Our vision

A well-regulated, growing and sustainable community housing regulated sector that provides access to safe, secure and affordable housing solutions for Victorians.

Our purpose

To enable the development, growth, and continual improvement of the Victorian community housing regulated sector through proactive, transparent, and risk-based regulation that promotes tenant outcomes.

Our principles

We are: Outcomes focused – risk-based and adaptable – proportionate – intelligence-led and evidence based – collaborative – transparent.

Our priorities

Organisational excellence

To ensure the capabilities of the Registrar to meet current and future challenges by enabling a high-performance culture that values and supports our people.

Better regulation

We will promote better regulation by:

• proactively engaging with registered agencies to achieve compliance against performance standards
• reducing the regulatory burden across the regulatory system
• facilitating investment in the regulated sector by promoting confidence in performance of the community housing regulated sector
• making the regulatory system and the performance of the community housing regulated sector more transparent
• identifying opportunities for continuous improvement.

Strong partnerships and engagement

We are committed to:

• building high-value and purposeful relationships
• being visible, open and engaged
• raising awareness of the regulatory system and the Housing Registrar’s role
• providing compliance advice and better practice guidance to the community housing regulated sector to support registered housing agencies.

Our outcomes

We deliver effective regulation that:

• promotes the growth and continual improvement of the community housing regulated sector
• protects government’s investment for the benefit of tenants, the community and future generations
• delivers safe, secure and affordable housing solutions to Victorians.

This report sets out the performance of the sector during a year of uncertainty and challenges due to the ongoing effects of the COVID-19 pandemic. For this fourteenth edition of this report, we looked at reporting from 40 registered community housing agencies (the sector) for the 2020‑21 financial year.

As at 30 June 2021, the sector owned $4.04 billion in housing assets, delivered rental housing services to 21,167 homes and employed 1,630 people. Despite operating expenses increasing to $347 million, the sector generated a net surplus of $214.7 million which will be reinvested in community housing in Victoria.

In November 2020, the Victorian Government announced the $5.3 billion Big Housing Build. The sector will deliver an estimated 9,000 dwellings of the overall target of 12,000 new social housing homes to be built. This recognises the strong partnership between government and the sector in delivering social housing in Victoria and the value proposition the sector brings in delivering growth at scale.

We have seen a 3.8% increase in tenancy units owned and under management, at a total of approximately 21,000 tenancy units at 30 June 2021. The asset value of properties owned increased by $0.33 billion to $4.04 billion, up 8.8% on the previous year. This growth will continue to exponentially increase over the coming years with delivery of the Big Housing Build.

The COVID-19 pandemic impacted the sector in many ways, requiring a shift to remote work, adjusting to temporary changes to rental and eviction requirements under tenancy laws, and implementing a range of preparedness measures impacting service delivery. These impacts were undoubtedly felt even more so by tenants, particularly during the Victorian Government’s Stage 4 restrictions which restricted our movement.

The sector is also faced with increasing financial pressures with rising debt levels to deliver growth, increased administrative costs, and impacts in the private market to deliver construction activities. Rental revenue has remained largely unchanged over the last two years, partly due to the temporary amendments to the Residential Tenancies Act 1997 (Vic) (RTA), which included a moratorium on rent increases from 29 March 2020 to 28 March 2021.

Despite these obstacles and challenges, the sector remained resilient and achieved strong performance results. In so doing, it demonstrated its commitment to serving the community through the provision of quality rental housing services while pursuing opportunities for growth to create more social housing.

Strong 2020‑21 performance results included:

• high levels of compliance across performance standards
• a decrease in evictions as a proportion of tenancy exits (3.1% in 2020‑21)
• high level of tenancies maintained (89.3% in 2020‑21)
• high resolution rates for complaints (93.5% in 2020‑21).

Between April 2021 and January 2022, five new housing providers were registered in Victoria, with several other registrations currently under consideration. These new registrations will continue to strengthen the diversity of the sector.

We look forward to continuing to work closely with the sector to promote better outcomes for tenants and prospective tenants in Victoria.

