Federal and state investment in all kinds of infrastructure projects has been one response to the Covid-19 crisis. Advocates are hoping that community housing is one area that will be included in this recovery investment – which focuses attention on how to manage this investment and the assets involved.
As the impact of Covid-19 continues to be felt throughout the Australian economy, housing challenges start to come into more focus. Research has shown that low-income renters in particular are subject to greater risks during the pandemic than the average. ‘’Even before COVID19, over two-thirds of low-income renters in Australia were in housing stress and over 31% of renters were in leases of 6 months or less. With limited ability to make changes to their homes or ask for repairs tenants also have less capacity to adjust their homes to allow for safe segregation of occupants if necessary,’’ says the University of Melbourne study.
There is a general social expectation that everyone should live in a house that is safe, secure, in good condition and provides for their needs. And where some people can’t afford suitable housing, the community through their government has a responsibility for providing solutions.
Community housing has many facets, from the economic to the social to the political. That makes it an ‘asset’ beyond simply the financial - it has a profound social impact as well. Greater minds than ours will focus on those broader issues, but as experts in asset management, we have some views on the management of the physical asset.
Managing housing as a long term asset
Housing assets are long term investments and need to be managed as such. Sometimes the tight budget environment of community housing leads to a reactive approach, where issues are addressed once they appear. Over time that leads to a deterioration of housing stock and necessitates large injections of funding to restore it.
Taking a longer term view i.e. 10+ years, both reduces maintenance costs over time and lengthens the life of the asset. Having the right asset management information in place means good decisions can be made, based on evidence, rather than making assumptions. It also paints a picture of the risks of underinvestment over the longer term. Underinvestment that will eventually cost the community funding it even more.
The focus for community housing providers is not about reducing the quantum spent on maintaining assets, rather optimising that spend. That is, moving from spending $X on maintaining a house per year to being able to potentially spending that same amount over say five years with the same long term effect. The dollar investment isn’t reduced but spread further so the housing stock under management better meets the tenant’s needs while being financially sustainable.
That requires having the knowledge to choose the right projects at the right time for the right reasons. It’s a complex task where you need a good methodology, data and systems. In basic terms, it is first knowing what you've got before you start planning what you need.
Greater maturity across Australia and New Zealand
We are seeing a change in this area across Australia and New Zealand over the past 3 to 5 years. Increasingly medium to larger sized community housing organisations (CHPs) are recognising the efficacy of doing long-term planning that’s based on good asset data, standards and policies.
Australia’s National Regulatory Systems for Community Housing (NRSCH) tiering structure reinforces the need to have a planned and measurable approach to managing the assets under the control of a CHP. And for a CHP to be considered for ‘stock transfers’, they need to be a NRSCH Tier 1 provider which includes having a strategic asset management plan .
Asset management planning driving better decision-making
CHPs and other actors in the state provided housing arena can be driven by building new homes to meet urgent and evolving community needs with increasing population and changing demographics. One element of that is smarter management of existing stock, another being to make informed, strategic decisions about how and where to invest.
Improving community housing stock can mean all kinds of strategies – upgrading existing assets to meet modern expectations, replacing poor housing assets with new configurations, or doing greenfields developments in new areas to meet local needs. Political pressure can lean towards shiny new assets, but that is not always the most effective investment of community housing funding.
Without a very clear view of the existing assets and their status, these decisions become harder to make and justify. That’s not to say data should be all about bricks and mortar. Gathering information about the positive outcomes of community housing is critical to the long-term success of these assets, as it builds political and community consensus that they are good investments. For example, this New Zealand study showed a correlation between social housing and improved educational and crime outcomes.
That makes smart investment in our community housing stock even more important. If the best asset management decisions about being made about community housing projects that not only maximises the life of those assets, it has much broader social effects, particularly for those most in need.
We’ve prepared a definitive guide to property lifecycle asset management planning, based on IPWEA NAMS Property and Practice Note 3 guidelines. Download your copy.