In late 2021, the Waikato Region’s well known Brian Perry Charitable Trust (BPCT) launched Bridge Housing with the goal of helping tackle New Zealand’s affordable housing crisis.
The data paints a staggering picture:
- New Zealand’s price to income ratio is running higher above the long-term average than any OECD country
- The number of properties in the hands of investors increased 191% between 1986 and 2018. Investors now own over a quarter of the occupied housing stock
- The number of entry-level homes in Hamilton (<$500K) dropped from 84% in 2014 to 3% in 2021.
- The average Waikato house cost more than 17x the annual minimum wage
- The Waikato Housing Initiative found there to be a shortage of 7,500 houses in the Waikato today, with more than 50,000 new homes needed by 2043.
And the list goes on.
Like so many others, BPCT’s Trustees felt disillusioned by the statistics and set out to research sustainable solutions that would have scalability and long-term impact. It very quickly came across the Queenstown Lakes Community Housing Trust’s (QLCHT) innovative Secure Home product.
Secure Home is an assisted ownership programme. The objective of Secure Home is not only to provide decent and affordable housing, but long-term housing stability and security in the same way that home ownership does.
Secure Home will be the flagship programme of Bridge Housing.
How Does it Work?
Secure Home is based on a leasehold agreement between the Housing Trust and the household. QLCHT explains it as follows:
Essentially, the Trust retains full ownership of the property and the household purchases the right to occupy that property at the cost of house construction (excluding land). The household then pays an annual ground rent to the Trust for use of the land, which is set well below market value and only ever increases annually with inflation for the period the household remains in the programme. This ensures the initial purchase price (Upfront Payment) and ongoing ground rent remain affordable for the household in perpetuity.
The Secure Home agreement provides a 100-year lease, which provides the household with a home for their lifetime. Secure Home is not a rental arrangement. A household in the Secure Home programme has all the benefits and responsibilities any home owner has, except the ability to on-sell the property in the private market.
The lease cannot be transferred or on-sold on the open market, but should a household decide to move on, the Trust will purchase the house back at the original purchase price, plus an annual inflation adjustment (provided the house has been well maintained). If the household has made any improvements to the property which the Trust has approved, then these too will be factored into the resale price.
The Secure Home Agreement has been reviewed and accepted by one of the largest residential lenders in Australasia. A full copy of the agreement is available through [email protected].
Bridge Housing’s first development, Peake Mews Cambridge, will offer pre-sales on 21 Secure Homes from mid-2022.
As featured in Volume 22, Issue 4 of The Property Lawyer