Sincerely

David Schreuder
Registrar of Housing Agencies

• At 30 June 2021, there were 40 registered housing agencies that owned and managed 21,167 rental housing units (homes).
• The sector employed 1,630 people. Note: This includes all staff employed by registered agencies across their businesses.
• The sector owned 11,099 homes (52.4% of stock) with a value of $4.04 billion (an increase of 8.8% from the previous year).
• The sector increased the number of homes it owned and managed by 767.
• Thirty-eight registered agencies (95%) were assessed as meeting or having a capacity to meet compliance with all performance standards. Thirty-one of those were assessed as meeting all performance standards.
• Registered agencies resolved 93.5% of complaints they received from current or prospective tenants within 30 days, demonstrating strong practices and positive complaints cultures.
• The total value of housing assets grew by 8.9% to $4.04 billion. Total assets of the sector as at 30 June 2021 was $5.04 billion.
• The sector maintained a surplus of $214.7 million, taking into account capital grants and other one-off items (e.g. fair value gains).
• The sector received $179.1 million in operating grants (up 26%) and $67.3 million in capital grants (up 77%), mostly to deliver new housing and associated programs.
• An additional $625 million in debt to fund development projects, reflected in the 14.6 percentage point increase in the debt to housing assets ratio to 25.3%.
• A positive interest cover ratio of 2.6 continues to demonstrate the sector’s strong ability to meet its interest repayment obligations.

This includes financial and non-financial data for the financial year ended 30 June 2021.

The information and analysis contained in this report is informed by regulatory reporting submitted by registered community housing agencies (registered agencies) to the Registrar of Housing Agencies (the Registrar) as part of 2020‑21 annual compliance and performance assessments under Part VIII of the Housing Act 1983 (Vic) (the Act).

This reporting from registered agencies includes:

• self-assessment of performance against performance standards
• audited financial statements at 30 June 2021
• declarations of compliance with financial, legal and taxation reporting requirements and that it is not a trustee or subsidiary of a non‑registered entity unless permission has been granted by the Registrar
• Key Performance Measure (KPM) data
• achievement of objectives against 2020‑21 business plans
• the 2021-22 business plan
• the Financial Performance Report including historical and forecasted financial data.

In addition to the Sector Performance Report, the Registrar publishes the following performance information annually:

• Performance reports for each registered agency containing KPM results benchmarked against comparable registered agencies. Performance reports are available on the Register of Housing Agencies(opens in a new window) (public register).
• Compliance outcomes and a summary of performance and compliance decisions for each registered agency on the public register(opens in a new window).
• Sector dashboard providing information on the community housing sector’s performance across tenancies, evictions and rental arrears. Sector dashboards are available on the Housing Registrar website.

Housing associations

• Aboriginal Housing Victoria Limited
• Common Equity Housing Ltd
• Community Housing (Vic) Ltd
• Housing Choices Australia Ltd
• Loddon Mallee Housing Services Ltd
• (trading as Haven; Home, Safe)
• HousingFirst Ltd
• Rural Housing Network Ltd (trading as BeyondHousing)
• Wintringham Housing Ltd
• Women’s Housing Ltd
• Unison Housing Ltd

Housing providers

• Baptcare Affordable Housing Ltd
• BAYSA Ltd (trading as Barwon Youth)
• Building Communities (Vic) Limited¹
• Centacare Housing Services Ltd
• EACH Housing Ltd
• Eastcoast Housing
• Eastern Suburbs Rental Housing Co‑operative Ltd
• Inner East Social Housing Group Ltd
• Launch Housing Ltd
• Mallee Accommodation and Support Program Ltd
• Mission Australia Housing (Victoria)
• National Affordable Housing Consortium – Vic Ltd¹
• Northcote Rental Housing Co‑operative Ltd
• Northern Geelong Rental Housing Co‑operative Ltd
• Prahran/Malvern Community Housing Inc
• Salvation Army Housing (Victoria)
• Servants Community Housing Ltd
• South Port Community Housing Group Inc
• SouthEast Housing Co‑operative Ltd
• St Kilda Community Housing Ltd
• Sunshine/St Albans Rental Housing Co‑operative Ltd
• The Haven Foundation Ltd
• United Housing Co‑operative Ltd
• Uniting Housing (Victoria) Ltd (trading as Uniting Housing)
• Women’s Property Initiatives Ltd
• VincentCare Community Housing
• WAYSS Ltd
• West Turk Housing and Elderly Services Co‑operative Ltd
• Williamstown Rental Housing Co‑operative Ltd
• YWCA Housing

Footnote

1. Registered in 2020‑21

The Assistant Treasurer and Minister for Regulatory Reform has portfolio responsibility for Part VIII of the Act, which establishes the Registrar to regulate community housing agencies in Victoria. The Registrar is supported by an administrative office, the Office of the Housing Registrar, located in the Department of Treasury and Finance, in delivering its functions under the Act.

