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What is affordable housing?

Affordable housing is housing that is appropriate for the needs of a range of very low to moderate income households and priced so that these households are also able to meet other basic living costs such as food, clothing, transport, medical care and education. As a rule of thumb, housing is usually considered affordable if it costs less than 30% of gross household income [1].

In this context, affordable housing refers to housing that has been developed with some assistance from the NSW and/or Commonwealth Governments, including through planning incentives. It may include a range of housing types and sizes, including single or multi-bedroom units or houses, as well as studio apartments. It is only available in some locations and eligibility criteria apply.

Although affordable housing is sometimes available for purchase, it is most commonly available for rent.

Affordable rental housing may be owned by private developers or investors, local governments, charitable organisations or community housing providers. It is usually managed by not for profit community housing providers, and sometimes by private organisations.

Affordable housing in NSW has been developed in a range of ways and funded through a mix of sources including government (local/state/Commonwealth) grant or land contributions, planning incentives, philanthropic sources, community housing provider equity contributions and from finance secured against assets owned by community housing providers.

[1] While this figure provides a useful benchmark of housing affordability, the definition of affordability varies according to a household’s individual circumstances. Demands on the same gross income may differ significantly.

Who are very low to moderate income earners?

People described as being on a very low income are those earning less than 50% of the NSW or Sydney median income, depending on where they live [1]. They include workers in a range of lower paid occupations, particularly in areas such as retail or manufacturing, as well as people earning the minimum wage [2] or who are on an aged or disability pension or other government benefit.

People earning more than 50% but less than 80% of the NSW or Sydney median income are described as earning a low income. They include many people working in jobs such as a child care worker, secretary or cleaner.

People described as being on a moderate income are those earning between 80-120% of the NSW or Sydney median income. They may include people working in occupations such as teaching, policing or nursing, particularly if they are in earlier stages of their careers [3].

[1] The 2011 ABS Census data found that the median income in Sydney is $1,444 per week ($75,088 per annum). For other parts of NSW it is $1233 ($64,116 per annum). These figures are updated each year.

[2] In 2012, Australia's minimum wage was $15.96 per hour or $606.40 per week ($31, 512 per annum). Generally, employees in the national system shouldn't get less than this. (For more information, go to the Fair Work Ombudsman’s website.

[3] Income figures for various job types in this section are derived from gross average weekly total earnings for full-time non-managerial employees as reported in the 2010 ABS Employee, Earnings and Hours Cat no. 6306.

How is affordable housing different to social housing?

Affordable housing is not the same as social housing.

Affordable housing is open to a broader range of household incomes than social housing. Households do not have to be eligible for social housing to apply for affordable housing, though people who are eligible for social housing may also be eligible for affordable housing properties.

Affordable housing is managed more like a private rental property, but there are eligibility criteria and the managers are mostly not for profit community housing providers. When there is a vacancy for an affordable housing property, this is usually advertised and people submit an application to the manager as they would if they were applying for a property in the private rental market. Some managers may keep waiting lists if there is no vacancy, but this is not required.

Rents for affordable housing are usually calculated differently to social housing and there are different tenancy arrangements. Generally, affordable housing tenants cannot transfer between properties and household members cannot apply to succeed a tenancy.

Some affordable housing properties are available to people who are also eligible for social housing and on the NSW Housing Register. If someone on the NSW Housing Register is eligible and accepts a tenancy in an affordable housing property, they will be removed from the NSW Housing Register.

Who needs affordable housing?

Many different people need affordable housing and for lots of different reasons. This may include people who work full- or part-time in lower paid jobs, where their household income is not high enough to pay market rent in the area in which they live and/or work. This is sometimes the case even for people working full-time in an essential service such as a police officer, a nurse or a child care worker, particularly if they are just starting out in their career or supporting a family on only one income.

People may also need affordable housing because a change in their lives has impacted on their financial circumstances – for example, a household member has lost their job, a family has separated, a family moves to a single income household after a baby has been born or when a spouse has died.

