Government urged to lift affordable housing target as subsidised rentals run out

As part of Labor's housing package, the government is targeting the construction of 40,000 new affordable homes in the next five years.

In December, the government released the latest round of funding, inviting state and territory governments to submit proposals to access Commonwealth cash for social and affordable homes, with a use-it-or-lose-it deadline.

As these new homes are built, however, cheap rentals that were subsidised in the National Rental Affordability Scheme are returning to the open market as the scheme winds down.

According to figures provided during Senate estimates in November, around 4000 of these subsidised rentals will exit the scheme each year until 2026, with the 447 dwellings left in the ACT exiting the scheme by 2026.

Originally implemented by the Rudd government, the Rental Affordability Scheme provided a financial incentive for landlords, including private owners and community housing providers, to rent properties for 20 per cent below the market rate.

The Coalition scrapped the program in 2014, in the austerity budget delivered by Tony Abbott and Joe Hockey.

The scheme has been criticised as being effectively a subsidy for landlords and in the ACT was largely taken up by universities providing student accommodation, not accessible to the general population, however the scheme did provide about 34,000 affordable rentals which have been progressively exiting the scheme since it was canned.

National spokesperson for housing advocacy body Everybody's Home Maiy Azize said the issue was a longstanding one in the housing sector, where new policy initiatives replaced older ones, without major changes to the total number of affordable homes.

"The things that the government is doing aren't bad," she said, "but they're not doing anything that matches the scale of the crisis and makes housing more affordable en masse."

A government spokesperson said the new scheme would ensure a long-term supply of affordable housing.

"We established the Housing Australia Future Fund and other programs to build 55,000 new social and affordable homes that would remain affordable for the long-term, and would be out of reach of the Liberal's chopping block if they get back into office."

While some of the homes funded through the rental affordability scheme would remain in the hands of community housing providers, Ms Azize said that many would be unviable without the subsidy and would return to the private rental market.

ACT independent senator David Pocock said there would be little difference in terms of the total stock of affordable housing as the one scheme ended and another began.

"Between the winding down of the NRAS and the ramping up of the HAFF, the net new gain of social and affordable dwellings will be marginal - if not negative when you account for increased demand," he said.

"Canberra will be hit hard by the winding down of NRAS. Between 2023 and when the scheme finishes in 2026 there will be 1056 affordable properties exit the scheme. Only 11 per cent of these are owned by community housing providers so the vast majority are unlikely to remain as affordable housing."

Chief executive of the Community Housing Industry Association, Wendy Hayhurst, said the Housing Australia Future Fund was an improvement on the National Rental Affordability Scheme but said that the sector needed long-term certainty in the pipeline of new affordable housing.

"Trying to get something going when it's been stopped for quite a long time is a slow process, whereas if you were just saying every year we're going to build a certain number of homes, people just get into the swing of it," she said.

"It would be something we do every year, rather than what it is now, feast or famine."

In the last week of parliament in 2024, the Albanese government was able to pass the legislation to begin its Build to Rent and Help to Buy schemes with the support of the Greens.

However, housing will remain a key election issue, with the Coalition attacking Labor's reforms as too slow and pushing its own fix, allowing home-buyers to use $50,000 if their super to purchase a home.

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Coalition housing spokesperson Michael Sukkar stood by the party's homebuilding track record.

"The pitiful 40,000 homes 'target' is an embarrassment and after nearly three years of a Labor government, not a single home has been built under a policy or programme delivered by the Albanese government."

Earlier this week, The Canberra Times revealed that the government's housing brains trust, the National Housing Affordability and Supply Council, did not know how many affordable homes were needed to match demand, and academic studies suggested the need was anywhere from 150,000 to 1.3 million.

In light of this, advocates called for the government to increase its ambition to meet the scale of the demand.

"More social housing is how we make housing more affordable for everybody, not just people who directly benefit from it," Ms Azize said.