The purpose of the Registrar is to enable the development, growth and continual improvement of the sector through
proactive, transparent and risk-based regulation that promotes tenant outcomes. The Registrar aims to deliver effective regulation that:

• promotes the growth and continual improvement of the community housing regulated sector
• protects government’s investment for the benefit of tenants, the community and future generations
• delivers safe, secure and affordable housing solutions to Victorians.

The regulatory framework consists primarily of the Act, gazetted performance standards and intervention guidelines.

The performance standards represent the standard of operation required of registered agencies, which include:

• Performance standard 1: Tenant and housing services
• Performance standard 2: Housing assets
• Performance standard 3: Community engagement
• Performance standard 4: Governance
• Performance standard 5: Probity
• Performance standard 6: Management
• Performance standard 7: Financial viability

This includes Aboriginal Community Controlled Organisations, Victorian organisations and interstate community housing providers with corporate groups already operating in other states and territories under the National Regulatory System for Community Housing (NRSCH). In addition to these entities, there is increasing registration interest from Special Purpose Vehicles (SPVs) including joint ventures and public‑private partnerships.

To obtain registration in Victoria, organisations must satisfy the registration requirements of Part VIII of the Act including the constitutional requirements contained in Schedule 7. These requirements include that the applicant must be a non-profit body and be established for the purpose of delivering affordable rental housing to people on low incomes.

The Registrar will assess the applicant’s:

• compliance with Part VIII of the Act
• capacity to meet performance standards
• regulatory risk in categorising the registered agency as a housing association or a housing provider.

In 2020‑21, the Registrar approved the registration of two new housing providers.

New registrations in 2020‑21

National Affordable Housing Consortium - Victoria Ltd (NAHCV) was registered as a housing provider in August 2020. NAHCV already has a presence in Victoria managing National Rental Affordability Scheme (NRAS) properties. Its parent entity, National Affordable Housing Consortium Ltd (NAHC), has been a registered Community Housing Provider under the NRSCH since 2018. Currently NAHC is the largest national NRAS provider of affordable housing with 3 600 properties under management.

Building Communities Vic Limited (BCVL) was registered as a housing provider in April 2021. BCVL is an SPV established by Community Housing (Vic) Limited, a Victorian housing association, for the purpose of participating in the Victorian Public Housing Renewal Program (PHRP). The PHRP project will see BCVL develop and operate 1 110 residential dwellings across three existing public housing estates in Flemington, Prahran and Brighton, of which 619 social housing dwellings will be made available to low-income Victorians from the Victorian Housing Register.

Looking forward, the Registrar anticipates further registrations and growth in Victoria over the coming few years in response to the Big Housing Build’s Regional Round, Mental Health Supported Housing Round, Homes for Aboriginal Victorians Round and Build and Operate Round 2.

This approach is intended to promote earlier identification and more effective monitoring and mitigation of harms, and increased capacity building in the sector through continuous improvement.

The possible compliance outcomes for each performance standard are:

• met – the registered agency has demonstrated that it complies with the performance standard
• capacity to meet – the registered agency has demonstrated that it mostly meets the performance standard with some identified areas for improvement
• did not meet – the registered agency did not demonstrate that it meets the performance standard with a number of areas identified for improvement
• N/A – the performance standard is not applicable to the registered agency. This occurs in instances such as newly registered agencies that are in construction phases and not yet delivering rental housing services. For these registered agencies, Performance Standard 1 Tenant and housing services, Performance Standard 2 Housing assets and Performance Standard 3 Community engagement would not apply.

In addition to compliance against performance standards, registered agencies are also annually assessed against continuous improvement criteria, which includes achievement and continuous improvement against KPMs and other measures contained in the registered agency’s annual business plan.

Annual compliance assessment outcomes 2020‑21

In the 2020‑21 reporting year, the sector continued to perform well overall and was assessed as having a high level of compliance with the Act and performance standards.

Of the 40 registered agencies in 2020‑21:

• Thirty-eight (95%) were assessed as meeting or having a capacity to meet compliance with all performance standards.
• Thirty-one (77.5%) were assessed as meeting all performance standards.
• Two are not yet delivering housing services and received a N/A result for Tenant and housing services, Housing assets, and Community engagement.

