A new model of affordable housing is being launched that will help provide more homes for those that need them.
Much like how leasing a car enables a person to own a vehicle sooner, so too does ‘lease to own’ with property. It is also similar to a mobile phone plan where you own the phone over the life of the plan.
The lease to own model of OwnLea was developed by James Alexander-Hatziplis co-founder and CEO of architects PLACE Studio who said today that “the Ownlea start-up introduces a unique lease- to-own model, offering a tangible pathway to homeownership for those renters who were previously excluded.”
“This new model transforms property ownership, delivering favourable outcomes for occupants, investors and developers.”
One of Ownlea’s partners is Pacific Community Housing, a Sydney-based community housing provider.
Matthew Daniel, Pacific Community Housing Director, says, “We are delighted to be partnering with Ownlea to develop better ways, through enterprise and opportunity, to assist first homeowners be able to have a pathway for long term stable access to a home that they can eventually own.
“We see this as an excellent opportunity to create choice to a sustainable pathway for a wider section of the community to be first homeowners.
“Our charter as a community housing provider requires us to be focused on the long-term stable housing needs of lower to moderate income people in the community, a category which many young people are in as they seek to establish their lives,” said Mr. Daniel.
Mr. Alexander-Hatziplis adds, “At the heart of Ownlea’s mission lies the drive to democratise property ownership, by empowering occupants to build equity gradually by leasing with the ability to purchase, rather than renting with no end in sight.”
How does it work?
Tenants commit to a set rental spanning five years. Any payments exceeding this rent contribute to their equity share in the property. Upon accumulating sufficient equity, they gain the option to purchase the property which may have increased in capital value. They can also improve the interior to add further value, just as if they owned it.
“This enables people to invest in a home according to their budget. You can accelerate or decelerate savings depending on own personal circumstance,” said Mr. Alexander-Hatziplis. “It incentivises people to meet specific savings goals – and doesn’t kick people out of their homes if they miss them.”
“If interest rates go up, you’re protected, if they go down then you have more options to get a loan and buy your property. Even if you never pay more than the rent, you will still gain as the property value is likely to go up so you can make some money, plus build up a rental record which looks good in front of banks.”
In terms of being different to other affordable housing, Ownlea control the stock. “This is beneficial for developers superfunds and the like, as we provide security along with other good returns. Our committed investors and developers play a pivotal role in in this approach by receiving a set return over the term from a more stable lessor base,” said Mr. Alexander-Hatziplis.
“We believe it is better than build to rent as with Ownlea the person gets equity, while with other models the renter may pay above market rent.”
“Additionally, local communities benefit through neighbourhood stability and long-term investment, while our network of suppliers and service providers benefit from ongoing collaboration.”
Construction of the pilot project will commence in April 2024.
The PLACE team also comprises Nicholas Grimes, the current director of Design who leverages his years of experience within PLACE and previously Lendlease to oversee the delivery and quality of the homes being built. James Chryssafis, Head of Acquisitions and Capital Partnerships, leverages his wealth of experience in delivering projects and sourcing off-market development sites. Matthew Paterson, Principal Capital Broker, brings two decades of finance experience focused on property finance, arranging finance for well-known property companies.