Consortium Likely Preferred for Homes Victoria Ground Lease Model 2

Homes Victoria is set to announce the selection of a preferred consortium for the Ground Lease Model 2 contract encompassing four strategic sites within Melbourne with an end build cost of $850 million.

The Ground Lease Model 2 initiative is an integral facet of the Victorian government’s comprehensive strategy to tackle the pressing housing affordability crisis gripping the state.

Collaborating closely with private sector entities, the state government is committed to expanding the volume of affordable and easily accessible housing solutions. The overarching goal is to ensure that every resident of Victoria has access to a secure and comfortable place to call home.

The preferred consortium comprises Tetris Capital in a principal role and Icon as the primary construction contractor and they are negotiating the final financial closure.

Underpinning this project is the objective of constructing no less than 650 homes designated for social housing. This translates to a noteworthy 10 per cent augmentation in social housing units across each of the four selected sites.

The remaining properties will comprise a diverse mix of homes, encompassing both affordable and market-rate rental accommodations. This assortment will incorporate residences designed to cater specifically to the needs of individuals requiring Specialist Disability Accommodation.

The incoming homes are primed to replace 502 outmoded social dwellings, representing a diverse spectrum of configurations including studios, one-bedroom, two-bedroom, and three-bedroom units. This variety is meticulously tailored to cater to the requirements of individuals, couples, and families alike.

An overarching commitment to energy efficiency and environmental sustainability underscores the construction of these units. Each development will be complemented by expansive communal green spaces, fostering a sense of community and wellness.

Four sites under Ground Lease Model 2 will be in Port Melbourne, Hampton, South Yarra and Prahran. The community housing provider will manage and maintain the sites for 40 years, before handing the land, and all dwellings, back to Homes Victoria.

Icon and Tetris are currently building four sites in Brighton, Flemington and Prahran as part of a $500 million contract under the first Ground Lease Model.

The projected outcome of this first package is 1,110 new homes. Among these, 619 units are dedicated to social housing, with an additional 126 homes designated as affordable accommodations. The remaining 365 homes will cater to the market rental segment, including 52 residences specifically tailored to accommodate individuals with specialised disability needs.

Social and affordable housing construction has been gaining significant attention across Australia and will feature in state and federal announcements in coming years.

In June 2023, the federal government announced a $2 billion Social Housing Accelerator to deliver thousands of social homes across Australia.

The federal government is planning to establish the $10 billion Housing Australia Future Fund, which will build 30,000 new social and affordable rental homes in its first five years.

Construction of Ground Lease Model 2 is expected to begin later this year, and it is estimated that the project will take approximately two years to complete.

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