The following table sets out the overall results against each performance standard for 2020-21:

Further detail of individual registered agency outcomes is in Appendix 1.

In recent years, the number of registered agencies assessed as ‘did not meet’ and ‘capacity to meet’ against certain performance standards has increased. This trend can be partly attributed to a more rigorous and targeted regulatory approach (as part of the Registrar’s 2020-22 Corporate Plan), rather than a decrease in compliance across the sector. In 2020‑21, the Registrar was focused on ensuring that registered agencies have appropriate management and governance structures and policies and procedures to support delivery of housing services to ensure good tenant outcomes.

For most registered agencies that received a ‘capacity to meet’ assessment, the issues identified were limited to one aspect of a performance standard, for example, complaints management. The two registered agencies assessed as not meeting certain performance standards are subject to close regulatory engagement to drive improvement and to identify if further regulatory intervention may be required.

Where a 'capacity to meet' or ‘did not meet’ was identified, regulatory action items have been included in the registered agency's regulatory action plan which will continue to be monitored and assessed by the Registrar. Similarly, continuous improvement opportunities identified during annual compliance assessments are also reflected in regulatory action plans.

The following tables summarises outcomes of compliance assessments for the past three years:

Regulatory action items

The Registrar assigns regulatory action items where compliance, performance and continuous improvement opportunities are identified. A registered agency’s regulatory action plan is comprised of regulatory action items that the Registrar monitors and assesses for progress on an ongoing basis.

A regulatory action plan may be developed in response to:

• an annual compliance assessment
• a registration
• ongoing monitoring activities including notifications from a registered agency of an event that may impact its ability to meet performance standards (reportable event)
• a complaint referred to the Registrar which may include investigation or inspection.

The Registrar takes a proportionate, risk‑based and outcomes‑focused approach to regulatory engagement with each registered agency. Regulatory action items are assigned to registered agencies in response to identified non‑compliance and continuous improvement opportunities.

This approach promotes earlier identification of risks, harms and continuous improvement opportunities, which can be progressed cooperatively with registered agencies without the use of intervention powers in most cases.

The table below summarises the key areas identified for improvement for 2020-21:

The 59 regulatory action items assigned in annual compliance assessments in 2020‑21 was less than half of the 124 regulatory action items assigned in 2019-20. This reflects the Registrar’s more targeted approach, focusing on priority risks and continuous improvement opportunities.

Thirteen regulatory action items relate to improvements in complaints management under Performance Standard 1 Tenant and housing services. The focus of these action items is ensuring that complaints systems are operating efficiently and are supported by positive complaints cultures. This includes ensuring complaints policies are accessible, providing clear avenues for appeals and referrals, and assisting and encouraging tenants and prospective tenants to make complaints to improve services.

Complaints management continues to be a key area of compliance focus for the Registrar. In addition to monitoring resolution of individual complaints, the Registrar monitors that information and feedback received by registered agencies from complaints is being used to improve practices. Further information about complaints management is included in the Complaints KPM section.

The 27 regulatory action items arising from new registrations in 2020‑21 are focused on the establishment and provision of information relating to governance and risk management for newly registered agencies. This includes providing final approved versions of policies, risk registers and board terms of reference, making tenant policies readily available through a website and reporting on progress of construction of new developments.

Housing and tenancy profile

At 30 June 2021, the sector managed 21,167 tenancy (rental) units. Of total housing stock, housing associations managed 70.5% and housing providers managed 29.5%.

Tenancy unit numbers reported for the previous four financial years have increased marginally from those reported in the Sector Performance Report: 2019-20. Since the publication of the previous report, the Registrar has undertaken a data validation review of tenancy units to ensure properties that are owned by one registered agency and managed by another are recorded correctly. The tenancy unit data presented in this report provides a more accurate depiction of the size and growth of the sector over the previous five years.

The number of tenancy units grew by 3.8% from 2019-20. Most of this growth (80.2%) was due to an increase in the number of units registered agencies managed on behalf of the Director of Housing (DoH) and third parties. This included properties owned by or under headlease to the DoH for provision of supported accommodation to homeless people housed in hotels during the COVID-19 pandemic.

Housing associations owned the majority of their housing stock at 69.2%, with 30.8% managed on behalf of the DoH and third parties. In contrast, housing providers owned 12.5% and managed 87.5% of their housing stock on behalf of the DoH and third parties.

