In early 2021, WA-based community housing provider Foundation Housing launched a new affordable housing program called ‘Elevate by Foundation Housing’, comprising 100 new affordable homes for WA’s essential workers. We spoke with CEO Chris Smith to learn more about their Australian-first social enterprise model and how NHFIC’s funding has helped Foundation Housing increase their response to housing need in WA.
When we first started looking at how we could develop our affordable housing portfolio, we explored the idea of purchasing completed units that were move-in ready. We approached a number of WA developers to find suitable properties that were in good locations with close proximity to public transport, retail precincts, were built by credible builders to a high environmental standard and were available for immediate occupation. In those discussions, we found we could benefit from commercially wholesale transactions and through leveraging our not-for-profit status.
We targeted 110 homes and approached NHFIC to access their low-cost, longer tenor loans. We estimated we could acquire approximately $55 million of stock at market value for $45 million, resulting in at least $10 million of equity on settlement.
As part of our application to access NHFIC’s Affordable Housing Bond Aggregator, we needed to complete NHFIC’s project finance model within a strict timeframe. When it became evident that we wouldn’t be able to meet the timeframes required to get the transaction over the line, NHFIC suggested that we access their Capacity Building Program which offers grants of up to $20,000 for tailored assistance from a panel of approved professional advisory service providers to help with applications for funding. This helped us meet the timeframes we needed to successfully access NHFIC’s loans and commence offering affordable housing options to WA’s essential workers.
Our Elevate by Foundation Housing project provides 108 new homes to essential workers in the WA suburbs of Perth, Subiaco, Duncraig, Cannington, Innaloo, Joondalup, Mt Pleasant and Como. The homes are aimed at essential workers in healthcare, emergency services, education, childcare, not-for-profit, retail, transportation and local government. Tenants pay less than 30 per cent of their household income in rent with rent capped at 75 per cent of the market rate.
Each property has unique features – for example, they’re all within 20 kilometres of a city centre and within walking distance to shopping centres, train and bus routes and other essential amenities. When we first released the units to the market, people were sceptical. They didn’t know who we were or what affordable housing was. Once tenants saw the units, they were thrilled to see everything was brand new and that the units were well located with great amenities. The feedback has been outstanding and we’ve seen higher than expected demand. In fact, we anticipate all tenants will have moved into the initial two tranches of properties by mid-April 2021.
Our journey with NHFIC and the process to access their loans has been a completely positive experience for Foundation Housing. The Capacity Building Program grant was put forward to help us address tight timeframes and there was always a solution to move through potential barriers to ensure we could access NHFIC’s funding. It’s important to note that NHFIC isn’t a financier, a banker or lender, it’s a statutory authority whose purpose is to support and grow our sector, ultimately for the benefit of Australians who are most in need.
The Elevate by Foundation Housing project provides 108 new homes for essential workers in WA.
There has been high demand for these spacious apartments among WA’s key workers, who pay no more than 30 per cent of their household income in rent.
The apartment buildings are located close to shopping centres, public transport, hospitals, education facilities and other essential amenities.