Housies will launch with eight Auckland properties. Photo: RNZ/Calvin Samuel
A new property investment model allows people to purchase a share of residential property, but it says it's different to the failures of the past.
Shared ownership residential property investment models have a chequered history in New Zealand. Many have struggled to get off the ground and those that did have struggled to complete deals, but the founders of Housies say they offer something different that should work better for everyone.
While other models have allowed people to invest together in a rental property, Housies will have one of those investors living in it.
The company will launch with eight Auckland properties open for investment and plans to expand to other centres.
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"An investor who owns at least two percent of the home will live in it and they will pay a four percent occupation licence fee on the portion they don't own," co-founder James Jordan said.
"Our model means a homeowner is in the property, and that ensures the property is cared for and looked after."
He said four people had already signed up to be "investor guardians".
They could then buy more shares to own more of the property and build their ownership over time.
"In that first sort of 10 years - compared to a bank mortgage - if you've got a 10 percent deposit, we're probably a better option, because they have more disposable income compared to a bank mortgage.
"What we're hoping is they will put most of that disposable income into buying more shares. In the early days of a 30-year mortgage, you're paying more interest than principal and it gradually swaps over, once you get to maybe 12-15 years.
"We would like to see, after 10 years, some of these guardians take the houses out of the system."
The occupation licence would cover rates and insurance, and four percent of the purchase price would go into a long-term maintenance fund to pre-fund maintenance work.
"There is no model like this in the world," Jordan said. "Housies is an all-encompassing solution to get more Kiwis into homes, while others are able to invest to create equity for their future.
"This is levelling the playingfield and removing unnecessary barriers for those priced out of traditional home ownership pathways..
"I've got grandchildren and I'm worried about how they're going to afford a home. This tool is opening the door to a more flexible way to enter the property market."
He said it could also work for retirees, who wanted to sell part of their properties to give them some income.
"If they have, let's say, a $1,000,000 property, they can sell down half the property, the four percent on $500,000 is $20,000 a year.
"They can park that $200,000 of that $500,000 in a term deposit and they've got their four percent for the next 10 years, and they've just got another $300,000 to help fund their retirement.
"In 10 years, the property's probably gone up by 30-40 percent."
He said it would be a cheaper option than a reverse mortgage, which could have high and compounding interest.
Investors can monitor their investments through a personalised dashboard, receive regular updates and rental income, and buy or sell shares through the platform at any time.
"As well as being a great option for those entering the market, we know it will also appeal to people looking to diversify their investments."
Jordan said. of the people who had gone through the anti-money-laundering process to be able to invest, 44 percent had ended up buying shares.
The FMA has approved a secondary market for shares.
Jordan said it could take two months to sell a property down in the early stages.
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