Affordability Part 3: Higher Level Influences

The delivery of affordable housing is a long and complex process that requires the support, and sometimes the active participation, of many different stakeholders, including the private development and construction sector, local and central government agencies, community stakeholders and finance sector.

In the final of three articles on affordability, we consider some of these higher-level contributors under the headings:

  • Project Procurement Strategies
  • Regulatory Environment
  • Delivery Path and
  • Ownership Path

Project Procurement Strategies

In structuring a ‘Development Team’, strong, ongoing relationships between developer/builder, architect and full consultant team can contribute to a time efficient economic design process. Varying a consultant team during a development can result in loss of project knowledge and expensive time delays.

In a similar way, the use of singular main contractor across multiple sites and repeat typologies results in build up of ‘project knowledge’, meaning that feasibility calculations can be extended over multiple sites. Repeat units constructed by different contractors can produce different results when consistency is the desired outcome. Strong project and site management can also increase economy during the construction phase.

Clear contractual relationships with the contractor are essential to ensure the required standard of construction, and it is on the basis of this contractual relationship that defective work can be remedied. The reduced size of affordable homes and reduced number of details requires these details to be constructed correctly and consistently.

As discussed in previous articles, prefabrication and offsite construction can lead to efficiencies and protection from weather related time delays. However it is noted that due to the scale of the New Zealand market, and the desire for individuality in housing, to date prefabrication has not been the ‘silver bullet’ for construction costs in this country. The New Zealand construction industry is currently set up to be efficient using on site construction with prefabrication making an impact in relation to components of house, rather than complete homes. We are currently seeing these components becoming increasingly sophisticated, with elements such as fully lined or clad internal and external walls delivered to site.

Regulatory Environment

Project specific consenting structures can be beneficial in minimising consenting times. This can involve a singular Building Consent for a standard typology, where foundations and services become the only site-specific aspect. For larger developments, access to a project specific Council Team at Resource and Building Consent stage can speed up processing and streamline engagement with Council.

An approach we are yet to see trialed in New Zealand is to provide height bonuses for developers amalgamating existing lots. Larger development parcels can lead to densities well beyond those achievable on single residential lots, with policies such as these supporting the need to promote density within existing suburban communities.

Development specific covenants on titles can protect the visual amenity of a development from unsympathetic additions and changes to affordable units by placing requirements for design approval for stipulated work to the exterior of houses or front yards.

Working with Council to achieve innovative approaches to storm water management such as planted recessed swales/cesspits can have the advantage of adding high impact significant landscape features and visual amenity to a development.

Delivery Path

It is difficult to sustain affordable housing delivery without consistent strong political and bureaucratic leaders. Given the rapid turnover of governments and politicians this will be an enduring problem for affordable housing strategies. Effective strategies are ones that deliver actions that are difficult to ‘unravel’ or require a long-term agreement with a third party that is difficult to unwind.

While central and local government may take a lead, actual delivery will require the cooperation of key private and non – government partners.

Recently we are seeing the growth of this model, where local and central government agencies are partnering with the private sector to deliver housing, often within mixed tenure public/private developments. Under this model, private or affordable housing is provided in addition to existing social housing through intensification. This in effect is a ‘land release’ program and based on some initial successes, we would expect to see local and central government developing this further as a policy tool.

Transfer programs can see social housing titles and management responsibilities passed to the community housing sector in order to help the sector grow by strengthening its asset base and cash flow. This can also be a vital catalyst in the development of the size, diversity and professional capacities of participating community housing providers, where an expectation would be that growth would move into the area of development of affordable housing.

It is recognised that strategies need to be implemented across the whole of the housing continuum, covering both the rental and ownership market, and that organisations responsible for strategy development and implementation must be flexible, responsive and have environments within which innovation can occur.

Strategies can be effective over the longer term if initial successes are widely reported and celebrated, helping establish ongoing support.

Ownership Path

Financing purchasers into homes can be a key component when considering affordability. Low deposit home loans can reduce the deposit and mortgage burdens of low-to- moderate income earners, shared equity and ownership schemes can also reduce the deposit and mortgage burdens of eligible households. Shared equity schemes enable the purchaser to enter into an agreement and share the cost of purchasing that property ownership with, a government or private agency. In this model the agency is directly influencing the affordability of the housing through part ownership.

Housing typologies with built in ‘value add’ capacity can lower the bar to initial home ownership, with the potential to increase the value of their home through development over time.

Over our three articles we have looked at aspects of site selection, house design, and ‘higher level’ influences, considering how they can impact housing affordability. There are other areas that could also be discussed such as around the markets of skills, labour, and material supply, which only goes to reinforce that there are many rungs to the ladder of understanding and dealing with housing affordability in New Zealand.

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