Monday, 30 May 2016

• Social home ownership program boosted by $2 million loan
• Affordable Housing Loan Fund provides innovative finance structure
• New homes to be built in Greater Melbourne for low income families

The Affordable Housing Loan Fund announces its first loan of $2 million to Habitat for Humanity, Victoria. The loan will assist the organisation to construct new homes for low-income families in Greater Melbourne and regional Victoria, specifically Yea, Geelong and the Mornington Peninsula. The fund, created in November last year, is an initiative of Lord Mayor’s Charitable Foundation and Social Enterprise Finance Australia (SEFA), and provides an alternative financial model to address the homelessness and affordable housing crisis in Victoria.

The homes will have an average market value of around $275,000. Construction costs are reduced due to the 500 hours of sweat equity (labour provided by future owners) and other volunteer labour and donations provided by corporate partners. The homes are purchased at 95% of the market value using a no interest home loan, with repayments capped at 25% of gross household income. Eligibility is based on income, assets and current standard of living. Most will be partner families on an income below $50,000 pa, and are likely to be recipients of CentreLink unemployment or disability payments. Similar social home ownership programs delivered internationally and involving sweat equity are highly successful.

SEFA applied an innovative approach to meet Habitat’s need for flexibility. Rather than a short-term solution that relies on inflexible mortgages as security, SEFA’s funding model follows the growth of Habitat for Humanity, leveraging their successful business model. The loan provides Habitat a pathway to financial sustainability and makes them less reliant on grants to fulfil their mission.

Philip Curtis, Habitat for Humanity’s Executive Director says “We believe low income families deserve access to affordable housing. We believe in the empowerment that flows from home ownership, and the improved long-term outcomes it generates in the areas of education, employment, health and lifestyle for parents and children. This loan will help us increase the pace of construction, and to build more homes.”

Ben Gales CEO of SEFA says, “Habitat for Humanity provides low income households with more than just a housing solution. It provides families with the opportunity to own their home, providing long-term stability, and the potential for household wealth creation. These aspects can help address current housing stress as well as the potential to break intergenerational disadvantage. We are delighted to be partnering with Lord Mayor’s Charitable Foundation to support Habitat for Humanity.”

Catherine Brown, CEO of Lord Mayor’s Charitable Foundation says, “The Foundation is committed to increasing affordable housing and reducing homelessness so it’s very fitting that the Affordable Housing Loan Fund’s first agreement is with Habitat for Humanity. Having secure housing will provide a stable base for many low-income families and is likely to lead to better educational and employment outcomes and to stronger social networks.”

The Affordable Housing Loan Fund

Established on 23 November 2015, the Affordable Housing Loan Fund is a social impact fund that seeks to address the homelessness and affordable housing crisis in Victoria. The Lord Mayor’s Charitable Foundation invested $3 million in SEFA, which will contribute its financial processes and knowledge, and will disburse the funds to selected affordable housing development projects throughout Melbourne and Victoria. The idea for the fund was generated out of the Lord Mayor’s Charitable Foundation’s Affordable Housing Think Tank held in October 2012, and further investigation into the need for intermediaries and alternative financial models to address the housing shortage.

Homelessness in Victoria

There are almost 24,000 Victorians who are homeless on any given night, 42% of whom are under the age of 24. The waiting list for public housing in Victoria now stands at just under 36,000 people.