As at 30 June 2021, the sector owned 11,099 tenancy units in total with a carrying value of $4.04 billion. This has grown marginally (1.4%) from 10,947 owned tenancy units at 30 June 2020. This growth has been delivered through both ‘new builds’ and property acquisitions, partially offset by disposal of aging housing assets that became uneconomical to maintain and were disposed of as part of asset recycling strategies.

At 30 June 2021, 80% of tenancy units managed by the sector were for long-term housing, including rooming houses, group housing and Specialist Disability Accommodation (SDA). The next largest housing type was Transitional Housing (THM) at 19%, which provides shorter term accommodation. Crisis housing makes up the remaining 1% of tenancy units.

Key performance measures

This section presents the aggregated sector results of 2020‑21 KPMs reported by registered agencies.

KPM results are used by the Registrar to monitor and assess registered agencies against performance standards and in continuous improvement. This performance information enables the Registrar to identify trends in aggregate across the sector and for individual registered agencies, which may inform regulatory engagement.

The Registrar publishes annual Performance Reports which contain individual KPM data for each registered agency.

Performance indicators

The Registrar assesses each registered agency’s performance under KPMs using performance ranges of ‘preferred’, ‘satisfactory’ and ‘action required’, which are taken into account in annual compliance assessments and reflected in regulatory action plans where required.

Further information on the sector’s performance in 2020‑21 against each KPM is visually represented below.

Staffing

The above diagram shows the growth in staff numbers in the sector over the past five years. These figures incorporate staff across all business areas including executive, corporate and administration, community housing and other services.

The total number of staff employed by the sector has increased by 4.4% to 1,630 staff in 2020‑21.

The increase in staffing is consistent with housing growth, increased tenancies and delivery of new programs and services. In 2020‑21, this included participating in the Big Housing Build and the From Homelessness to a Home (H2H) initiative to provide people residing in emergency accommodation due to the COVID-19 pandemic with access to stable medium and long-term housing and support.

Staff turnover

The Registrar monitors staff turnover in registered agencies as a percentage of total staff. This indicator should remain in the preferred range to ensure continuity in service delivery to tenants. Low staff turnover may also be an indicator of good employment and retention practices including a positive workplace culture.

In 2020‑21, staff turnover across the registered sector averaged 19.7%, an increase from 17.5% in 2019-20. Some registered agencies reported an increase in staff turnover brought on by the effects of COVID-19, including staff relocation, increased job opportunities and earlier retirement.

Registered agencies that recorded a high staff turnover in 2020‑21 had a relatively small number of employees, sometimes as few as two staff. Therefore, a small change in staff numbers, including one resignation, could result in a significant change in this KPM outcome.

Turnaround time

Turnaround time is a measure of the average number of days taken by a registered agency to re-let a tenancy unit, either when it is ready for a tenant to move in (vacant tenantable) or when it requires cleaning or maintenance prior to tenanting (vacant untenantable). The Registrar monitors this KPM as reduced turnaround times enable new tenants to be housed faster than would otherwise be the case. Turnaround time is an indicator of efficiency and minimised turnaround times reduce the amount of foregone rent for registered agencies associated with vacant tenancy units.

In 2020‑21, the sector performed as follows:

• average vacant tenantable turnaround time¹ was 25.1 days, a 36.8% increase on the 2019-20 average of 18.36 days
• average vacant untenantable turnaround time² was 45.3 days, a 27.5% increase on the 2019-20 average of 35.5 days.

These increases were largely due to COVID-19 public health measures. Registered agencies managing rooming houses and other higher density accommodation prolonged re-tenanting vacant units to allow for greater social distancing at properties with shared facilities. Some registered agencies managing rooming house properties also reported difficulty re‑tenanting vacant rooms, as prospective tenants were reluctant to move into properties with shared facilities.

Footnotes

1. Vacant tenantable turnaround time measures the total number of days all tenancy units were vacant and tenantable during the year, averaged across the total number of vacancies during the year.
2. Vacant untenantable turnaround time measures the total number of days all long-term housing tenancy units were vacant and untenantable during the year, averaged across the total number of long-term housing vacancies during the year.

Rent outstanding

The KPM for rent outstanding measures the amount of rent that is overdue (rent arrears) to a registered agency at 30 June 2021. This is an indicator of a registered agency’s performance in appropriately managing rents, including providing support for tenants facing payment difficulties. As rent revenue is a major source of income for most registered agencies, this measure has a direct impact on financial viability.

