Shared Equity

July 2016

Our story

• 2002 - launched as joint venture between Bendigo Bank & Community 21 (a consortium of not-for-profit organisations), bringing together the knowledge of not-for-profits and the best of business banking

• 2016 - approximately 12,000 not-for-profit customers ranging from small local community groups to national charities

Our shareholders

Community 21 is a consortium of not-for-profit organisations advancing the financial future of the not-for-profit sector

The consortium consists of 38 organisations working in social services, affordable housing, disability, animal welfare, conservation and many more.

What is Shared Equity?

A pathway to home ownership

assisting low to middle income earners

own a home

Traditional home loan

• Resident 20% Deposit - less deposit LMI application

• Bank 80% bank debt

Shared Equity home loan

Resident

5%

Equity

CHP/Gov’t

20%

Traditional Mortgage

75%+ +

Why?• Provides an alternative finance solution for Community Housing Providers (CHPs),

government and home owners

• Alleviates the stress of rental shortage and affordability

• Provides pathways into homeownership for eligible residents leading to increased social outcomes and mobility for individuals/families

An example– selling the house, resident relocates

Increased value of property $350,000

CHP/Gov’t = $70,000 (vs $50,000 originally)

Resident = $280,000 (vs $200,000 originally)

House bought for $250,000

CHP/Gov’t owns 20% ($50k)

Resident 80% ($200k)

Property sells for $350,000

CHP/Gov’t receives 20%

Resident 80%

An example– selling the house in default

Sale price $225,000

Loan = $200,000 (debt repaid to bank)

Balance of $25,000 goes to CHP/Gov’t

House bought for $250,000

CHP/Gov’t owns 20%

Resident owns 80%

Property sells for $225,000

What’s in it for the Co-owners?• Unlocks equity in existing housing assets

• Increase cashflow without maintenance costs on rental properties

• Offers a low risk investment with limited recourse guarantee

• Changed demographics of property portfolio; mixed income/socio economics within development

How is it structured?• Joint ownership between the resident and

co-owner: ‘tenants in common’ scheme

• Rights are regulated by a co-ownership agreement to protect the interests of both parties.

Where are we now?

Working with CHP’s and state governments, input to Qld Government’s Housing strategy

Significant time spent on structuring the product to suit market & regulatory requirements

Ensuring the NCCP regulations are adhered to.

Structuring management of the scheme – the role of Community Sector Banking and the equity provider CHP/Gov’t

Co-ownership and supporting agreements in draft

Questions?