The Elephant in the Room Property Podcast | Australian real estate
The Elephant In The Room Property Podcast with Veronica Morgan & Chris Bates


Episode 66 | What's causing Australia's housing affordability crisis? | Michele Adair, CEO Housing Trust


Is it everybody’s right to have a roof over their head?

Michele Adair, CEO of Housing Trust, joins us and explains how her organization builds and manages affordable housing for people on a very low to moderate income.

We're going to find out the difference between social housing and affordable housing. Michele highlights some important factors affecting household affordability.  It’s not just about first home buyers wanting to get onto the ladder. So what are the gaps in the system?

Here’s some of what we covered:

  • What are alternative models for property investment and will they provide more affordable housing?

  • Why households spending 30% or more of total household income, in rent, or in mortgage repayments, are in housing stress.

  • What happens when life throws a curved ball & you can’t afford a roof over your head. How much ‘buffer’ do you need?

  • Can good urban design & planning eliminate social problems?

  • Why everyone deserves a decent home & why it’s Housing Trust’s vision.

It’s an insightful episode, we hope you enjoy listening.

Guest Website:

Housing Trust

Get in touch:

Work with Veronica?
Work with Chris?


Veronica Morgan: You're listening to the Elephant In the Room Property Podcast, where the big things that never get talked about, actually get talked about. I'm Veronica Morgan, real estate agent, buyer's agent and co-host of Foxtel's Location Location Location, Australia.

Chris Bates: And I'm Chris Bates, financial planner, mortgage broker, and wealth coach.

Veronica Morgan: Together, we're going to uncover who's really making the decisions when you buy a property.

Chris Bates: Veronica will introduce our guest in a moment, and I have to say I'm disappointed I couldn't be part of this interview. It's an interview with a difference, but I can tell you, you want to listen on to hear what our guest has to say about what's missing in the household affordability debate in this country. This discussion also looks at alternative models for property investment, and whether there's a future for individual and institutional investors in providing affordable housing.

Chris Bates: Please stick around for this week's Elephant Rider Bootcamp. We have a cracking Dumbo of the week, coming up. Before we get started, everything we talk about on this podcast is generally nature, and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisors, or buyer's agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: In this episode, we're going to look at housing differently. We often speak of property investment, capital growth. Of course, given where we live and work, a lot of our conversations revolve around property located in a very expensive inner ring suburbs of Sydney. But not everybody can afford to live here, and not everybody can afford to buy their own home, and yet we all need to live somewhere. The provision of affordable housing is something that we need to be aware of as a society. We've had conversations with a number of people about different investment models, fractional investing, co-living, build to rent being just a few of the concepts that we've been discussing.

Veronica Morgan: But there is a renascence amongst institutional investors, around getting involved in some of these spaces. So in this episode, we're picking the brains of somebody who is actively involved in the not for profit space. We're going to find out the difference between social housing and affordable housing. Michele Adair was appointed as CEO of The Housing Trust, 18 months ago. Based in Wollongong, this organization builds and manages affordable housing for people on a very low to moderate income.

Veronica Morgan: They currently have over 1100 properties, over 2500 tenants, and they plan to double the portfolio in five years. Michele's got a team of 45, it's revenue in the last financial year was 17.5 million, and there's a $156 million in assets on their balance sheet. So we said, significant operation. Now Michele has previously held national executive positions with the Smith Family Amish in Australia. So she will be able to share valuable insights with us on the extent of the housing needs in Australia.

Veronica Morgan: A few months ago when I first met Michele, I was very interested to hear what she had to say about the commercial opportunities in providing affordable housing, as well as the social aspect. So I expect this will be a very enlightening conversations on a number of levels. So thank you so much for joining us, Michele.

Michele Adair: Great to be here.

Veronica Morgan: Unfortunately Chris isn't here to join us on this conversation, which is a bit of a bugger really, because he was really looking forward to it. He's got quite a big social bend, and he had a load of questions to ask you. So I've got a few here. But this conversation is really about housing affordability, but real housing affordability, not simply just first home buyers wanting to get onto the ladder. So what are the gaps, as you see it, in the current system?

Michele Adair: Well, look. I mean the first part of the conversation really is about what does it actually mean to be able to afford to put a roof over your head? And the common accepted understanding based on all the economic data, is that if any household is spending 30% or more of total household income, either in rent, or in mortgage repayments, then they're in housing stress. That means that it's only one really serious illness, one bad car accident, a child suddenly arrives in the family with a significant disability. Any of those sorts of things, all of those sorts of things, that happen to all of our families and all of our friends, every week of the year, really. Can throw that household into really crisis circumstances and into homelessness, potentially.

Michele Adair: So that's the issue, when we're talking about affordability, is how much have you got left over as a bit of a buffer? We're not just talking about mashed avocado for brekie. We're talking about being able to educate your kids, we're talking about being able to meet life's unexpected curve balls as well.

Veronica Morgan: And that's really interesting, because that's, you could say, "Oh, I'll just get insured." But I guess if you are already struggling to afford to put a roof over your head, you don't have any money left to insure yourself too, for these things that could happen.

