Blue-chip real estate to boost public and private rental stock in Melbourne suburbs

An Australian-first scheme set to create thousands of jobs will bring social housing to some of Melbourne’s ritziest suburbs. Is your suburb on the list?

A half a billion dollar building blitz will turn bluechip Melbourne real estate into a mix of social and private homes through an Australian-first build-to-rent scheme.

A $500m building blitz will turn blue-chip Melbourne real estate into 1110 public and private homes through an Australian-first build-to-rent scheme.

The innovative plan will see social housing blocks in Prahran, Brighton and Flemington demolished and transformed into 745 social or rent-reduced units, and 365 homes for private rent.

After four decades the private rentals will return to government ownership, while lease “profits” made once borrowing costs are reduced in 12 years will be shared between community groups and taxpayers — to be reinvested into more housing.

The program is a shot in the arm for the economy with 4635 jobs created, while bulging public housing waiting lists will be reduced.

Housing Minister Richard Wynne said it was a win-win for the economy and for the community.

“This is a new way of delivering social housing that will not only build new, affordable homes — it will also create thousands of jobs,” he said.

“This project delivers benefits immediately and in the long-term, with hundreds of new social and affordable homes as soon as the project is finished, and more than a thousand at the end of the lease.”

A mix of homes of between one and four bedrooms and at various heights will be built by the consortium, which gets paid over time to cover gaps between construction and maintenance costs and rental returns.

If properties aren’t kept up to scratch, the government could cut off payments.

Included in the private rentals are 52 disability homes, which will be accessible through the National Disability Insurance Scheme.

The new units replace 445 outdated homes.

The program will be kickstarted with $50m upfront from taxpayers and $75m from Community Housing Limited, with the rest of the approximately $500m build borrowed by the consortium led by CHL and paid back through rent and public subsidies.

An artist’s impression of the affordable units.

It is separate to a $5.3bn housing package, revealed by the Saturday Herald Sun last year, that will create 12,000 new social housing units. Construction of the first new homes will start this year, with the 1110 properties ready for tenants by the end of 2024.

Community Housing Limited managing director Steve Bevington — the Victorian nominee for Australian of the Year — said the model was “replicable” around the country to replenish and grow old social housing stock.

He said the state and community would share in surplus funds once borrowings were paid down.

“We plan to pay down the debt in 12 years or so and then there are surpluses that can be used to build more social housing,” he said.

“This is 1110 units … we reckon we can more than double that in the 40 years.”

While the properties will be spread across three suburbs, Prahran will get the largest share due to height restrictions.

The sites in Brighton and Flemington had social housing units predominantly built in the 1950s without lifts, and were designed for a renewal program last decade.

The consortium selected to finance, design, build, manage and maintain the housing includes Community Housing Limited, Tetris Capital, the ­National Housing Finance and Investment Corporation, Icon Kajima and Citta Property Group.

The Australian-first model has the potential to be an investment vehicle for large-scale financiers if successful.

It also takes advantage of Australia’s record low interest rates, allowing CHL and the state to fund new builds that will produce income-producing assets.

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