While house prices in Australia have taken a dip over the past year, the Australian dream of owning a home remains out of reach for many. Not only that, for many Australians, even renting a property is too expensive.
The Australian Housing and Urban Research Institute estimates there is a current shortfall of 433,000 social housing units in Australia, with 36,000 new homes needed each year to meet future demand1.
While government is addressing some of this shortfall, it’s not enough. According to Bridge Housing CEO John Nicolades, the problem is particularly acute in Sydney: “Our estimation is there’s a shortfall of around 150,000 affordable and social housing properties in Sydney and that’s only going to increase.”
Bridge Housing is a registered charity that started in 1985, managing 35 homes for low income families in the Sydney suburb of Redfern. Since then it has grown steadily to be a leading community housing provider in Australia. It now owns and manages 3,200 properties, 610 of which are private rental properties.
According to Bridge Housing, the fastest-growing demographic of homeless people in Australia is women over 55. They often become homeless due to relationship breakdowns and then find themselves without assets or sufficient income to make their rent. They have to leave the area they’ve lived in for years, and are forced out into an unstable, uncertain future.
A philanthropic solution
Four years ago, John and the Bridge Housing team started brainstorming solutions to this growing problem.
“We came up with a solution that leverages our experience in leasing and managing properties. We established a full service licensed real estate agency that does everything that your current real-estate does. The main difference is that our model makes it easy for philanthropic housing investors to use their real estate assets to make a difference to housing affordability.”
There are two main ways investors can work with HomeGround:
- Hiring HomeGround to manage the renting of their property. HomeGround seeks to maximise rental return while taking the management burden away from owners. Any profits are used to fund the growth and operation of the business.
- Investors can decide to offer their properties at sub-market rates, or alternatively, to donate their properties to HomeGround for rent by low income Australians. Any gap between the rental return and actual market rates becomes a tax deduction due to HomeGround’s registered charity status and an ATO ruling secured by Bridge Housing.
Initial funding for HomeGround was provided by the City of Sydney as well as by individual philanthropists and sponsors. Bridge Housing is committed to running HomeGround for a trial three-year period, before assessing its viability. The intention is for it to be profitable and self-funding with profits invested back into the business. At its one-year anniversary in April this year Bridge Housing was slightly behind its targets, but John is confident that much of this is due to the current dip in the housing market:
“This ongoing issue of decreasing affordability for people on low incomes is not going to go away because you have a cyclical change in the market. Over time the market will return to its previous performance.”
HomeGround manages properties for investors across Sydney, with a concentration in areas where demand is greatest like Sydney’s inner suburbs and Northern Beaches. HomeGround Melbourne offers a similar service but is owned and managed separately.