As a percentage of total rent revenue, the average rent outstanding from current tenants at 30 June 2021 was 1.48%. This is a slight decrease from 1.55% reported at 30 June 2020 and continues the positive downward trend of this measure.

Most registered agencies recorded rent outstanding from current tenants at less than 5%, within the satisfactory range for this KPM.

Tenancies maintained

This KPM measures the percentage of long-term housing tenants that have remained housed with a registered agency for the entire reporting year. Note: Tenancies maintained data includes voluntary exits and deceased tenants during the reporting period.

The Registrar monitors and assesses the effectiveness of registered agencies in sustaining tenancies including minimising evictions in recognition of the importance of stable secure housing in enabling tenants to participate in employment, education and the community.

Average tenancies maintained has remained stable across the sector for the past three years at 89.3%, within the satisfactory range for this KPM.

Occupancy rate

The occupancy rate provides a measure of the percentage of available tenancy units that are occupied averaged across the year. Note: There are no performance ranges for the average occupancy rate as this measure is derived from data entered for the turnaround time KPM.

Similar to turnaround time, the occupancy rate is a measure of efficiency of registered agency practices in ensuring that properties are fully tenanted and rental revenue is maximised.

Occupancy rates continued a downward trend in 2020‑21 to 96.2%, largely due to COVID-19 preparedness measures in higher density accommodation. Registered agencies also reported delays in re-tenanting units due to COVID-19 public health measures as described in the turnaround time KPM.

Evictions

The Registrar monitors the rate of evictions as a proportion of tenancy exits to evidence that registered agencies are working to sustain tenancies and are treating eviction as a means of last resort. Note: Evictions are defined under this KPM as ‘a warrant of possession is issued (purchase of warrant) and the tenancy is subsequently terminated’.

In 2020‑21, the average eviction rate as a proportion of exits from community housing was 3.1% and in the satisfactory range at below 5%. This continues the downward trend of the past four years and is the lowest rate for this measure in the past five years.

The eviction rate has been impacted by temporary amendments to the RTA following the commencement of the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) which made changes to the circumstances in which registered agencies could seek eviction of tenants from 29 March 2020 to 28 March 2021.

During this period, the Registrar increased its monitoring of evictions through the introduction of revised requirements for registered agencies to formally report proposed evictions. Evictions occurring during the period were generally for reasons such as public and safety concerns, extensive property damage, and significant rent arrears.

Complaints

Registered agencies are required to have accessible and efficient complaints systems that comply with the Act and performance standards. Registered agencies are also required to demonstrate a positive culture towards complaints management and must take all reasonable steps to resolve complaints from tenants and prospective tenants within 30 days.

Performance Standard 1 Tenant and housing services identifies the following indicators of good complaints and appeals handling practice:

• information is readily available and promoted to tenants on complaints and appeals
• the registered agency manages complaints and appeals promptly and fairly
• the registered agency regularly monitors the effectiveness of the complaints and appeals system.

During 2020‑21, 93.5% of complaints lodged by tenants and prospective tenants were resolved in 30 days. This was a slight improvement from 92.7% in 2019-20, which may reflect strong complaints management and positive complaints cultures across the sector.

All registered agencies but one recorded at least an 80% resolution rate for tenant and prospective tenant complaints, with the majority reporting rates in the 90% to 100% range. The outlying registered agency recorded a 50% resolution rate across a relatively low number of complaints (four).

In 2020‑21, the sector received 417 complaints from tenants and prospective tenants, representing less than 2% of the total tenancy units under management within the sector. This low result may be an indicator of tenant satisfaction. Note: This figure may include multiple complaints received from a single tenant.

However, the lower numbers of complaints may also indicate issues with the accessibility of complaints systems for tenants. As such, the Registrar will continue to closely monitor complaints management practices and completion of regulatory action items.

Tenant satisfaction

Registered agencies are required to survey tenants at least every two years. The following questions must be included in tenant surveys with a standard response scale to ensure comparable data across the sector:

• Taking everything into account, how satisfied or dissatisfied are you with the services provided by [registered agency]?
• How satisfied or dissatisfied are you that your views are being taken into account by [registered agency]?
• Generally, how satisfied or dissatisfied are you with the way [registered agency] deals with repairs and maintenance?