Michele Adair: If you're talking about income protection insurance, it usually doesn't kick in for 12 weeks or something. So you're in trouble straight away. I mean the stats around the number of households that are in housing stress, are terrifying. I mean nationally, we're talking 260, 280 thousand households, just in the Wollongong local government area in the last-

Veronica Morgan: Oh my God. So it's not the all Australia?

Michele Adair: No. [crosstalk 00:05:27]. So just in the ... On those 260 odd is nationally. But just in the Wollongong local government area, we've got 8000 households in that category. I mean that's more than 10% over the total council area in Wollongong. That's potentially on the brink of homelessness and that's in addition to people that we know are homeless. We've got about 1100, 1200 [inaudible 00:05:52].

Veronica Morgan: So is that location dependent statistic, i.e. are certain areas more likely to have higher levels of that?

Michele Adair: Absolutely. Wollongong, relative to household income, is the third most expensive city in Australia, behind Sydney and Melbourne.

Veronica Morgan: Is it?

Michele Adair: Yeah. Interestingly, Wollongong and the Illawarra more broadly, we get caught, we're not really regional and we're not really metropolitan. Which often means we miss out on the policy benefits and initiatives that are otherwise invested into growing western Sydney or trying to really promote more regional parts, in our case of New South Wales. We're not either, and often get missed.

Veronica Morgan: What's the population of Wollongong?

Michele Adair: About a couple hundred thousand. So we've got 74000 households.

Veronica Morgan: It's about the same size as Hobart, roughly?

Michele Adair: Yes. There you go.

Veronica Morgan: It's funny, isn't it, because when we're looking at data, we're talking about capital city data, for instance. Hobart is, I think, the 12th biggest city in Australia?

Michele Adair: Yeah.

Veronica Morgan: Yet Wollongong doesn't make the list.

Michele Adair: And I think there would've been a really sound argument for thinking about Sydney, greater regional Sydney as a full city metropolis rather than that only having three, and Wollongong would've made sense in my view.

Veronica Morgan: Yeah, well it's certainly pretty close, and it's got a great train line, that services it. So yeah.

Michele Adair: There are tens of thousands of people that commute from Wollongong to Sydney every day for work. It's extraordinary.

Veronica Morgan: Yeah. Wow. So you think it's a bit neglected by the government?

Michele Adair: Totally.

Veronica Morgan: You're saying that is one of the causes for the fact you've got? Well, why is it so expensive? Why is it the third most expensive metropolis?

Michele Adair: Because it's a stunning place to live. I mean the coast and the mountains and the lifestyle is brilliant, and it has, until fairly recently, been more affordable than Sydney. But of course, that's becoming more and more difficult. So we're finding that increasingly, people are needing to move further south and further west. And the northern suburbs, places like Austinmer and Bulli and Thirroul are as expensive as any fabulous big side suburb in Sydney these days and for good reason.

Veronica Morgan: And it is unique in the sense that that train line does run along the coast. So you can actually live on the coast, on the beach, practically, get on the train and go either to Wollongong or to Sydney for work.

Michele Adair: We've got Wollongong University is outstanding. Absolutely world class in a number of fields. We've got terrific teaching hospital in Wollongong hospital. So it's got everything it needs.

Veronica Morgan: So you've got these pressures, which they're good things for property investors, but not so great for the people who are under pressure, financially?

Michele Adair: Increasingly, it's not a good thing for property investors, when the markets looking like it's going to continue to tank for a little while, it's difficult. I mean, the other difficulty for the Illawarra region is that we are sandwiched between the coast and the mountains, and a lot of the land in between is actually floodplain. So it's difficult to actually get access to large new, greenfield sites.

Veronica Morgan: That's interesting. I can say the affordability piece is interesting on a number of levels. I mean there's a lot of discussions around being able to offer affordable accommodation for your nurses, and your teachers and MBOs and et cetera, et cetera and now support services. Obviously, if Wollongong struggling or suffering under affordability, then there's so much debate around this. So what are your thoughts on that? The idea that we need to provide affordable housing so that everyone can live in a city. A city that only caters for the high income earners is unbalanced, who is going to look after those high income earners? And who's going to provide services for that city to run? So what are your thoughts on those issues?

Michele Adair: Well, it's a human right. It is a fundamental human right to be able to have safe, affordable housing. It's actually recognized by the Human Rights Commission. So that's got to be a given. The difficulties that we have and there are two types of I guess, official perspectives on housing affordability in the rental market. So let's set aside purchasing. There are people whose incomes are so low, and that typically means that their only income is going to be some form of government payment. They are typically eligible then for social housing, and that's the only official list that we have of people.

Michele Adair: So in New South Wales, the government keeps a list to the housing pathways list. There are tens of thousands of people on that list. Nationally, we are 500,000 homes short. So in again, just to take Wollongong, for example is a bit of a microcosm. I've got over 3300 people on the social housing waiting list. The typical wage is five to 10 years. The government doesn't bother to keep lists after that, because if you're waiting for 10 years, like I was waiting for 10 years. The massive increase particularly in older women, and older couples on the list means that People literally die waiting. So between 2017 and 2018, again, just taking the Wollongong LTA as an example, the waiting list for social housing in that area. So these are the clients that we exist to try, and help and serve, reduced by 10, and two of those people died.

