NHFIC writes first construction loan with a CHP

The National Housing Finance and Investment Corporation (NHFIC), which was set up by government and commenced operation on 1 July 2018, is dedicated to improving housing outcomes.

NHFIC offers loans, investments and grants to encourage investment in housing, with a particular focus on affordable housing, and forms part of the Coalition’s plan to help reduce pressure on housing affordability.

Working with community housing providers (CHPs), NHFIC has announced that it has provided a total of $85.7 million to two separate affordable housing providers to help them bring their projects online.

This is the first time CHPs have had access to concessional finance from the NHFIC, previously relying on commercial banks for construction funding, and marks the first construction loan that the NHFIC has funded.

Construction loan

BlueCHP will borrow $45.7 million from the corporation in order to build at least 93 affordable housing dwellings in Lane Cove and Liverpool, NSW.

The construction loan is offered for a period of two years with an interest rate of “less than 4 per cent”, according to the NHFIC.

It has been estimated that the loan will save BlueCHP more than $600,000 per year.

Upon completion, NHFIC will provide another $6 million loan to BlueCHP to support the provider’s retention of 48 of those dwellings for affordable community and disability housing, including for people with disabilities.

At least 24 of the remaining dwellings will be delivered to the NSW Land and Housing Corporation.

NHFIC CEO Nathan Dal Bon said the benefits of providing construction finance to CHPs is paramount to increasing the supply of social and affordable housing.

“Extending our financing into construction enables us to work with CHPs to accelerate the delivery of new housing supply for Australians in need,” Mr Dal Bon said.

Refinance funding

As well as the construction loan, the NHFIC has also provided a $40 million loan to Bridge Housing to help it refinance existing projects and fund new ones.

It is expected that the loan could help support almost 300 social and affordable dwellings across Sydney and could save Bridge Housing more than $7 million in interest and other costs.

The NHFIC construction loan for Bridge Housing will be split into two tranches, with one used to refinance debt on existing development programs, including seniors’ housing in Glebe and affordable homes in Bungarribee, Parramatta and Ashfield, while the second will be used to develop 16 townhouses in Dulwich Hill and the acquisition and refurbishment of eight units in Punchbowl, Sydney.

Bridge Housing CEO John Nicolades said the NHFIC loans are a “game changer”, adding:  “The money we save with lower interest payments means more cash to develop additional social and affordable housing for Australian families struggling in the housing market to access secure and affordable housing.” 

Meanwhile, NHFIC’s CEO said the loans provide certainty and cost savings to CHPs, which is critical to bringing social and affordable housing online.

“CHPs can use these savings to initiate additional new social and affordable housing projects, including in growth corridors and inner city areas that are among the most challenging when it comes to affordability,” he said.

Minister for housing welcomes deals

The move has been welcomed by the Minister for Housing and Assistant Treasurer, Michael Sukkar, who called NHFIC’s commencement of construction lending a “significant milestone” in the delivery of affordable housing in Sydney.

“Improved access to lower-cost, longer-tenor finance through NHFIC is enabling community housing providers to scale up and save on costs. Savings that can be reinvested into things like tenant services and the supply of more affordable rental housing,” said Minister Sukkar.

NSW Minister for Housing Melinda Pavey also welcomed the move, stating that the funding of these projects will bring positive outcomes for people in need.

“Access to finance on favourable terms will improve considerably the capacity of community housing providers to borrow for new supply or refinance existing loan facilities,” Minister Pavey said.  

“This is a great step forward in our efforts to increase the supply of social and affordable housing in New South Wales.”

The NHFIC loan construction program is set to deliver 23,500 new affordable social dwellings over the next 10 years.

[Related: New grant scheme opens for community housing]