Housing Australia Future Fund (HAFF): Financing opportunities for community housing providers and lenders
A $10 billion fund has been set up by the Commonwealth Government to accelerate social and affordable housing.
Community Housing Providers (“CHPs”) may see this as a once in a generation opportunity to accelerate their service offering and create legacy social and affordable housing projects.
Financiers seeking projects with long term characteristics and potential stable income streams may supply senior and/or subordinated debt to such projects. The financiers may also view this as a once in generation opportunity.
How can CHP’s and Financiers access HAFF funding opportunities?
Housing Australia’s primary program to increase the supply of social and affordable housing in Australia is the Housing Australia Future Fund (HAFF), which is backed by the above mentioned $10 billion fund. HAFF may present an opportunity for a Community Housing Provider’s (“CHP’”) to accelerate their impact and create social and affordable housing projects. CHPs may explore alternative funding sources and structures to build strategic partnerships to address Australia’s housing shortage and leverage the opportunity.
1. Accessing alternative senior debt
Registered CHPs are eligible applicants for HAFF funding and if successful they may be able to access senior debt to support the construction or development of social and affordable housing. Depending on the funding arrangements, this may include long-term financing with a repayment profile tailored to the project which may be advantageous for the CHP. For example, an interest-only structure may reduce the need for principal repayments of the HAFF facility during the loan term, helping to manage cash flow. This could provide CHPs with greater flexibility when structuring the capital requirements of such a project compared to non HAFF funded projects. Financiers may deem this advantageous as the borrower’s cash flow will benefit which will provide additional funding for alternative lending arrangements (senior or subordinated lending).
2. Reducing financing costs through concessional funding
Housing Australia may also provide concessional loan financing to support eligible social and affordable housing projects. Depending on the applicable funding program and terms, concessional loans may offer more favourable financing terms (including interest rates) than conventional commercial debt for CHPs. This can reduce financing costs and improve the financial feasibility of a development. Financier’s may see this as advantageous reducing the financier’s loan to debt ratio as part of the total capital expenditure of the project.
3. Bridging the affordability funding gap
Social and affordable housing tenants pay rental income below prevailing market rates. This can create a funding gap when compared with the costs of financing, operating and maintaining such dwellings. Under applicable HAFF arrangements, availability payments can help bridge this gap, with payments linked to the availability of eligible housing in accordance with the relevant agreement. These payments may provide a predictable revenue stream and help support the long-term financial sustainability of a project which a financier may value.
4. Why Financier’s (senior and subordinated lenders) may be interested in partnership
Registered Community Housing Providers (“CHPs”) play an important role in delivering and managing social and affordable housing in Australia.
For financiers (senior and subordinated lenders) partnering with a CHP may provide a pathway to explore long term government supported property development opportunities. A CHP may be able to apply for funding through HAFF and partner with a financier to provide alternative funding sources to develop multiple projects backed by real property and stable rental income, subject to the relevant program requirements.
A strategic partnership can help align the financier’s capabilities to deliver long term funding for real property projects whilst partnering with a CHP to help address Australia’s housing shortages and provide social and affordable outcomes in the sector.
Structuring social and affordable housing projects
1. Special Purpose Vehicle (SPV)
CHPs who are considering leveraging Commonwealth Government support through HAFF or other support mechanisms to build legacy housing infrastructure projects should consider how structure matters.
Prior to lending money, financiers will consider the structure of a potential borrower and may prefer to lend to an entity with minimal operational risk and an ability to place an adequate level of security over assets of such an entity. However, a current CHP may provide a magnitude of services to its stakeholders and may have assets of its current operations tied to other security arrangements which may be impacted by any potential new lender.
A new financier would want to ensure its borrowings are well secured and the CHP may not want to expose its current operations or current assets to the new financier’s restrictions and/or security arrangement or the risk associated with taking on additional debt to deliver new property projects. Therefore, CHP could consider establishing a special purpose vehicle (“SPV”) to mitigate risk, potentially ring fencing such operations and gaining access to new for additional funding sources.
2. SPV’s eligibility for HAFF and NHAF funding
The National Regulatory System for Community Housing (“NRSCH”) developed guidelines to inform the community housing sector on the requirements to access streamlined registration under the NRSCH for a special purpose vehicle (“SPV”) seeking funding through the HAFFF and/or the National Housing Accord Facility (“NHAF”). The NHAF is an Australian Commonwealth Government financing mechanism administered by HA to help boost supply of affordable housing. The accord is aspirational target to build one million new well‑located homes over 5 years from mid‑2024 and the Commonwealth and states and territories agreed to update this target at National Cabinet in August 2023 to 1.2 million new well‑located homes over 5 years from mid‑2024. NRSCH confirms in its guidelines that registered CHPs are part of the cohort eligible to apply for both the HAFFF and NHAF, provided they are also a registered charity (or are applying to be registered as a charity) and a constitutional corporation.
3. ACNC Charity registration requirements
To apply for charity status in Australia entities must apply to the Australian Charities and Not-for-profits Commission (“ACNC”). The ACNC Commissioner Interpretation Statement revised on 14 August 2026 recognises that changes in the operating environment and available funding models may lead new and existing housing providers to establish SPVs with multiple participants, including investors. The ACNC sets out an SPV as a separate legal entity established for a specific purpose or project.
To consider the SPV eligibility for charity status the ACNC will look closely at the SPV governing documents and consider if it is providing services in furtherance of its charitable purpose The charitable purpose should be expressly set out in the SPV governing documents and the SPV governance and contractual arrangements may be assessed as part of its charity eligibility application. Financing arrangements may also be considered and any application to the ACNC should careful consider the ACNC Governance Standards and how the SPV will abide by these standards.
What are the key considerations for CHPs and Financiers?
The Commonwealth Government is investing large amounts of money to assist in the creation of legacy social and affordable housing projects. A CHP may wish to take advantage of this investment and leverage commonwealth support with support from senior and/or subordinated lending provided by external financiers.
Financiers may be looking for an asset class which can have real property as security and its income stream and capital expenditure potential partly offset or supported by commonwealth government support.
However, the appropriate project and structure will depend on the characteristics of each project, the relevant HAFF or NHAF funding round, eligibility requirements and the commercial arrangements between the parties. Not every project or funding structure will qualify or be appropriate.
For Community Housing Providers: partnering with experienced financiers can create pathways to deliver multiple projects at greater scale. If you are seeking HAFF funding or assistance with your contractual arrangements, we have experience advising CHPs on agreements with Housing Australia, government housing authorities and subordinated lenders.
For Subordinated lenders: Projects can involve different capital structures and counterparties that need to be understood. We welcome discussions with lenders interested in exploring funding opportunities alongside partnering with CHPs and supporting the delivery of multiple social and affordable housing projects.
How we can assist with social and affordable housing finance
Social and affordable housing opportunity will not be appropriate for every CHP or financier. However, for the right project and party, it may create access to alternative funding and partnership structures that are worth exploring early in the opportunity lifecycle.
We work with CHPs and lenders to explore these opportunities and help navigate the associated legal and contractual arrangements.
If you are considering the opportunity to build (or lend funds to) legacy social and affordable housing projects and seek assistance with establishing the right structure or liaising with potential partners please contact Richard Beissel, Director or Mario Pegoli, Senior Associate of our specialist Social and Affordable Housing Team. Richard and Mario have extensive banking and finance experience working with CHPs and senior and subordinated lenders.
If this topic is of interest, please keep an eye out for Part 2 in our Social and Affordable Housing Insight Series which will focus on how property developers may find this sector appealing.
Cowell Clarke's Social and Affordable Housing team
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.