Veronica Morgan: Natural attrition.

Michele Adair: So that's a social housing waiting list. When someone who is eligible for social housing is able to get a home, and it's very scarce. Then they pay 25% of their income, which keeps them under that 30% threshold that we're talking about. So, regardless of what the market rent is, that's what they pay.

Michele Adair: The next category of people are the affordable rentals. There's no list, we don't actually know. So we use the ABS data around housing stress, to get a bit of a gauge on how many people are in that category. That's where absolutely you've got your essential workers. But you've also got these days increasingly, young professionals. You've got all the kids that are working their way through uni and pulling bees and all the cafe owners. You've got all the white collar workers, in admin roles, clerks. You've got all the retail shop assistance. You've got data entry people, huge volumes just about every cross section of society is going to be in that category.

Michele Adair: Some really concerning government data about the future of jobs growth, and where careers are going to go over the next 10 to 20 years. Of the 10 biggest growth areas for increase in terms of employment prospects into the future, six out of 10 of those jobs and careers are in the lowest paid income levels. So this problem is not going to go anytime soon. We've got to have fundamental economic policy and systemic change to reform and to make a difference.

Veronica Morgan: Now, we're get into what your organization does shortly, but what I'm interested in understanding is it, okay. So its government provides social housing, right?

Michele Adair: New South ... Well, it's a combination of Commonwealth, provide typically the Commonwealth rent assistance for those social housing eligibility people. And then there are a range states differ. But in New South Wales, then the New South Wales government provides social housing. So, like the London Housing Corporation, and organizations like mine, registered community housing providers with a capital CHP. We're a whole regulated industry sector, and we also provide both, we manage it on behalf of the government, New South Wales Government. But we also have our own stock. So some of our stock is social housing, and some of it is also affordable.

Veronica Morgan: Okay, and I'll get into how that stacks up from ... Someone is got to own it, someone's got to build it, someone's got to run it. You know what I mean? Obviously is a lot of cost involved with providing these housing. We know ... I mean look, let's face it, have an overview of what's are those? I mean, look, I'm sorry. I mean, I'm just trying to be ... There's a lot of stigma around it, and I know certainly I live in Sydney. There's a lot of Housing Commission as we used to call it. Now, it's called Social Housing, correct? You can see that there's been a lot of obvious government policy over the years in terms of how these social housing should be provided. So you look at in Waterloo, we're here we are in Waterloo, bordering on where Redfern is, those big towers that often fondly called suicide towers.

Veronica Morgan: I don't think they look like very joyous places to live. Then you've got, obviously you've got the post war stock that I used to live in Balmain. So there's a lot of that around there, so that's caught often with old people that live in those complexes. Then you've got obviously out further west, and where you got Tim McQuarrie Fields for instance. I understand that there's entire developments, so townhouses and complexes. Actually, I used to live in Annandale and there was actually townhouse complex, very close, which is also social housing. So you can always ... Then I've seen in Roselle on the left field, there's been knocking down a lot of these post war ones and rebuilding them, and changing them and trying to put a mixed. Housing. It's a whole, you can see almost carbon date when these buildings have been, all the complex has been built.

Veronica Morgan: Obviously been a lot of failures in all of that. But there's also a bit of a perception, and please tell me if I'm wrong here. But there's a bit of a perception that if there's a long waiting list, and if people ... It's so hard to get it, that when you get it, what's the incentive to actually get yourself out of that hole?

Michele Adair: You've just given us probably enough to talk about for the next six months.

Veronica Morgan: Right. Okay, sorry. [crosstalk 00:16:01].

Michele Adair: No, it's cool. Let's try and pick that. So you're absolutely spot on when you talk about the failures of previous architecture, urban planning, construction design. We have historically, and we are still needing to unpick and unpack and undo.

Veronica Morgan: And demolish.

Michele Adair: Yeah, absolutely. For really good reason, mistakes of the past. We know from a whole range of disciplines that we can either help to reduce or completely alleviate, and eliminate social problems through good urban design. In the same way that bad design can perpetuate it, and create it. So let's park that, and in that acknowledge that for the individuals that are living through necessity, because there simply is nowhere else. It's not their fault, that they're in those disasters. In fact, we know that 66% of people who are homeless and in housing crisis are there as a direct consequence of health, or social and economic failures. So it's not their fault.

Michele Adair: So we just have to embrace the fact that not everybody, and just pick themselves up and get on with life in the way that others are able to. The changes that are necessary are those things, it's around good urban design and good planning. The implications and the actual experience is that about 20% of social housing tenants, do continue to live significantly with mental health issues. They are indeed victims of domestic violence. So there is a household sadly and an intergenerational experience of violence and abuse, being a reasonable response to situations. But these days just you don't have to look much past social experiments on TV programs to see that this stuff is being [inaudible 00:18:11]. I mean, God. What a nightmare.

Veronica Morgan: I think I know what you're referring to there, and I watched, and I got so sucked into that.

Michele Adair: But it's just a horror story.

Veronica Morgan: Scary, yeah.