Responses

• Very satisfied
• Fairly satisfied
• Neither satisfied nor dissatisfied
• Fairly dissatisfied
• Very dissatisfied
• No opinion

Survey results and analysis provide registered agencies with insight into the needs of tenants and suggestions to improve services.

Tenant satisfaction – housing services

The trend over the five years to 2018-19 saw the result for this KPM consistently above 85%. However, a slight drop to 83.6% was recorded in 2019-20, likely in part due to COVID‑19 public health measures, with a small rise to 84.3% recorded in 2020‑21.

Registered agencies have reported that minimal face-to-face contact with tenants and a reduction in non-urgent maintenance performed over the past two years during the COVID-19 pandemic has affected this measure. Therefore, the slight rise seen across all three tenant satisfaction measures may be partly attributable to reduced restrictions from public health measures. The registered sector average for Tenant satisfaction – housing services at 84.3% falls within the satisfactory range for this KPM.

Tenant satisfaction – consideration of views

This KPM measures how satisfied the tenants of registered agencies are in relation to consideration of their views by the registered agency. This includes complaint management, feedback and tenant engagement.

The average satisfaction rate for consideration of views was 71.8%, a slight rise from the previous year’s low of 69.0%.

Registered agencies reported that the lack of regular and face-to-face contact with tenants during 2020‑21 due to COVID-19 public health measures contributed to the low results for this KPM. In response, several registered agencies developed new systems and strategies to ensure that tenant voices are better considered when planning and delivering housing services.

Tenant satisfaction – consideration of views at 71.8% falls into the action required range for this KPM. The Registrar will continue to monitor registered agencies’ implementation of systems and strategies to promote improvement in this measure.

Tenant satisfaction – maintenance

In 2020-21, 72.4% of tenants were satisfied with maintenance to their residences. This is a slight increase from 71.5% in 2019-20.

Similarly to 2019-20, the impact of COVID-19 public health measures on the completion of non-urgent maintenance is likely to have significantly impacted tenant satisfaction with maintenance.

Tenant satisfaction – maintenance at 72.4% falls into the action required range for this KPM. The Registrar will monitor this measure for a return to pre‑COVID-19 levels following the easing of restrictions allowing non-urgent maintenance activities to resume.

Financial performance

Under Performance Standard 7 Financial viability, registered agencies must maintain financial viability by effectively managing financial risk exposure, maintaining satisfactory financial performance and having a viable capital structure.

Registered agencies report a range of detailed financial information to the Registrar as part of the annual compliance assessment process. This reporting includes provision of the:

• Financial Performance Report – contains historical and forecast financial data including grants, debt and development projects for each registered agency
• audited financial statements
• financial related policies and procedures – including policies evidencing financial risk management.

The Registrar consolidates financial data provided by registered agencies to analyse the financial performance of the sector.

Housing assets

In 2020‑21, housing assets owned by the sector grew by $0.33 billion to a total value of $4.04 billion. This figure reflects housing owned by the registered sector only and not housing managed on behalf of the DoH and other parties.

In 2020‑21, the increase in the value of housing assets was driven by both housing asset valuation increases and an increase in the number of housing properties owned by the sector, primarily by housing associations.

Operating revenue

In 2020‑21, total operating revenue of the sector was $376 million. Note: Operating revenue excludes capital grants, non-cash income, fair value gains, profit/loss on disposal of assets and other unusual/non-operating items.

Operating revenue is analysed by the Registrar to monitor cash inflows received by the sector and the reliance of the sector on specific income streams.

Operating revenue has increased steadily over the past five years, primarily driven by operating grants received. In 2020‑21, operating grants comprised 48% of the sector’s total operating revenue. Note that where registered agencies provide other services in addition to housing, operating grants for non-community housing services will be included in these figures. Further information on grant funding is provided below.

Operating expenses

In 2020‑21, the sector incurred $347 million in total operating expenses before depreciation and finance costs. Note: Operating expenses excludes depreciation and finance costs which are included in the summary financial statement.

Prior to 2020‑21, operating expenses have been relatively consistent with operating revenue growth within the sector.

In 2020‑21, the operating expenses to operating revenue ratio increased by 7.1%, due to an increase in operating expenses without a comparable increase in operating revenue. Drivers of increased operating expenses have included salaries and wages and consultant expenses as registered agencies prepare funding submissions and undertake project management activities to participate in the Big Housing Build.

