This report provides a contemporary international review of established and emerging practice in Europe and the US concerning the use of guarantees to support long-term investment in social and affordable rental housing.
This report is provided at a time when Australia and Europe are facing long-term infrastructure investment needs to support more sustainable and inclusive development. There are mounting demands by key stakeholders to design appropriate instruments and intermediaries to channel investment towards necessary infrastructure, including affordable housing. Government and sector based guarantees are a rapidly emerging area of policy interest and international innovation. This is demonstrated by new and expanding schemes in Scotland, the UK and Ireland, and growing interest in the established Dutch and Swiss schemes. There are proposals for special purpose bonds, guarantees and housing funds, involving key stakeholders such as European housing ministries, the Federation of Public, Co-operative and Social Housing and the European Investment Bank. Towards this end, this report provides readers with an extensive and contemporary international review of established and emerging practice in Europe and the US concerning the use of guarantees to support long-term investment in social and affordable rental housing.
International experience provides pertinent insights to guide the design of any such guarantee for affordable rental housing in Australia, and key lessons are elaborated in the conclusion of this report. One of the most important findings is the minimal impact guarantees have had on government budgets. A zero default rate amongst housing providers receiving guaranteed loans has been achieved through appropriate revenue support and regulation, sound business management practices and carefully structured guarantees. However, dedicated efforts are required to minimise a variety of ever-present but sometimes unforeseen risks, including policy risks.
This Positioning Paper informs a Final Report, which building on extensive consultation, will propose a model instrument and intermediary suitable for Australian conditions.