Michele Adair: They don't look like social housing tenants. There is this whole mess around abusive behavior and violence. Talk to any private real estate agent, and they will tell you that, yes, of course. They have well paid full time employed tenants who have wild parties on a Saturday night, who cause social disruption. So my tenants are no different. In fact, the tenants that are living in homes provided by community housing providers like the house and trust, like us, are proactively managed. We directly engage with our tenants, we get to know them. So that if things start to come on stuck, we notice that maybe their rent. They're paying their rent fantastically, regularly every week for years.

Michele Adair: Then they start to miss or it gets a bit late or suddenly will be driving by and notice that the loans are less cared for. We can pick up the phone and say, "Hey, is there something wrong?" Because we actually really know our tenants, we manage our portfolios very proactively. So that we can provide referrals to other sorts of support. Inevitably, the vast majority of people get back on track. There's a whole bunch of differences, and it's just wrong to only associate people on very low incomes, as being the only members of our society that live with difficulties and challenges.

Veronica Morgan: So I guess what you're saying there about the ways in which you proactively assist your tenants. It's the same principle for any property manager. If you're going to be an investor in property, you really want to choose the property manager well, and you obviously you're doing a great job as a property manager. Now, who is providing the housing?

Michele Adair: So all state governments. So in New South Wales, of course, New South Wales, state government has an enormous amount of their own stock. But over the last eight to 10 years, there's been a really, really sound and a very successful, well informed policy. At least particularly from the government's point of view of doing stock transfers. So organizations like the Housing Trust, like mine, a registered community housing providers. We receive, we can bid for and receive stock transfers. Now, the whole purpose of that is that it boosts our balance sheets, so that we can then enter into commercial loans in our own ride, to be able to do new property developments, do acquisitions.

Michele Adair: I was actually really interested in your introduction when you described us as a not for profit because like Crikey. My board will go nuts, I might have charitable status. But I'm very much a full purpose organization. I've got to deliver a profit, I have got to manage my cash flow. I've got to maximize my obvious, and all those other hugely commercial very sound things. The community housing sector is actually, I think that the perfect social enterprise, it's just that we manage our profits to be able to reinvest back into more housing, and-

Veronica Morgan: Is that what not for profit really means is basically?

Michele Adair: Its profit for purpose.

Veronica Morgan: Yeah, okay. Got it.

Michele Adair: Yeah.

Veronica Morgan: Thanks for taking me up on that.

Michele Adair: No, it's cool. Who wants to be defined by what they're not? And I can assure you, I'm making a profit.

Veronica Morgan: So it's a reinvestment of that profit?

Michele Adair: Completely.

Veronica Morgan: As opposed to shareholders taking the profit?

Michele Adair: Absolutely right. There's even from at a macro level, in the lead up to our election in the near future. There is no point talking about jobs and growth, unless those jobs in growth are able to be realized by people living in houses that they can afford.

Veronica Morgan: I'm sorry, but you know politicians don't like a slogan has got more than three words. Jobs and growth.

Michele Adair: Yeah. But look the reality is, you just can't keep any part of your life together or put one foot in front of the other for any sustainable period of time, unless you've got a safe affordable roof over your head. You just can't educate your kids, you can't hold a job, you can't manage your health. You just can't do anything.

Veronica Morgan: It's Maslow's Hierarchy of Needs.

Michele Adair: Total.

Veronica Morgan: I mean, it's the ... Mind you apparently, you add two layers for millennials.

Michele Adair: Is that right?

Veronica Morgan: Underneath a roof over your head. You've got battery and you've got Wi-Fi. Anyway, that's just a little bit of it.

Michele Adair: And solar on the top.

Veronica Morgan: Suppose to be funny. Okay, so yes. So therefore, you're not, it's for purpose. So let's all get my own vernacular, correct there. Okay, so it's for purpose, but it's not all provided by government, right?

Michele Adair: No, definitely not.

Veronica Morgan: No?

Michele Adair: No. Definitely not. So, my organization, we own a third of our stock. So of our 1100 or so, we own a third of it. Classic Property manages for New South Wales Government for about a third. We also look after and think that there's actually enormous potential for us to do a lot more with private investors, so that we can look after the leasehold properties for them. Increasingly, I think particularly these days, more and more people are recognizing that there are opportunities where you can, perhaps not completely max out your financial returns.

Michele Adair: But in being more modest, you can actually make a difference in your communities and still make a good returns. Still protect your assets, still have capital growth over a period of time. But you don't have to squeeze every last cent out of range. Most people I'm sure would agree that, a very modest compromised perhaps in rental income, or guaranteed security and guaranteed rental income is worth a small clip on their weekly amounts.

Veronica Morgan: Well, it's interesting, because I mean, there wouldn't be any vacancy rates. Just couldn't live with that amount of demand.

Michele Adair: That's exactly right. Well, it's actually true, and some of the other work that I'm doing is looking at helping to position community housing as a global asset class for investment, that can and will be able to attract investment from superannuation funds. Increasingly, particularly industry super funds, their members saying quite rightly to the trustees, "What are you doing about community investment?" Yes, we're doing some good stuff socially. Yes, we're doing some good stuff environmentally. What else are you doing now? Around community housing? Certainly community housing is and housing or broadly we know now, is much more appropriately described as a part of social infrastructure, than it is just about the property sector.

