Plans for equity share home lending
17 December 2004
One of the many recommendations to come from the Government’s
investigation into First Home Ownership is the concept of equity
sharing between home owners and institutional investors.
Basically, an equity sharing scheme involves investors lending
money to home owners for the purchase of a property, with the
equity which has been built up in the property over several
years being divided between the investor and the home owner on
sale of the property.
Last week, an Australian asset management company announced its
plans to release an equity share home ownership scheme, which
would see more than $500 million invested in residential
property in the form of an investment fund.
According to the asset manager the fund would lend money to home
owners at lower rates than those being offered by the banks, and
then any equity built up in the property over the years of
ownership would be divided between the home owner and the fund
on a 60/40 per cent basis.
It is expected that the fund would invest in around 6,000 homes
across Australia, and return around 11 per cent to investors
over a five year period.
Release of the fund has been planned for June 2005.
