Affordable housing – cost to strata committees?

One of the oft-proposed solutions to the current housing crisis is to encourage developers to build affordable and social housing as part of their strata schemes. In her first post to the Flat Chat website, Strata Community Australia (Vic) president Julie McLean wonders if strata committees are expected to take on the burden of managing the social issues that such a radical change in the demographics of strata schemes could bring.

Many are calling for urgent action to find solutions to the housing crisis in Victoria.

Nightingale, a Victorian developer, has announced a five-building project in Brunswick. Of the 282 apartments they propose to build, between 10% to 20% will be designated as affordable or social housing.

Another 20% will be sold to key workers, carers for those with disabilities, workers in the arts industry, and people deemed to be part of a vulnerable group or demographic.

While this is a noble idea and one that aims to create a solution to the current housing crisis, is it really workable? Or will it be the first step in the demise of the effectiveness of the owners corporation to discharge its duties under the Owners Corporations Act 2006?

Collective ownership comes at a cost, and those expenses are not easy to contain, nor are they indexed to CPI or come with any guarantees, except maybe to go up! Will 40% of restricted ownership have the capacity to pay?

One method of controlling the outgoings is by setting the lot liability lower for 40% or so lots, however, there is no mechanism to do so under the Subdivision Act 1988. Even if social or affordable housing was a criterion, is it fair to the other owners who use the shared common spaces just as little or as much as the restricted lots?

What assurances do they have that when the lot is sold, it is sold as a restricted lot? Will the role of an owners corporation become one of social housing and those who have funds those who have not? Does this mean the prophecy that strata is the 4th tier of government will come true?

At the same time, the Grattan Institute is calling for the government to provide further social housing by expanding the use of “head-leasing” – leasing private rentals and subletting them to vulnerable people, and buying homes and turning them into social housing.

Again, these are noble ideas and a solution that the government has used before. However, it has also caused problems in the past. For instance, it increased tensions between common property repairs (especially lack of) and impacts on social housing occupants. There were different response times to fix repairs, and it was harder to get access to social housing apartments due to different laws and policy standards.

Additionally, there was a lack of supervision and accountability managing the occupants, who often did not receive the care that they needed. It also increased costs to the owners corporation as a result of after-hours callouts and disputes.

There was a lack of engagement at AGMs by property owners (the government), different emergency responses, and duty of care. Outsourced property management to a 3rd party blurred the accountability even further.

So, did it work? No. Existing lot owners suffered, and property values fell. However, it could work with a proper framework in place.

For instance, a mental health caseworker could be appointed by the local council for the use of strata properties 24/7 to help resolve social and people at risk housing issues.

There could also be an alignment of repairs and maintenance protocols, emergency evacuation protocols, a proper dispute management officer for every LGA that would attend 24/7 to get the situation under control so others don’t suffer, fixed response times for communication, a framework for escalation, and a framework for a three-strikes-and-you’re-out process.

VCAT should not be involved. Strata communities are places that people choose to live in and call home. They are entitled to quiet enjoyment and expect their right to quiet enjoyment to be respected.

Developers and governments have a fiduciary duty to act in the interests of the future and existing owners corporation when they are making decisions that that will impact the lives of the community