The South Australian Government announced a new build to rent project this week in the suburb of Eastwood. The project will see twenty-nine, run down public housing units be redeveloped to produce one hundred and forty units. The public housing will be replaced and become social housing. The remainder of the units will be a mixture of affordable rentals, at 75% of market rent, and market rentals.

The shortage of rental properties across the State is of major concern. Shelter SA welcomes all projects that aim to increase the supply of rental housing however, this project will not be completed until 2023/4, and the rental crisis is happening now.

Good Ideas!

Building to rent is a great concept that we hope will gain more traction in South Australia to add to the supply of social housing and rental stock generally. Building to rent makes it possible for landowners to keep their land, grow the value of their land assets and generate cash flow. Building to rent is well-suited to building housing on public and not for profit owned land because the land can be retained for a social purpose. This project differs from other urban renewal projects that sell housing built on public land to the market, resulting in the loss of a public asset.

In the Eastwood project, it is pleasing to see that the land will remain a public asset through a long term lease to a community housing provider and provide a form of subsidy for the development. A mixed tenure model also makes sense, because market rents can offer another subsidy for social housing and can add to the financial viability of projects like this one.

We are pleased that a community housing provider will undertake this project, but through an Australia-wide procurement process, it is possible that a provider based in another jurisdiction will win the project. We would like to see a South Australian based organisation undertake the project.

State Government's 50% land tax discount for build to rent projects is also welcomed and helps the financial sustainability of redevelopments!

Concerns

A market rent in Eastwood is approximately $580 per week, so an affordable discount of 25% would reduce that amount to $435 per week or $870 per fortnight. For a household in the lowest household income quintile, receiving $30,000 or less in yearly income, or $1,153 per fortnight, this rent would represent 75% of household income, which is deemed severely unaffordable. Such a household would only have $283 per fortnight left to purchase food, pay utility bills and meet their other basic needs such as transport, clothing and health care. These families need social housing.

The 'affordable rentals' will help some people, but it is those living with the greatest housing need who will miss out. The replacement of public housing stock is welcome and seems to be the best we can hope for currently. However, South Australians need more than the mere replacement of social housing to meet their housing needs. Across all the urban renewal projects there is no increase in the net supply of social housing and the need for social housing greatly outweighs the available stock.

The State Government is contributing $10 million ($9m in land value and a $1m grant) and the builder will contribute $50 million dollars to this project. If the Government contributed a greater amount it could be possible to increase the social housing outcomes and the current plan represents a missed opportunity.

Media

You can listen to the Minister and the Shadow Minister for social housing discussing the project during an ABC Adelaide interview yesterday from 2:30:24.