork.org/). A good introductory publication is Davis and Jacobus (2008).
Building appropriate stock A key sustainability concern is that housing stock in the ACT is affordable but also appropriate. The two main sustainability issues are that the stock is suitable for the increasing proportion of aged in the ACT as well as the stock being energy and water efficient.
Appropriate stock for the aged Many traditional Australian housing designs are not appropriate for older residents. Key design issues include:
• Too many steps;
• Bathrooms have too many obstacles e.g. shower hobs; and
• Doorways which are too narrow for wheelchairs and walking frames.
A detailed list of the biological changes with ageing and some possible design responses are provided in Appendix 1.
This is very much a worldwide issue – amongst other responses there clearly needs to be greater education amongst the home building sector and consumers about the benefits of universal design.
Energy efficient dwellings The energy efficiency of many Australian homes is also not of a high standard. The houses are difficult to cool and heat, are often poorly orientated and have poor quality or no insulation. Whilst newer stock is responding to revised building standards, greater awareness of environmental issues and the high costs of heating and cooling, more needs t be done. One mechanism which has been useful in the NSW context has been BASIX. This is an on‐line assessment tools that is required for all developments which contain new residential dwellings or alterations and additions to a dwellings.
The BASIX certificate has been attached to all Development/Building Applications in NSW. The tool requires applicants to specify a variety of energy saving and water saving measures in order to reach a desired sustainability threshold.
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Whilst there has been some concerns amongst developers that the tool has led to increases in capital costs this has been offset by the lower running costs experienced by households occupying BASIX approved households.
Figure 4. NSW BASIX home page.
Locating affordable housing Some previous efforts at increasing the supply of affordable housing in Australian cities have used a strategy of trying to reduce housing costs by locating houses in fringe locations. This reduces housing costs but can isolate residents from employment markets and other services. In many cases, savings in housing costs are overtaken by increased spending on transport costs. It is clear that affordable housing should not be isolated in fringe locations. This suggests that a strategy that including a proportion of affordable housing in all developments is important (such as the South Australian approach).
The mixing of cheaper affordable housing with for‐market housing is often seen as problematic, especially by for‐profit developers. However, many of these concerns are based on historical cases where the concentration of affordable housing was high and the stock was poorly designed. Two recent developments of the Brisbane Housing Company have highlighted the acceptability in the market place of mixed developments. Two developments with about a 50‐50% affordable/market housing mix sold out in two weeks when released to the market ( after the affordable housing had been constructed) (see Milligan et al, forthcoming).
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6 Conclusion
The availability of affordable housing is a key element of any sustainability strategy. Increasing the availability of affordable housing is a complex task that requires a variety of strategies. In undertaking this task it is crucial that policy makers think about the location of the affordable stock, strategies that encourage the planning system to deliver an increased supply of affordable housing, and the important role that non‐for profits can play in increasing the supply of affordable housing. Given the rapid ageing of the population and the serious consequences of climate change it is important that affordable housing stock be appropriately designed.
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Appendix 1
Biological Changes to Ageing and possible home design changes
BIOLOGICAL
CHARACT ERIST IC
AGE RELATED CHANG - POSSIBLE DESIGN RESPONSE
Sensory: Visual Reduction in light reaching the retina
Reduced tolerance for glare from bright light
Loses ability to focus on details
Have difficulty in discerning the outlines of objects
Increased level of illumination
Reduce glare impact
Contrast colours to enable objects to be seen against backgrounds
Appropriately sized and coloured signage
Avoid fluorescent lights
Sensory: Auditory Most people over 65 experience hearing impairment
Reduction in speech comprehension resulting from difficulty in distinguishing high pitched consonants
Good sound insulation to reduce background noise
Avoid locating near sources of background noise (for example on busy roads)
Provide devices (if required) to alert residents to a ringing doorbell or smoke detector (such as strobe light)
Sensory: Olfactory Older people experience a noticeable decline in their ability to detect scents at approximately age 70 and a significant decline at age 80.
As a result an older person may not smell electric overheating smoke, gas fumes or burning food.
Avoid gas appliances
Use timers on electrical devices to stop overheating
Burners on stove can be used that sense the high temperatures associated with a dry pan and turn off
Sensory: Tactile perception or touch
The opportunity for tactile interaction with the environment lessens with ageing
Owing to a slowed reflex of withdrawal, a senior is at risk of burns when there is a sudden increase in water temperature or inadvertently touching a hot surface
Older people are also more prone to heat stroke and hypothermia
Use anti scalding devices in hot water services/limit hot water temperature to 43.5 degrees Centigrade.