Michele Adair: We have guaranteed cash flows, we've got leases for 10, 20 years, and that's quite unique. We don't enter into property purchases and developments on a speculatively high turnover, quick turnover sale. We are in the market for 10, 20, 30 years without a problem at all.

Veronica Morgan: Which is interesting because, I mean, that certainly fits in my own philosophy around properties long term investment. So people are trying to be speculative. Well, that's not property investing, that's just gambling. Okay, I don't know the answers on the capital growth side of things, and of course, I'd always think that that's something needs to be absolutely thoroughly investigated. However, in terms of private investment, what sort of investor would come to you? Somebody who owns an entire building, somebody who just wants to actually buy an apartment for argument's sake, [inaudible 00:26:20] household townhouse. How does it work?

Michele Adair: Both, absolutely. So at the moment, I'm working on putting a deal together with a private builder, construction developer. We're looking at 110 new apartments built in two six storytellers. Great location, just south of Wollongong, still in the Wollongong LGA. We will take a 10 by 10 year leasing option for the whole lot. And that will allow us, he will have guaranteed rent, he will never have an empty apartment, or a week without rent. We still [inaudible 00:27:04] barging about the finer details of his paying maintenance on which bits of it. We will typically look after all of the apartments, he'll look after the public common areas. He doesn't have any ... So this is a design we will actually do together. So we're going to co design it. We're going to make sure that we're not over engineering, on-suits everywhere and double garages and, really schmuck laundries. Which we just don't need that stuff. That can be good quality homes, without being really up market.

Michele Adair: So he doesn't have any of the strategies. He doesn't have any the marketing costs, there's a whole bunch of advantages. We're very confident there have been a number of test cases now on an individual case by case basis of tax rulings, that allow him to write off the difference between his market rent, and the rent that he's getting for affordable from us, for affordable tenants. So we would take a head list, he's only got one person to deal with, not 110. And it's a good deal for everybody, and it's going to make a fabulous contribution. We will carefully advertise and make sure that we mix up the tenant profile. So it's just like every other building, and it will look like every other building. Nobody wants as you were describing before, to repeat the mistakes of the 50s and 60s. We're just not going to do that, and there's no reason to.

Veronica Morgan: It's very interesting, because I would imagine there's not a lot of developers that have the capacity, the financial capacity to hold onto a building for that amount of time. Most of them are relying on pre sales in order to actually get the finance to build the thing.

Michele Adair: It varies a lot. It varies a lot, and I think with the success of the last couple of years, there might be more that are in a position to do that than others. It certainly helps.

Veronica Morgan: It might be some desperate take to do some deals, because I can't sell them.

Michele Adair: Well, I'll leave you some business cards. Yeah, look, that's true. Certainly, some others might have done very nicely with pre sales already for buildings that are, either fully complete or well and truly progressed. Again, guaranteed income from a community housing provider, for a percentage of that stock is a great thing to do. It's really smart.

Veronica Morgan: Are you getting a lot of pressure from refugees or from new immigrants in Illawarra?

Michele Adair: Yes. There is a large refugee community, but no larger than Tasmania, for example, or some parts of western Sydney. Again, the issues of affordability, no barriers in terms of age or ethnicity or place or origin.

Veronica Morgan: But I guess if we've got a waiting list, it's over 10 years long already. How does that ... How do I get accommodated?

Michele Adair: I live in housing stress, and they're technically meeting the definitions, many of them have homelessness. So homelessness isn't just roughly sleeping. A lot of people think that, that what it must mean, but it means much more than that. It means living in a place that is not suitable for you. It might mean overcrowding. It might mean living with intergenerational, so might mean a young family having absolutely no choice but to move back in with their parents, and then to overcrowd. It might mean older people, moving in with their kids. It might mean squeezing extra bedrooms, obviously, the couch surfing. Which sounds like a fun thing that you might have done by choice when you were 18.

Veronica Morgan: 18.

Michele Adair: Exactly right after a certain night. But when you know, I mean, I personally my kids when they are in their late teens, came to me one day and said, "Mom, can-" This particular friend of theirs that I'd known for some time, "Can he come and stay with us? His mom's drinking again. And he's got nowhere to be." We pulled a mattress out from the back of the garage and put it on the floor. Now, the kid was technically homeless. Because this wasn't his home and it was a short term solution. He happen to live with us for three and a half months. But that's a part of so many lives these days.

Veronica Morgan: Because I was going to ask you with a waiting list that long and what are people doing?

Michele Adair: Well, so a tentative of ours who's been living in one of our units in Wollongong now for about two and a half years. She was a nurse at Westmead Hospital, I heard that she has told her story in the media before. I'm not going to breach her privacy or her trust. So she was a nurse at Westmead Hospital. She had an accident work, she couldn't work. She was already in a violent relationship. She had two teenage sons. She was the primary income earner as she had to take a break to deal with her injury and to recover. She wasn't working, and so her husband's violence increased because of the financial stress. Over a period of time, then her eldest son started beating her as well. She had no alternative but to get in her car and literally just drive away from the home that she had known for 20 years.

Michele Adair: She lived in and out of Crisis Women's Refuges and Transitional Services. Which typically only provide a maximum of 28 days accommodation. She lived between Crisis Refuges and motels that are often used to provide crisis accommodation and transitional accommodation for four and a half years, before we were able to give her a home.

