PRADS – Permanent Rental Affordability Development Solution
The Permanent Rental Affordability Development Solution, PRADS, is a model where as part of a negotiation process with the local government authority (LGA), the developer agrees to share some of the value created in the planning process (including rezonings) by providing affordable housing “for life”. The obligation is then secured via a voluntary planning agreement.
The developer is then able to sell the dwellings to investors (at a lower price due to the lifetime encumbrance) in the private market with an obligation for the investor to comply with a robust governance process. Through an approved property manager, the investor then rents the dwelling to the specified target market.
This model is scalable and has the potential to create a significant supply of long-term affordable private rental housing without the need for any ongoing government subsidy. From a governance perspective, it will be based on a similar process that currently exists, and is in use, in managing the National Rental Affordability Scheme (NRAS) properties. Discussions are currently underway with superannuation funds to establish an Affordable Housing Fund.
This model can work and is applicable for apartment projects and land subdivisions. It works on the commercial principle of value sharing the uplift created through the planning process. Only in its infancy, the model has already gained support from sectors of the property industry, the banking sector and public tenant groups.