Illustration: Simon Letch Investors would stump up the cash, and in return receive a regular coupon payment, funded from incoming rent. If that sounds familiar, that's because that's exactly how government bonds work. Essentially, the new intermediary would issue bonds, receiving money from investors and passing it on to community housing associations to develop the new rental stock. Low income renters would benefit from an expanded supply of affordable housing. They'd also benefit from the longer leases and more closely monitored care for tenants that the community housing sector is able to provide. Presently, low income renters are often subject to the vagaries of landlords who flip properties for capital gain.

Below-market rents in central, work-rich regions are still extremely high and out of reach for many. Credit:Louise Kennerley With less than half of Australian adults set to be homeowners come next year, the time is right to consider reform of rental properties. But does a new "financial intermediary" all sound a bit "out there" to you? It's innovative, certainly. But the British have been doing it for 30 years now. In 1987, under Prime Minister Margaret Thatcher, a new body was established which today is called the Housing Finance Corporation.

It's a conservative idea through and through to favour private sector investment to taxpayer-funded affordable housing. Starting out with around 600,000 homes, the corporation has now facilitated the building of a stock of 2.4 million affordable rental homes. You might think it would be cheaper for the government to use its own credit card to build new public housing. But the corporation is today able to borrow at rates cheaper than the government to fund new projects. (Although that may say as much about the perceived creditworthiness of the British government right now.) The problem for governments keen to get investors interested in building affordable housing is that the return on such investments is – almost by definition – below market. Rental housing built this way is only affordable if rents are lower than private rents. The British government had to chip in to top up the return for investors. But all governments already spend taxpayer money on housing, it's just a matter of how to do it – directly or through investment incentives.

When the Housing Finance Corporation started out, interest rates were high, and investors demanded a return of 11 to 12 per cent on their money. As a result, projects were funded 90 per cent through outright government grants and 10 per cent through debt. Today, with interest rates at historic lows and, indeed, the prospect of negative interest rates in Britain, investors are willing to accept a much lower return for such a stable, long-term investment. Safe as houses, as they say. Back at home, Australia's $2 trillion pool of superannuation money is also looking for a home. Super funds have been looking at the British model and helped to fly the corporation's chief executive, Piers Williamson, to Australia this week for talks with federal and NSW Treasury departments.

Williamson met previously with former NSW planning minister Brad Hazzard​ in London. Together with the NSW Federation of Housing Associations, he has been meeting with Treasury officials working on a Housing Affordability Working Group. Never heard of it? That's a shame. The working group was established by Scott Morrison during his time as social services minister. It is tasked with examining ways to harness private sector funding for new affordable housing developments. Morrison brought it over with him when he assumed the Treasury portfolio and it now has the weight of Treasury behind it.

An issues paper released in January called for submissions on various proposals, of which the financial intermediary model appears to have found favour. The working group is due to release its final report in September. Williamson is optimistic that Australia is ripe to follow the British example. The imperative is clear, he says. "Where can my children afford to live? That's a question politicians are increasingly asked. They know there's an issue. I think there's a solution. Do you want to try, or don't you?" Australia's existing community housing sector is admittedly small, but so too was the British sector when the program began. Today it provides millions of homes for vital workers like teachers in inner-city areas.

What the idea needs is a political champion, says Williamson, able to elevate the issue above daily politics. Of course, tackling our housing affordability challenge will require a multifaceted solution, including reining in tax breaks for property investment and boosting the supply of well-located land. But a financial champion of cheaper rents? That's an idea worthy of hope.