Veronica Morgan: That was just traumatic.

Michele Adair: At every level.

Veronica Morgan: Probably she's got PTSD now, right?

Michele Adair: Absolutely. Yeah, absolutely. She lives with the consequences and will forever, not just of being in a violent marriage.

Veronica Morgan: Not having anywhere safe to go afterwards.

Michele Adair: Absolutely. Absolutely, and the loss of her relationship with her songs as well. Again, this is a nurse in the hospital, so well educated. Professional, successful career woman.

Veronica Morgan: Someone that you would just imagine is your stereotypical.

Michele Adair: Yeah. We had ... I mean there are just so many stories. We're building five more homes, affordable homes now in Carmel. We've just had the CC for seven more in Shellharbour Council in a suburb called Flinders. One of the dads, that's going to be, we're pretty sure taking one of the homes in Carmel. He and his wife have three children under seven, and the two eldest, two boys. Were both diagnosed with quite significant autism. But it's two and three, and they hadn't realized and one of the boys also has quite significant hearing loss. They applied for 70 private rental properties in six months. But because they were a single income, [inaudible 00:34:56] time to deal with the needs of two special needs children. Three kids, single income, 70 private landlords knock them back.

Veronica Morgan: We've currently got organizations such as yourself. I guess, we probably should mention here, if people are in crisis, I can't imagine this, probably be listening to this podcast is in crisis. But if you ever come across somebody who is or you know someone who is. Where can people go to get help?

Michele Adair: Look, I mean, one of the places to actually to start to try, and navigate is your local [inaudible 00:35:39] actually. As frustrating and as slow and as confusing, and as difficult as all that is. The cynic in me would suggest that sometimes governments make this stuff deliberately difficult, and don't get me started on the NDIS. But that's an option and certainly all of the well known, wonderful organizations like Mission Australia and the Benevolent Society and Catholic Care, and lots and lots and lots of others. You probably won't immediately easily find your way to community housing providers like us. But certainly all those other broad spectrum community support organizations will help you.

Veronica Morgan: Will start you on the process.

Michele Adair: Yes.

Veronica Morgan: So, what do you think of the IOPs policy to encourage investors to provide what is it? I think it's 250,000 houses over the next decade. What do you think of that policy?

Michele Adair: It's fabulous. It's the first new fresh policy and commitment, to affordable housing for a very long time. The liberal coalition Commonwealth government passed legislation just last year to establish the NHFIC, and the acronym for that is the National Housing Finance and Investment Corporation. So the NHFIC for short.

Veronica Morgan: The NHFIC.

Michele Adair: Thankfully. The NHFIC's got two really substantial vehicles. One is that they provide local slangs to registered housing providers like us. So that we can do what I was describing before, borrow, and grow stock, grow our balance sheets. But they also have a grant stream as well, that can be used for infrastructure. So for private developers that would not otherwise be looking to create social and affordable housing stock. So one of the one of the projects that I'm looking at the moment, we will certainly be applying to cover all of the civil works for a project that would not otherwise be cost effective for that particular developer to allow us to partner with them, and to come into the estates. So that's a really good thing.

Michele Adair: The recognition, I think, for me, one of the really critical things is that we change, and broaden this perspective. That as again, as you were describing earlier, housing affordability is not just the purchase price of entry as a homeowner. It is how do we increase the amount of affordable rental stock. So the IOPs recognition commitment is significant, NRAS. Again, the National Rental Affordability Scheme,

Veronica Morgan: NRAS.

Michele Adair: NRAS, that was first rolled out a number of years ago, and there was some policy mistakes, frankly in that. There were some just pretty suboptimal deals and loans and things done. But for the most part, it was a fantastic stimulus package and investment and Labour's commitment to a new version of NRAS, if they're elected. Will be in my view, and the industry's view a very significant stimulus to help, I guess alleviate some of the ongoing downturn and problems that we're facing in reduced applications and approvals.

Veronica Morgan: Yeah, and look, I guess, I've always got to think about, one of the things that I often find from property managers or individual property managers in areas that are have ... That are lower socio economic areas, one of the issues that they often have is that ... Now, I'm trying to be careful not to generalize here. But there are certain types of areas where you get the individual investor, and their property is not treated well by the tenant. Now, I guess, part of that, as you have suggested is how its managed, and screening of tenants and all the rest of it. But part of it or not, I mean, I guess I have to wonder how much of it is, go to your [inaudible 00:40:04], because I'm trying to think of the right question to ask you.

Veronica Morgan: When we look ... When I talk about investment fundamentals for property investors and individual investors that are buying one property. You got one shot at it, you've got to really buy a property that is going to help you deliver your own financial future. That's taking the pressure off the government's and taking the pressure off the future governments as well, right? So I'm very much in favor of this, all taking responsibility for what we can do in our lives. But at the same time, obviously, there's a huge affordability issue with and the right of us all to have a safe roof over our heads or a safe place to live. I don't want to take away from that either. There are times though when people make or create their own on safety.

Michele Adair: Kepp going.

