Affordable housing: The only way is ethics

The Nightingale Project ‘Commons’ building in Melbourne has won several architectural awards since its completion in 2013.

Is there anybody in the housing industry who is more interested in doing what it says on their tin – housing people – than making money regardless of the social costs?

While politicians view the twin issues of affordable housing and negative gearing as threats to both their seats and their sanity, public housing projects, which in any sane democracy would be at least part of the answer, are viewed as close to communism in these free market days.

But they shouldn’t be, and I don’t mean housing commission. What if the government provided the land, planning permission or tax breaks to developers in exchange for prices based on cost-plus rather than sky’s-the-limit potential profits?

They could also trade off lower costs with restrictions on investors’ ability to “flip” the property for the first, say, five years, and set the rents at a sensible level, with leases of at least three years.

Would we be living in North Korea?  I don’t think so but it ain’t gonna happen, even if we are already subsidising property developers and investors through the tax system.

However, surely in this clever country of ours we can think of an ethical alternative into which we can put our money and which is exactly where tax breaks should be going.

Actually, there is. The Melbourne-based Nightingale Project is an architect-driven model for apartment block development with affordability and sustainability at its core.

With three projects on the go in the Victorian capital, its aims include capped profits, reduced operating and maintenance costs, removal of extraneous expenses like marketing, covenants on resales to ensure affordability is passed on, and transparent project costs for investors and purchasers.

There’s an interesting article about the Nightingale Project – and resistance to its aims – HERE.

Closer to home,   City of Sydney is offering grants of up to $10 million to affordable and diversity friendly housing projects.

And they have recently received an application for a residential and commercial project based on the Nightingale model from housing co-op provider Common Equity NSW  .

Housing co-ops are a terrific idea. They provide low cost rentals for like-minded tenants who would qualify for social housing anyway. Their rent is 25 percent of their income plus whatever they get in rent assistance form the government.

But there’s a trade-off. They must be prepared to get involved in the running of their schemes, and even decide between applicants for any vacancies.

The problem is there are just over 30 schemes in the whole state and there is no opportunity for private investors to get involved.

Would ordinary investors buy into residential projects where their incomes were more modest but guaranteed and they were denied their spin on the roulette wheel of the property boom?

Maybe. Last year, the Responsible Investment Association of Australia reported that more than $600 billion was invested in ‘ethical’ funds.

So perhaps ethical property investment isn’t just an answer to the affordability problem it represents a huge gap in the market.

Would you invest in ethical property?  Write to [email protected] or log in to the forum and have your say there.

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About the Author:

JimmyT - the T stands for Thomson - has been writing the Flat Chat column in Domain in the Sydney Morning Herald for the past 12 years. He also appears regularly on radio on the James Valentine show on ABC 702 radio. Jimmy is also an author (of 10 published books) and a TV scriptwriter (three broadcast series) and writes travel articles for whoever will publish them

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