Alternative Strategies for Affordable Rental Housing Development: A Feasibility Study for Tasmanian Government and Investors

Unlocking Affordable Housing: A Study on Alternative Mechanis Support the Development of New Rental Accommodation

This document presents an evaluation of alternative strategies that government entities can employ in order to facilitate the creation of new affordable rental housing, particularly within a short-to-medium timeframe. The assessment explore how the Tasmanian Government can collaborate with private investors for the acceleration of affordable rental accommodation supply.

A feasibility model has been established for two project typesmedium density infill and greenfield subdivisionsto illustrate the complexities in delivering private market housing projects while considering potential support mechanisms that could result in a proportion of developments being sold to community housing providers at discounted prices, thereby providing affordable rent or shared equity options.

The assessed government mechanisms include:

1. Capital Grants

2. Density Bonus Policy

3. Accelerated Planning Processes

4. Reduced Stamp Duty and Financing Costs

Findings indicate that for medium density infill projects, which currently face significant feasibility challenges in the Tasmanian housing market, substantial government intervention would be necessary to elevate returns to levels where private investors might find these developments financially viable.

Upon analyzing how support mechanisms impact project feasibility, several insights have been unearthed:

1. The Capital Grants and Density Bonus Policy were the only measures that successfully surpassed the baseline market feasibility standards.

2. Except for a 50 capital grant, no single mechanism alone could indepently improve feasibility ratios beyond target thresholds to attract significant private investment into affordable housing projects.

3. Combining multiple support mechanisms consistently achieved the necessary feasibility hurdles.

Some potential combinations include:

• Density Bonus Policy + Government Land Sale at Discounted Rates

• Capital Grant 10 + Density Bonus + Accelerated Planning Processes

• Capital Grant 25 + Reduced Financing Costs + Lower Stamp Duty

In contrast, for greenfield subdivision projects assuming demand is sufficient to absorb all delivered units without delay and considering the inclusion of a 10 affordable housing requirement:

The Discounted Sale of Government Land proved to be the most influential mechanism in improving feasibility rates beyond baseline market expectations.

Insights from this analysis suggest that scaling down potential support mechanisms such as reducing the discount on land sales or capital grants might still provide some benefits.

As such, it is recommed that government entities should continue exploring synergies between multiple support measures, especially those that can be scaled effectivelylike a discounted sale of government landto achieve optimal outcomes.

References:

• Unlocking Affordable Housing: A Feasibility Medium Density and Greenfield Projects - Document

• Private Sector Investment in Affordable Housing - Study Report

  that this information is a representation document, but actual detls might require updating or additional research to ensure accuracy.

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