Veronica Morgan: So if you're the abuser, and I know that people who abuse, like the husband, who beat his wife, the nurse. I know that he was probably abused himself in his childhood, and it just goes back multigenerational. I get that, I get that he's just not some evil man and obviously his sons and are learning how to do that from him. That in societal sense, that's our big issue, in many ways, right?

Veronica Morgan: But that person, him, he's probably a mental stress, too, right? And he doesn't earn an income. She was the primary income earner, he's gonna live somewhere. Does he then become a tenant that then doesn't actually value the place? I'm just trying to be a bit of a devil's advocate here, because from an investor's point of view, these are really real concerns.

Michele Adair: Yeah, they are. Look, I think, bottom line is bad, unacceptable behavior. Whether that's interpersonal violence, whether it's poor property care. Whether it's irresponsible financial management, so you're not paying your bills when you can. Refusing to learn how to budget and if you've got a limited income doing what you can to put some aside. Poor behavior cannot and must not be facilitated and supported. We will always and I think it is perfectly appropriate and reasonable, we do it in all parts. You do it with your staff. Somebody makes a mistake, they mess up you don't kick them out first time around, and you say, "Let's have a conversation about this. This is not okay, these are the rules. Is there anything I can do to support you to avoid that mistake in the future? What are you going to do to avoid that mistake in the future?" And we proactively manage it. It's no different with tenants. What are the rules? Hold them accountable. Follow up with them.

Michele Adair: Let me tell you, my Staff [inaudible 00:42:53] every time they need to be. We don't ... It is simply not acceptable. But nor is it acceptable, frankly, and for so much of the New South Wales Government own housing stock. Often some of the stock that they transfer to providers like us to be sub standards, it is not acceptable. If you're living in a dump, why should you take pride in it? This is not okay. So again, the opportunities and the importance or renewal and refreshing stock, and have mixed tendencies, are good sound economic policy and social investments.

Veronica Morgan: I think that ... What did you say, the word you used like integration what's? Well, I just I don't think it worked in the past to quarantine people need-

Michele Adair: No, no, no.

Veronica Morgan: They've got to integrate.

Michele Adair: I mean, one of the other policy frameworks that were very supportive of is inclusion rezoning. So that about 15%, only 15% of all new big large scale development is made available to people on low to moderate income. That's a good sensible thing to do.

Veronica Morgan: Yeah, we touched on it earlier actually in terms of being able to provide housing for essential services for argument's sake. So with that, are developers offered specific incentives in order to do that?

Michele Adair: Look, we can now and certainly the New South Wales government's opportunity to extend 70 across the state is a fantastic initiative, and something we've been screaming out for the Illawarra for ages. So that's a really good thing to do. It still needs to be science specific, and that certainly gives developers, if it's our concessions, and sometimes concessions and a few other bits and pieces, so it's a really good thing to do. How that actually plays out, I think we certainly often the devil is in the detail, and individual councils need to be very careful. We certainly socially need to be very mindful to hold councils, and the parts of the system that are involved accountable for making sure that any of those 70 concessions do in fact, result in additional stock. That we're not just collecting fees and money, and somewhere along the line. There's layers of bureaucracy that reduce the capital.

Michele Adair: So, that's a good initiative, and it changes. I think unfortunately, one of the other really difficult realities of the way so much of the property development, particularly in certain parts of Sydney has occurred in the last few years. Let's be honest, some of the stuff is really ugly, awful.

Veronica Morgan: Rubbish.

Michele Adair: It is rubbish. It looks bad, it's not going to stack up. It's just put a really nasty note on our industry and on our sector, in ways that we have to change, and we have to accept responsibility for turning around.

Veronica Morgan: So there hasn't just been built for your sector. [crosstalk 00:46:12]. It said that speakers can plug it to unwitting investors. There's so much stock that is what we call investor stock, which is really not desirable for anyone to live in.

Michele Adair: It's absolutely disgraceful. There are appropriately community concerns about conversations of medium or high density and when we do that. Again, it's part of the very, very strong arguments. Again, the New South Wales Government good on them. We've now got a minister for housing again, and it's been taken out of family and social services and put into infrastructure and planning. That's a really good smart appropriate policy decision, and we need a Commonwealth minister for housing too.

Veronica Morgan: Yes, very important, isn't it?

Michele Adair: Well, and again, labor at a Commonwealth level are talking about very specifically seeing housing being embedded within treasury and infrastructure. Which is an appropriate place to put it.

Veronica Morgan: And what are your thoughts on the bill to rent model?

Michele Adair: It's great. It can work, but it needs to be thoughtfully and deliberately designed. There are, we know enormous layers of [inaudible 00:47:32], and duplication that make it difficult. So for my sector, one of the contributions that particularly state governments can make and Commonwealth governments can make, its make the land available. These are actually public assets. So make public land available for public good, would be a good start, rather than forcing charities like mine to compete in the open market with private developers for a block of land.

Veronica Morgan: It is an issue.

Michele Adair: Yes. There would be an opportunity. The two developments that I mentioned before, in Flinders, and in Carmel, I've just written checks for 10s of thousands of dollars of section money for fees. I don't think that's helpful, from a social community outcomes. So that stuff needs to be revisited. At the moment, without a degree of social outcome commitment. I wouldn't say it has to be philanthropic. But certainly until we can resolve some of the opportunities around EPA regulations to be able to attract things like superannuation investment into built to rent. We've got to have some broader policy reforms to make that more accessible. But again, it depends on your margin. If you're not going to really have expectations of arguably excessive returns, and you happy to make modest returns, then built [inaudible 00:49:14].

