Treasury has published a Consultation Paper seeking feedback on the potential structure and governance of the National Housing Finance and Investment Corporation (NHFIC), and the operation of the National Housing Infrastructure Facility (NHIF) and an affordable housing bond aggregator.
The Government’s plan includes establishing:
- The National Housing Finance and Investment Corporation (NHFIC) – a new corporate Commonwealth entity dedicated to improving housing affordability;
- A $1 billion National Housing Infrastructure Facility (NHIF) which will use tailored financing to partner with local governments in funding infrastructure to unlock new housing supply; and
- An affordable housing bond aggregator to drive efficiencies and cost savings in the provision of affordable housing by community housing providers (CHPs).
The bond aggregator is intended to aggregate the lending requirements of multiple CHPs and finance those requirements by issuing bonds to institutional investors. The bond aggregator would act as an intermediary between CHPs and wholesale bond markets, raising funds on behalf of CHPs at potentially lower cost and over a longer term than traditional bank finance (which generally offer three to five-year loan terms).
The bond aggregator would have the flexibility to offer a range of financing options to CHPs. It is expected that the preference would be for medium-to-long-term tenor, interest-only loans with fixed interest rates.
This structure would provide CHPs with a more efficient source of funds, reduce the refinancing risk faced by CHPs and will reduce their borrowing costs. This should enable CHPs to invest more in providing social and affordable rental housing.