Affordable Housing Bonus Drives Mixed-Tenure Momentum

Mixed tenure is considered a bit of a headache. The complexities of mixing tenant profiles, feasibility questions when combining affordable and market homes, and even identifying eligible tenants are all obstacles—and that’s before even considering other tenures such as student and retirement housing. But Traders in Purple director Charles Daoud sees real opportunity, particularly in mixing affordable and market homes. “We are very much in our infancy but the great news is that we have made a start,” he says. And the NSW Housing SEPP policy changes—modelled on the Affordable Housing Overlay in South Australia—have accelerated its adoption by Australia’s development industry. ▲ Traders in Purple director Charles Daoud. “The NSW policy is the single most effective policy to increase the quantum of affordable housing that I have seen,” Daoud says. “With the incentive of extra height and density through the provision of affordable housing, developers are taking it up in droves. “[It] has made a huge difference to developer attitudes.” Cubic chief executive Wegland Lau agrees the SEPP changes have been “massive” but says developers are still uncertain about how affordable housing fits into projects. “But there has been a shift in the past 18 months and CHPs are getting a lot more recognition.” And given its early days, there are still questions about what Australia’s mixed-tenure future might look like. Affordability and feasibility Decode chief executive Divya Mehta says mixed tenure is becoming more attractive, especially with government support. “One advantage is funding efficiency,” she says. “Standard units are now highly unaffordable to build and buy. “But affordable and social housing can stretch funds further, allowing more homes to be delivered. Older assets can also be adapted for social outcomes.” ▲ Decode delivered not-for-profit Link Wentworth ’ s St Marys affordable micro-units. Charles Daoud says that in terms of feasibility, a “take-out partner” helps de-risk projects. “You have solid pre-sales … [and] financiers are more likely to apply less risk to this type of sale,” he says. But Eda Property founder Anissa Cavallo says that traditional feasibility models tend to favour uniform tenure, because it’s simpler to finance and sell. “Mixed tenure can mean juggling different funding sources, managing varied rental yields and navigating additional regulatory requirements,” she says. “There’s also a perception risk. Some stakeholders worry that combining social, affordable and market-rate housing will affect sales or values, even though global evidence shows it can strengthen communities when done well. “Overcoming those barriers requires strong policy settings, financial incentives and proof-of-concept projects.” Reputation and design Perception remains a challenge, says Lau, but seeing renter profiles changes minds. “They’re no different to your normal tenure, they have full-time jobs, but because in places like Sydney where even on a combined income of $100,000 per annum, you can’t rent anything.” ▲ Decode Group chief executive Divya Mehta. Sydney obtained the dubious accolade of world’s second most expensive city with a house price-to-income ratio of 13.8 this year. Adelaide, Brisbane and Melbourne were also dubbed “impossibly unaffordable”. Jackson Teece managing director Damian Barker says integrating tenure models can break down social barriers and current NSW planning pathways encourage ‘pepper-potting’ social and affordable housing in a development. This creates “tenure blindness”, which can mitigate potential for social isolation and general stigma, he says. “Designing to create a feeling of an integrated community is fundamental. “This means common facilities and entrances, and opportunities for interaction and connectivity with the external community wherever possible can facilitate better community engagement and acceptance.” ▲ Traders in Purple’s Wollongong project Northsea is considered one of the first truly mixed-tenure projects in Australia. Daoud points to Traders in Purple’s Northsea project in Wollongong, designed by Jackson Teece, where all build-to-sell apartments sold out in the mixed-tenure build. “Government or CHP-backed projects are higher quality with expectations of longevity and low maintenance,” he says. “These are standards we apply to all our projects both private and mixed tenure but it would be a challenge for developers whose model is to meet minimum standards and no more.” Structural challenges That’s not to say it’s without hurdles. “Multiple stakeholders involved in the delivery of mixed-tenure housing can be a challenge but it’s not insurmountable,” Daoud says. Cavallo says it can be further complicated in that housing, infrastructure and community planning are managed by different departments with their own KPIs. “Governments may prioritise political ‘quick wins ’ over complex, multi-layered developments that take years to deliver,” she says. “Mixed-tenure models often require more collaboration, risk-sharing, and patience than the standard build-to-sell model. It’s not that the capability doesn’t exist—it’s that the incentives don’t always align.” ▲ Eda Property founder Anissa Cavallo and Jackson Teece managing director Damian Barker. But mixed tenure can also help to offload the responsibility of finding and managing tenants when CHPs get involved, says Daoud. “In most 100 per cent private buildings there will be a mix of owner occupiers and those who rent, with multiple agents managing the properties. “With affordable housing you have one point of contact, the community housing provider, who is responsible for collecting rent, and tenant and community satisfaction.” A new future for affordability Getting CHPs on board early in the process can help in navigating these challenges, according to Lau. “But I would like to see a lot more incentives given to private developers to provide more housing. “You can’t totally rely on the government to provide housing for the crisis that we’re in, so we need to work with private developers hand-in-hand.” The NSW model is encouraging but every state needs to consider something similar, says Daoud. ▲ Traders in Purple’s Northsea project was delivered in partnership with Housing NSW and CHP Housing Trust. “You are extracting more housing out of existing serviced land and not relying on government grants or subsidies. “Projects still have to meet rigorous planning criteria but where you can get extra height and density with little or no impact, it is an effective solution to a crisis that has been many years in the making. “It’s about getting people off housing waiting lists and seeing key workers able to do their jobs close to where they live. “It’s about seeing the way secure housing can change lives.”

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