Philanthropic investors shaking up community housing

Housing affordability

Perpetual Impact

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.”

Bridge Housing’s solution is HomeGround Sydney, a spin-off of a successful social enterprise which has been running in Melbourne for around five years.

There are two main ways investors can work with HomeGround:

  1. 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.
  2. 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.

 


1. Australian Housing and Research Institute, 15 November 2018, AHURI website.

WANT TO LEARN MORE?

If you’re interested in considering HomeGround as part of your overall wealth plan, chat with a Perpetual financial adviser.

Privacy laws apply to our handling of personal information and we collect, use and disclose your personal information in accordance with our privacy policy.

Follow us

Perpetual Private advice and services are provided by Perpetual Trustee Company Limited (PTCo), ABN 42 000 001 007, AFSL 236643. This publication has been prepared by PTCo and may contain information contributed by third parties. It contains general information only and is not intended to provide you with advice or take into account your personal objectives, financial situation or needs. The information is believed to be accurate at the time of compilation and is provided by PTCo in good faith. You should consider whether the information is suitable for your circumstances and we recommend that you seek professional advice. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. PTCo does not warrant the accuracy or completeness of any wording in this document which was contributed by a third party. Any views expressed in this document are opinions of the author at the time of writing and do not constitute a recommendation to act. Past performance is not indicative of future performance.