Veronica Morgan: Yeah, and it's an interesting one and maybe we need to dive more into this is a topic. But it's interesting because margins, well, higher margins often come with higher risk. There's a balancing all of that out, and that's something that investors need to be very, very mindful of.

Michele Adair: Again, if you've got a headless relationship for ALS will be 10 years with a 10 year option. There's enough property startup within that lease to make it worth everybody's while. You've suddenly got a very different proposition on hands and it can work.

Veronica Morgan: Yeah. Every week we hear incredible stories about the dumb things that property buyer do. Dumb things that cost a lot of money and cause a whole lot of stress, mistakes that can be avoided. Please, Michele, do you have a property Dumbo that you can tell us about? Because we can all learn what not to do from these stories?

Michele Adair: Wow. That's really tricky.

Veronica Morgan: It's meant to be.

Michele Adair: Yeah, it worked. I think the Dumbo for me, and this is probably going to potentially get me into a bit of a struggle.

Veronica Morgan: Yeah,[inaudible 00:50:32].

Michele Adair: Yeah. The Dumbo for me, would be all layers of government, local, state and federal. Not getting the fact that none of their other policy frameworks initiatives, ideas, grand plans, or promises, a gun or mount to diddly squat. Unless they actually acknowledge that affordable housing is the Maslow first plank of every life, and every bit of social and economic policy. It's really that simple.

Veronica Morgan: I like that. So basically all the band aids that have been applied all over the place and not really going to do a job until everyone has a safe place to call home.

Michele Adair: Absolutely, a safe, affordable.

Veronica Morgan: Safe, affordable place. I actually noticed on your website, and we will include the links to your website and some of the other things that we've talked about. Your website does talk, use the word decent, and we had a bit of a chat in our office yesterday about that. I like the word decent, it sounds ... It's not over promising. But it's a decent, it's there. It's decent and both fairness.

Michele Adair: I say to myself, I say to our tenants, around our policies, around our maintenance program, around the homes that we build. Would you be happy and proud your mom lived here? Would you be okay to visit your kids if they lived here? And if you're not sure, then it's not okay. Probably means it's not a decent home and then it's not okay. So yeah, a decent home for everybody is our vision. That's unequivocally what everybody on my team is turning up to try and do every day.

Veronica Morgan: Fantastic. Well, thank you so much for your time.

Michele Adair: Thank you.

Chris Bates: We want to make you a better elephant rider. And this week's elephant rider training is.

Veronica Morgan: Is all about choosing a property manager. Now I have to say that we covered a lot of really, really interesting things with Michele and some really thought provoking things around the concept of a home, and the rights of all of us to leave in a safe, affordable home, which is the mandate of Michele's organization. Now, one of the things that she did talk about was really, they're very, very careful management of tenants in a very proactive management of tenants. That is a principle that we all need to look for when we're looking to hire or engage a property manager. We want to know that they are not just finding a tenant, and they're just letting it go. We want to make sure that the property managers are actually looking after our investment.

Veronica Morgan: That's certainly all those principles that Michele was talking about in terms of their engagement with the tenants, once if that looks like they're not paying the rent, for instance. Getting involved early on, being proactive in terms of making suggestions and actually providing help and assistance for them. Those are all things that are any property manager can do if they choose to. I know from experience, there are a lot of property managers out there that actually do offer that level of service to their landlords, and to their tenants. So I would encourage you if you are a property investor to make sure that your property manager is proactively working with those tenants. Making sure that those inspections are regular, so every quarter. That they are keeping on top of the rental payments. They're making sure that those tenants in there are issues with the property that they are being addressed. That they are bringing those issues to the property managers attention because they do know they're going to be heard. All of those things are really important. It's not just in the affordable housing sector, it's in every housing sector.

Veronica Morgan: Tune in next episode when we interview Kylie Walsh, she's the general manager of Dow Jones and recently won an award for the most influential woman in real estate. Now, we did touch on women in real estate, we did have a good discussion about who is better, men or women? The answer may not be quite as obvious as you think. We also talked about transparency, how technology is going to improve things with regards to transparency for both buyers and sellers, and also country options. So slightly divergent topics that we covered and a very interesting interview.

Veronica Morgan: Now just quickly, don't forget that you can access the transcript for this episode on Don't forget to download a free fool or forecaster report. Which experts can you trust to get it right. Get the report and find out.

Chris Bates: Don't forget we're on all the social channels. We're on Facebook, we're on LinkedIn, we're on Twitter. Please connect and send us a message, we'd love to hear from you.

Veronica Morgan: The Elephant In The Room Property Podcast is recorded at the Sydney Sound Brewery. This week's podcast was recorded by John Risk, editorial by Gordy Fletcher.

Chris Bates: Until next week, don't be a Dumbo.

Veronica Morgan: Now remember, everything we talked about on this podcast is generally nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent, who will tailor and document their advice to your personal circumstances with a statement of advice.

Veronica Morgan