Alternative Housing Models

August 27th, 2020

Byron Shire is lacking in housing diversity. This is backed up by the data as our neighbouring shires have more accessible housing options like medium density, apartments, duplexes, and rental flats. Council recently commissioned an extensive report from Melbourne planning firm Echelon to look at what is going on across the country in the way Alternative Housing Models.

Housing Definitions

Having more housing diversity means that housing becomes more accessible to more people. This is different from “Affordable Housing”. The definition of affordable housing is if the cost of the mortgage or rental is between 30 – 35% of one’s income. Therefore most property in Byron Shire will never be technically affordable.  The Barnett Model splits housing into three distinct categories:

  • Social Housing
    Social housing requires a 100% subsidy and is there to provide emergency shelter and community housing for the vulnerable and needy. For the last few decades, state and federal governments of both stripes have abdicated responsibility for this area.
  • Market Housing
    This is the vast majority of housing in Australia. This is a property that is sold and traded on the open market and is affected by market forces. Again, state and federal have not regulated this section, if anything, provided incentives to investors and market forces to promote growth.
  • Non-Market Housing
    This area is what can be included in the Alternative Housing Model, which is dealt with here, is housing that may have some commercial content but is not purely speculative or price growth priority.

TINY/RELOCATABLE/SECONDARY HOUSES

Tiny houses are small and usually on a trailer with wheels. They may be completely off-grid or causally connected to water and power. Being mobile helps them to avoid onerous council regulations and compliance demands. (Did you know that nearly one-third of a normal new suburban home is government taxes and fees). A relocatable dwelling is a prefabricated home usually associated with holiday camping grounds. There is a growing interest in creating tiny house communities where several dwellings are clustered together in rural or urban settings. The Byron Shire LEP permits the erection of secondary dwellings up to 60sqm in some zones.

BUILD TO RENT

This model should be the growth area most likely to ease Australia’s extreme housing stress. Unfortunately, many government regulations make it difficult for private developers to embrace. With this model, developers build dwellings, mainly apartments, and retain them to long term leases to tenant households. Build to rent is an established practice in both the UK and the US, but has yet to be fully taken up in Australia. Ironically, our own superannuation funds invest in overseas build to rent schemes but do not do so here. It does seem like both major parties are getting on board and Build To Rent should be more common here soon. Good news – the NSW gov is about to give a 50% land tax discount to Build To Rent developers in an effort to stimulate the market.

RENT TO BUY

In this model, the homes are offered for rent for several years with the ability to then purchase the home. The model has a small footprint already in Australia as in the MAKE/Assemble model in Melbourne. After five years of renting, the tenant has the 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. There are also some rent-to-buy schemes in Australia that have targeted vulnerable low-income buyers who may not usually be able to obtain a loan due to not having a large enough deposit, not being able to afford mortgage repayments, or having a poor credit history.

COMMUNITY LAND TRUST

A Community Land Trust (CLT) is shared ownership of a property. It can also be known as a Land Lease Community. The land is owned by a community, council, or not-for-profit legal entity while the building is owned by an individual, couple, or small family. CLTs remove land costs from the cost of housing so they make housing more affordable. Especially somewhere like Byron Shire where land costs have outstripped the ability of a normal wage earner to afford it. The CLT charges an ongoing ground lease for the land payable monthly by the householder. This ground lease may be subsidised for low-income households so as to make housing affordable.

CLTs offer householders many of the benefits of homeownership, including householder’s control over a dwelling, security of tenure and transfer of occupancy rights, and the potential for some asset wealth building. The ground leases on which the homes are built are inheritable, and properties on leased land can be bought and sold at prices determined by a resale formula spelled out in each CLT’s ground lease. When the householder decides to sell, any increases in the value of the property are limited through the use of predetermined price formulae instead of being based upon open market values. The intention is that the initial subsidy is maintained and ensures the home will remain affordable for future households.

LIVE/WORK MODEL

The Live/Work, or Co-living model, is a setup where a building’s bedrooms are private, but nearly all other spaces and facilities are communal. In this arrangement, the building operates as modern “dorms for grown-ups”. Co-living spaces are particularly popular in large cities where there are high rents and a lack of housing choice. Co-living provides flexible, community-driven housing and is attractive to a young, urban, professional, and mobile population.

The co-living model continues to move further away from long term commitment with the model evolving from signing a lease to being provided only with a “membership” to provide for a furnished bedroom and common areas. This model whilst not strictly affordable housing is an example of the changing role housing is playing in society and the trend for community-driven outcomes.

RESTRICTED PURCHASE

Price-controlled dwellings can only be resold at a limited cost or can be made available to purchasers on defined incomes. The idea is that Restricted Purchase housing is made available at a discount, usually because a council or state government provides land cheaply. Resale of dwellings in this situation Is controlled so that the discount remains in perpetuity to future occupants.

SHARED EQUITY

A shared equity model is when the buyer shares the capital cost of purchasing a home with an equity partner. This allows lower income levels households the ability to purchase property with less deposit than would otherwise be required. Government-backed shared equity arrangements already operate in Western Australia, South Australia, Tasmania, and the ACT. The Victorian government recently initiated its own scheme. Alternative, ‘community equity’ models operate overseas. This is where a home-buyer buys a proportion of a property with a subsidy from the equity partner, usually a form of ‘not-for-profit’ trust or housing association. In this scenario, the equity partner retains a large proportion of ownership and has an ongoing interest in the property.

DELIBERATIVE DEVELOPMENT

This model is for people looking for different ways to deliver housing and want more input and control. It could be classed as a movement challenging traditional development models. Whilst the term is relatively new, the concept is not. Many home-seekers have sought to play a more active role in the creation of their homes for many decades – notably, the environmental movement in the 1960s and 1970s saw the establishment of many housing cooperatives, ‘sweat-equity’ housing projects and other non-traditional housing models. However, these models operated outside of the mainstream housing market. In this modern deliberative model, the housing project is driven/influenced by future owners in contrast to speculative development. These “do it yourself schemes” are known as ‘Baugruppen’ in Germany, ‘auto-promotion’ in France, ‘ground build’ in the Netherlands, and ‘collective custom’ in the UK. In Australia, it has recently been termed deliberative development. Nightingale Housing is a successful example of this model already operating in Australia.

CO-HOUSING

This collaborative housing model was imported to the United States from Denmark in the 1970s. It is an intentional community of private homes clustered around shared space. It seeks to plan for a very specific need to promote sustainability and ensures there isn’t redundant/ poorly used land or interior spaces within the home. Each attached or single-family home typically has its own amenities, including a private kitchen. Shared spaces typically being a common house (kitchen/ dining/lounge), laundry, and recreational areas, walkways, and gardens. The size and design of the common house vary across projects depending on the scale of the development and individual requirements.

Conclusion

The report goes into more detail about these sites and other models as well. It also lists existing examples that have been completed in Australia – mainly in Victoria. Our own Habitat in Byron is used as an example of the Live/Work model. I highly recommend people looking at the report and being educated on the different kinds of housing that can be introduced into the shire and help resolve even a small part of our housing crisis.

Leave a Reply

Your email address will not be published. Required fields are marked *

Real Estate Buyers Agent

BYRON BAY | BALLINA | LISMORE | OCEAN SHORES





    • Since 1999

      250+ happy clients

    • $310 mil

      Properties sold across the Northern Rivers

    • 1 in 5

      Properties purchased off market