Many people, particularly older people, now recognise they will never own their own home. They are letting go of the Australian Dream of home ownership and accepting that they will be renting for the rest of their lives.
Rental is likely to become the norm
In some ways rental can be seen as a good thing, because the needs of renters are becoming a driving force towards the new “share economy” and “collaborative consumption” arena. This is good for both the people affected and the environment.
Security of tenure for rental tenants
One critical reason renting has never been seen as acceptable in Australia is that there is no security of tenure, which means renters can never turn their house into their home. Australia needs new rental models, similar to those in some of the European countries, where long-term rental is the norm. Everyone needs to feel secure in their own home, and they will take much more care of a home that they can be sure of.
The major suppliers of affordable long-term rentals are public housing and community housing providers. These organisations cannot satisfy the increasing demand which is coming from the new demographic – those people forced out of the housing market as a result of skyrocketing rents and flat-lined fixed and low incomes.
Without relying on government assistance and banks we aim to develop property syndicates that specialise in long-term rental accommodation: the community looking after its own!
What is a property syndicate?
“Property syndication is a direct property investment where the smaller property investor with limited available capital has an opportunity to invest in commercial, retail or industrial properties.
These projects are managed and marketed by licensed property dealers and should have a prospectus lodged with the Australian Securities and Investment Commission.
The main objective should be investing in properties with quality tenants, long-term leases, strong returns and good potential for capital growth. There is more risk when investing in only one property though it can provide a regular cash flow, tax benefits and potential capital gains.” Australian Investors Association
Put quite simply, a group of investors is found to purchase or develop an affordable housing property. They receive a return on investment, that is the rental paid by the tenants less the costs of maintaining the property. At some nominated date in the future individual investors can sell their investment to another potential investor at the going market rate. However, the property itself can only be sold if it becomes uninhabitable due to changes in the surrounding human or natural environment. In this case there will be a commitment to rehouse the existing residents.
All residents of the property are tenants with long-term or lifetime leases. The property will not be sold unless it becomes uninhabitable, so their tenancies are secure. Leases can allow personalisation of the property. Yes, they can change the curtains, paint colour and hang pictures on the walls – all those things home owners do to make their house their home.
Tenants may also be investors. They may choose to purchase some shares in the property syndicate, but when they do, they invest in the total property and not in the home they are living in. There is no rent-to-buy option. When that resident leaves, for whatever reason, their house is re-let to a new tenant. That resident retains their property syndicate shares and has the option to sell if they wish. If that resident dies, their heirs can sell the any shares in the property syndicate they may have inherited, but the house their relative lived in is not sold.
Types of housing developments
There are many different kinds of property that could be purchased or developed by a syndicate to create affordable housing.
- A syndicate could purchase existing properties like old hotels, motels and holiday parks to refurbish and convert into affordable housing.
- A syndicate could purchase land of any size from a housing block for a few homes, to large acreages to create many different styles of neighbourhoods.
They could also be built or purchased to suit different demographics depending on the housing needs of the existing local community.
There is an overarching perspective that new housing should not involve increasing the loss of the natural landscape. Property syndicates could build or renovate properties to be as environmentally sustainable as possible whilst also looking after the needs of the residents. That means they should comply with minimum environmental standards such as collecting water and generating electricity where possible.
Social and physical sustainability
In addition they should be socially sustainable. They should incorporate common spaces that include a meeting space for common activities, organic vegetable gardens and orchard trees, shade gardens, play areas, and maybe other special interest facilities. As well as being environmentally sustainable these initiatives provide not only affordable housing but AFFORDABLE LIVING.
They will also be built for both low development and low maintenance costs, and with a projected long life expectancy.
There are many different ways the ensuing properties could be managed to suit different locations and demographics. We are developing one option that is designed to keep both the investment and the residents “safe”. This management process is under development and is summarised here. Managing rental properties to protect both owners and renters