Stoves should have front mounted controls (many older people suffer injury after their clothes catch on fire whilst cooking)
For electric cook-tops use a model where the colour of the cook-top changes when it is hot.
Use good quality insulation and good passive solar design
Body position in space or balance
Stability for posture depends on the interplay of body position, balance and visual perceptions. All these functions decrease with age.
Older people have a decreased ability to realise when their body is tilting the base of support’s centre of gravity.
They can also experience dizziness when they have a quick change in body position. Older people also have more postural sway for which they have to compensate.
All these conditions result in an increased incidence of falling.
Bending down creates risk – appliances should be raised
Toilets should be higher than standard
Pavements should be even
Non slip surfaces should be used
Hand rails should be on both sides of stairways
Use wide doorways to allow for the use of mobility devices in the home
To allow for reduced steppage of older people, door thresholds should be eliminated
Install hobless (step-free) showers
Phone connections and power points should be at waist height to reduce the need for bending
Neuromuscular: strength and endurance
Older people may experience stiffness in the muscles and reach restrictions owing to:
A loss of strength in muscles
Locate cupboards and storage at an appropriate height. Use rocker switches on lights
Use sensors to operate taps or use lever handles
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BIOLOGICAL
CHARACT ERIST IC
AGE RELATED CHANG - POSSIBLE DESIGN RESPONSE
Having less energy for carrying parcels etc
Difficulty in opening heavy doors
Less ability to manoeuvre motor vehicles
wherever possible
Stovetops should be flat so that “heavy” pots can be slid and not lifted
Windows and doors should be easy to open
Have plenty of space in the car park – reduce the need for reversing if possible
Cognitive Some loss of memory but cognitive degeneration usually slower than physical changes
Provide visual cues to differentiate houses/apartments
Use simplified layout where possible
Psychosocial A number of factors increase isolation for older people including withdrawal from the workplace, stereotypes about the reduced significance of older people, less money to afford social outings, loss of confidence due to death of a partner or death/ relocation of friends, depression about declining health
Design so as to increases chances of interaction such as shared spaces / community space
Locate near good public transport to maximise interaction opportunities
Cater for pets
Source: Adapted from Luton and Marston (2005) and Hazen and McRee (2001)
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References
ACT Government 2007 ‘Affordable Housing Action Plan’ at http://www.actaffordablehousing.com.au/resources/pdfs/action_Plan.pdf, accessed February 25 2009
Davis J.E. and Jacobus R (2008) The City‐CLT partnership – Municipal Support for Community Land Trusts. Policy Focus Report – Lincoln Institute of Land Policy. Available from http://www.lincolninst.edu/pubs/PubDetail.aspx?pubid=1395‐(downloaded May 22nd , 2009)
Epic Dot Gov (2004) Northern Beaches Key Workers Study, Final report. Available from: http://www.manly.nsw.gov.au/IgnitionSuite/uploads/docs/Key%20Workers%20Study%20‐%20Final.pdf (downloaded May 22nd 2009)
Government of South Australia. 2005 Housing Plan for SA, Gov. SA
Gurran, N., Milligan, V., Baker, D., Bugg, L.B. and Christiansen, S. 2008 ‘New directions in planning for affordable housing: Australian and international evidence and implications’. Final Report, AHURI, Melbourne. (Available from www.ahuri.edu.au)
Hazen, MM and McRee S 2001, Environmental Support to Assist an Older Adult with Independent Living: Safety and Activity Accommodation in a Senior’s Home, Journal of Housing for the Elderly Vol 14 No 1-2 pp27-52
Lutton L and Marston K 2005 Involving Seniors in Developing Planning Guidelines for Aged Persons Dwellings – A Collaborative Approach. Paper presented at the National Housing Conference 2005.
Milligan V, Gurran N, Lawson J, Phibbs P and Phillips R (forthcoming) – Innovation in Affordable Housing in Australia: Bringing it Together. Final Report to AHURI.
Yates, J. and Milligan, V. with Berry M., Burke T., Gabriel M., Phibbs P., Pinnegar S and Randolph B. 2007 Housing Affordability: a 21st century problem, Final Report, National Research Venture 3: Housing affordability for lower income Australians. AHURI Melbourne. (available from www.ahuri.edu.au)