Maintenance expenses also increased in 2020‑21, in response to the Department of Families, Fairness and Housing Building Works Maintenance Stimulus program grant spending and carryover maintenance from 2019-20, which was unable to be completed in the relevant year due to COVID-19 public health measures.

Operating EBITDA

In 2020‑21, the operating EBITDA margin was 7.6%, a decrease of 7.1% from 2019-20. This has been driven by an increase in operating expenses compared to operating revenue and reflects smaller operating margins within the sector.

This measure will be closely monitored, given the significant projected growth and construction activity associated with the Big Housing Build and as newly registered agencies become operational over the coming years.

Grant funding

The sector’s revenue is predominantly comprised of rents, operating grants and capital grants. Operating grants provide funding for delivery of specific programs and capital grants fund upgrades and development of properties.

The information and charts provided in this section of the report relate to the grant funding portion of revenue as a proportion of total revenue.

In 2020‑21, the sector received $246 million in operating and capital grants, which is a 37.1% increase from 2019-20. This increase was associated with additional government funding from the Big Housing Build, the H2H initiative and philanthropic contributions. Operating and capital grants comprised 56.4% of total sector revenue, reflecting the sector’s reliance on grant funding for both operational programs and housing development.

In 2020‑21, housing providers received a far greater proportion of total revenue from operating grants than housing associations received. Launch Housing and WAYSS Limited accounted for 53.6% of total operating grants received, delivering Victorian Government support programs including for homelessness and family violence.

Housing associations received a greater proportion of capital grants due to their increased capacity to deliver growth. Housing First Limited and Unison Housing Ltd accounted for 40.2% of all capital grants received by the sector.

Debt

In 2020-21, sector debt significantly increased by $625 million to $1.02 billion. This primarily reflected the registration of housing provider, Building Communities Victoria Limited, which had borrowings of approximately $500 million for the development of the PHRP. Borrowings by housing associations also increased by $117 million, reflecting funding of development projects.

The debt to housing assets ratio increased to 25.3%, reflecting the additional borrowings within the sector. However, this ratio remains within acceptable levels, with debt predominantly comprised of low-interest Federal Government loans.

In 2020‑21, sector debt was made up of 68.3% Federal Government loans, 14.2% state government loans, 13.0% intercompany loans and 3.9% loans from private lenders.

Interest cover

The interest cover ratio indicates the extent to which operating earnings can cover interest expenses. This ratio decreased in 2020‑21, reflecting the decreased operating EBITDA of the sector. However, a positive ratio of 2.6 continues to demonstrate the ability of the sector to meet its interest repayment obligations.

Liquidity

The working capital ratio shows the ability of the sector to pay its current liabilities with its current assets. Note: Excludes capital grants received in advance.

This ratio has significantly increased in 2020‑21 due to an increase in the sector’s cash balance discussed below. A working capital ratio of 5.8 at 30 June 2021 demonstrated that the sector had sufficient current assets to meets its short‑term financial obligations.

Cash and short-term investments

Total cash and short-term investments within the sector significantly increased by $546 million in 2020‑21. This primarily reflects the drawdown of loan facilities.

The total cash balance for housing associations increased by $53.9 million. This indicates an increase in cash and short-term investments available to support operational goals and future housing development.

Capital structure

In 2020‑21, equity continued to represent a significant portion of the sector’s capital structure, driven by positive earnings accumulated over time and an increase in housing assets owned.

At 30 June 2021, total liabilities (predominantly debt, payables and provisions) of $1.3 billion remained much smaller than equity at $3.74 billion. Debt however has increased significantly from 2019-20 to facilitate sector growth.

Capital structure financial indicators

The sector’s debt to equity ratio increased to 27.3% at 30 June 2021, driven by an increase in debt.

Cash cost of capital represents the cost of funding and is calculated as the sector’s total interest expense over average assets. The cash cost of capital decreased to 0.2% in 2020-21. While total debt has increased, this decrease reflects a $4.8 million reduction of interest expenses within the sector primarily due to registered agencies refinancing previous commercial debt with lower interest National Housing Finance and Investment Corporation loans.

Summary financial statements

Income statement¹

Balance sheet¹

^{1. ($ million)}

^{2. Net operating surplus was impacted by the inclusion of a newly registered agency, Building Communities Victoria Ltd, which contributed -$9.0 million in operating expenses to support construction activities. This entity is not yet delivering rental housing services and is therefore not currently generating revenue.}