Last-Resort Housing for Homeless More Cost Effective

It’s cheaper to provide last-resort housing to homeless people than to leave them sleeping rough, a landmark Australian report has found.

Each bed provided by governments provides an average net benefit of $10,800 per year, according to a cost-benefit analysis commissioned by the University of Melbourne’s Sustainable Society Institute (MSSI).

The university partnered with consulting firm SGS Economics and Planning, who undertook the analysis called The Case for Investing in Last-Resort Housing.

Director of SGS and the report’s lead author Ellen Witte said they found governments and society “benefit more than they spend” by providing last-resort housing to homeless individuals.

“This is mainly through reduced healthcare costs, reduced crime, and people getting back into employment or education,” Witte told Pro Bono News.

“What we looked at was a whole range of studies that have been undertaken nationally and internationally into the costs and benefits providing supports to homeless people.

“We identified a number of key benefits. If you are able to provide people with a roof over their head the key drivers that we saw are savings in terms of demand for health care especially emergency department admissions; the reduced crime rate – people who are homeless especially sleeping rough are more involved in crime as both victims and perpetrators; and importantly also improved human capital. So people are better able, once they have a roof over their head, to re-engage with the workforce and education and contribute to society.

“We estimate that over a 20-year period every bed that is made available generates net benefits to the community of $216,600. And so for every $1 invested the return is $2.70.”

She said 60 per cent of the total $10,800 in benefits was generated due to a reduction in health care costs and costs related to crime.

“There is much to gain in economic and social terms, both for government and society, by assisting the homeless,” she said.

Witte said she wasn’t surprised by the findings.

“We have done many investigations that look beyond the direct costs and revenues for investments in the public interest and what we often find there are these wider benefits that can be easily overlooked but when you actually start diving into them they can really make a big difference,” she said.

“Of course every dollar not spent in health costs can be spent and provided to other people who need support.”

She said, however, despite the benefits there were currently insufficient supplies of last resort housing which includes registered rooming houses and emergency accommodation.

“The supply of last resort housing has actually dropped in inner Melbourne while demand continues to peak,” she said.

“Demand is primarily driven by housing unaffordability, people escaping domestic violence and a structural lack of social housing.

“Especially concerning is that over the last five to 10 years, especially in inner Melbourne we have seen a significant drop in the number of rooming houses and the beds available. This is due to property prices being very high and sites coming up for redevelopment and all kinds of high-rise buildings being put up but they do not replace the services that were available before, for people who are at risk of homelessness.

“We have spoken to many community housing providers and so I think in the sector the awareness [of the shortage] is there but it is perhaps the governments and the wider public that are unaware of the need to invest for last-resort housing and those funds have not been made available.”

Witte said the report’s key recommendation was a call to governments to invest in purpose built last resort housing in new complexes with both medium to large scale.

“Government needs to work together with the not-for-profit sector and community housing providers to make sure that the people who are given a roof over their head also receive the range of services that they often also need in terms of mental health and areas around substance abuse,” she said.

Witte said it was difficult to work out exactly how many last resort beds were available at any one time.

“We tried to identify the exact amount but it is not easy because of the number of unregistered rooming houses that operate also offering housing of last resort and they have been growing a lot in the outer suburbs,” she said.

“These are usually overcrowded houses, not registered and so their safety standards are not often met and people pay a lot of money for a bed.”

Director of MSSI and an expert adviser to the report Brendan Gleeson, said: “Homelessness is getting worse in Melbourne – but the good news is that governments come out ahead if they provide last-resort housing for those sleeping rough.

“It’s time for governments to step up, provide new housing for the homeless, and make sure that existing emergency housing stays open to those in desperate need.”

Key points in the report include:

• The number of people sleeping rough in Melbourne’s streets has increased by over 70 per cent in the last two years.
• There has been a reduction in the supply of last-resort housing which refers to legal rooming and boarding houses, and emergency accommodation.
• On average, more than 40 requests for last-resort housing are turned down across Victoria every day.
• The analysis shows that the government providing one last-resort bed will generate a net benefit of $216,000 over 20 years. That averages to a net benefit of $10,800 per year.
• For every $1 invested in last resort beds, $2.70 worth of benefits are generated for the community (over 20 years).
• The report calls for governments to build more new, permanent last-resort housing to help the homeless.

The report is available here.