(image via Wentworth)
Community Housing Providers (CHPs) may have access to cheaper financing under a new type of financial arrangement set to be introduced by the Commonwealth Government.
In his latest announcement, Federal Treasurer Scott Morrison said the government had established an Affordable Housing Implementation Taskforce, which would develop a model for an affordable housing bond aggregator which will be considered by the Commonwealth.
In a statement, Morrison said such a move would assist community housing providers in obtaining access to cheaper and longer term debt and would help to improve affordability for private renters as well as those who rely on social and affordable housing.
“An affordable housing bond aggregator would allow a financial intermediary to attract greater private sector investment into affordable housing,” Morrison said.
“This would give community housing providers access to cheaper and longer term debt, freeing up capital for the construction of new affordable housing.”
Based largely on systems in place in Switzerland and the United Kingdom, bond aggregators source and aggregate large amounts of private sector capital from bond markets.
Proceeds will be invested into long-term debt finance for community housing providers across a range of projects and providers.
An advantage of this approach would be that it would enable CHPs to access private sector finance without the expensive one-off transactions such as when borrowing from a bank.
In addition, it is likely that the government will act as guarantor should the CHP be unable to make repayments, thus reducing the perceived level of risk associated with the bonds from an investor perspective and enabling CHPs to access capital at a lower rate of interest than would otherwise be the case.
The Taskforce will develop a model for such an aggregator which would be considered by the Commonwealth and State/Territory governments.
An expert panel has been appointed to guide the work of the Taskforce, including former New South Wales Treasury Corporation Chief Executive Officer Stephen Knight, Community Housing Industry Association Chief Executive Officer Peta Winzar and Secretary to the Treasury John Fraser.