A man’s castle
By Carmel Fisher, Director
26 May, 2017
I don't envy Government ministers tasked with solving their country's housing issues.
Finding innovative ways to supply would-be property owners with affordable homes in a timely manner is a massive challenge at the best of times. When you are overseeing a budget that's never quite big enough, and other parts of the economy are equally deserving of financial support, the task becomes Herculean.
The Australian and Italian Governments have recently tackled their housing issues in quite different ways. Trust the Italians to make their plan a glamorous one.
In its 2017 Budget, the Australian government introduced the National Housing Finance and Investment Corporation (NHFIC), an "affordable housing bond aggregator designed to attract private and institutional investment and provide cheaper, longer term finance to the development of affordable housing". Huh?
Essentially the government will issue long term bonds (debt securities) to investors — particularly institutional investors such as superannuation funds. These bonds will be backed by the federal government so will have an implicit AAA credit rating to give them investor appeal.
By issuing these bonds, the NHFIC will have significant capital to lend to registered community housing providers and not-for-profit housing providers.
As solutions go, this seems a somewhat complicated and indirect route to getting Australian citizens into affordable housing.
The Italians have a far more elegant solution, at least on the face of it. The government announced it would give away, for free, more than 100 historic monasteries, castles, stone towers, inns and railway stations.
Many of the properties are on historic walking routes or pilgrimage trails including the Appian Way, the ancient Roman road that once led from Rome to the Adriatic coast. Others are along established cycling routes; many offer outstanding coastal views and proximity to picturesque Italian villages.
This initiative follows earlier government moves to lease ancient lighthouses to buyers willing to convert them into accommodation.
There is a catch — prospective owners must submit detailed plans to the government by the end of June, outlining how they will renovate the buildings and turn them into businesses that will boost tourism.
The successful bidders will be given a nine-year lease during which they must use their own capital to transform their castle into a tourist-ready property. If they do well, their lease will be extended for nine years and the really stellar proposals will be given attractive 50-year lease terms.
Acknowledging that not all home buyers want to renovate a castle or monastery, you've at least got to credit the Italian government with thinking outside the square. This single policy deals with several issues in one fell swoop.
Property buyers without sufficient capital can get a foot on the property ladder (and a pretty nice ladder it is). The tourism sector gets a boost as castles are renovated to become hotels, apartments or homestays and tourists will be tempted to travel outside main centres, which are prone to overcrowding.
The government has even looked to address youth unemployment, giving under-40 renovators preferential treatment. In a country where tourism accounts for close to 12 per cent of GDP and 40 per cent of youth are unemployed, this policy hits the right buttons.
Perhaps our government could learn from their European peers.
How about leasing State homes on favourable terms to would-be renovators, on the condition those homes contribute to our tourism industry or at a minimum, provide accommodation to those most in need?
In a difficult property market, any home can be a castle.