Affordable housing is sometimes only needed for a short- or medium-term period, depending on the life changes a household is experiencing. Over time, the household’s circumstances or income may change again and some households may re-enter the private rental market or purchase a home. For example, the primary income earner may progress in their career or a family on one income moves to two incomes.

Why do we need to be concerned about housing affordability?

People in NSW earning very low to moderate incomes are increasingly unable to access housing that is affordable. During 2009/10, almost half (45.7%) of low to moderate income private renters in NSW were in housing stress, up from 39.9% during 2007/08 [1]. This was even more accentuated in the Sydney region, where over 50% of low to moderate income private renters were in rental stress, up from 41.4% in 2007/08 [2].

Demand for affordable housing far exceeds supply. This continues the upwards pressure on rents and house prices and leads to a decline in the number of available affordable properties, even in suburbs which are experiencing an overall increase in supply of rental properties. A comparison between the twenty most affordable suburbs for low to moderate income earners in 2006 with affordability in the same suburbs in 2010 found dramatic reductions in the number of properties that were affordable – for example, the suburb of Westmead recorded an 89% reduction in available affordable properties over the period [3]. In most instances, the properties were the same in 2010 as they were in 2006, but the rents for these properties had increased so they were no longer affordable for low to moderate income households.

People on low incomes living in rental housing are some of the most vulnerable people in the community and at highest risk if there is any tightening of supply or price increases in the private rental market. Households which are struggling to pay housing costs are faced with a range of issues that further erode their ability to meet costs. These include:

  • living with unmanageable levels of debt, further exacerbating housing vulnerability
  • working long hours to pay for housing
  • travelling long distances to work or services
  • living in overcrowded or substandard housing
  • going without essentials such as adequate food, heating, medication or education
  • missing out on other opportunities because housing costs are too high relative to income.

[1] Where housing stress is defined as spending more than 30% of their gross household income on rent

[2] A 2011 ABS Survey of Income and Housing

[3] Housing NSW analysis, using Rental Bond Board data

How is eligibility for affordable housing determined?

Initial eligibility for affordable housing mostly depends on household income, which must be within limits set by the NSW and/or Commonwealth Governments. The more people, including children, living in a household, the higher the household income is allowed to be.

Other factors may also be considered when assessing eligibility, including:

  • Australian citizenship or permanent residency
  • whether the household would be able to secure suitable or adequate housing in the private rental market
  • whether the household owns any assets (for example, a property) which they could be reasonably expected to use to solve their housing need.

Eligibility, including income limits, can vary depending on the way a property was funded or developed, and who manages it. Income eligibility limits set by the NSW Government are outlined in the NSW Affordable Housing Guidelines. Income eligibility limits on properties receiving National Rental Affordability Scheme (NRAS) funding are outlined on the DSS website.

Tenants of affordable housing must remain eligible to stay in the affordable housing property and regular eligibility reviews are carried out by property managers.

For more information about renting affordable housing, or to apply, please see renting affordable housing.

How are affordable housing rents set?

Affordable housing rents vary, and are set either as a discount to the market rent or as a percentage of a household’s income.

Where rent is set as a discount of the market rent, the discount is usually between 20 and 25% compared to the market rent for a similar property in the area.

Where rent is set as a proportion of a household’s income, households may be charged between 25 and 30% of their before tax income for rent, although providers may charge slightly more in some circumstances.

The method used to set rent is often determined by how a property was funded originally and the requirements of the funding contract. It is also influenced by the strategies managers use to ensure that affordable housing properties are available to a range of income groups balanced with a need to ensure rents cover the cost of managing the properties.

For more information about renting affordable housing, or to apply, please see renting affordable housing.

Is boarding house and caravan park accommodation affordable housing?

Boarding house and caravan park accommodation is often considered affordable housing because they are generally lower cost and therefore more affordable to rent by very low to moderate income households. However, there are no specific eligibility criteria that apply to these types of accommodation, and rents are set at the discretion of the boarding house or caravan park managers.

Boarding house operators in NSW will need to register with NSW Fair Trading by 30 June 2013 under the Boarding Houses Act 2012.

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Last updated: 24 Sep 2019