Property industry veteran Adrian Harrington will take over as chair of The National Housing Finance and Investment Corporation (NHFIC), having served as a board member since the organisation was founded three years ago. He replaces Brendan Crotty whose three-year term ends in July.
As well as chairing the NHFIC, Harrington’s “day job” is head of capital and product development for Charter Hall, one of Australia’s largest funds managers.
He will be stepping down as director of the Australian Housing and Urban Research Institute (AHURI) to assume his new role with NHFIC.
Also joining NHFIC as fresh board members are Kelvin Ryan and Jane Hewitt, both of whom have extensive experience in housing and real estate.
Hewitt’s background includes co-founding student accommodation giant UniLodge and holding a non-executive directorship with Mirvac, while Ryan is the former chief executive of major housing developers, Simonds Group and BGC Residential.
The government-operated NHFIC was created with the aim of getting more Australians into suitable housing by increasing the availability of social and affordable dwellings and supporting first home buyers and single parents.
“From my perspective it’s a very exciting time to be helping in this space because there’s a lot of opportunity there in terms of bringing more institutional investment into the sector to support the delivery of, particularly, social and affordable housing,” Harrington told The Fifth Estate.
In just three years, the organisation has issued roughly $2 billion worth of bonds, including two new bonds released in June that garnered overwhelming interest both in Australia and overseas.
The funding raised by NHFIC is passed on to Community Housing Providers (CHPs) in the form of long-term low interest loans, so far resulting in an estimated $420 million worth of savings on interest payments for CHPs which can be put towards delivering more housing.
NHFIC’s latest bonds included a 10-year fixed-rate social note of $362 million and the organisation’s first floating-rate note of $100 million which followed a $343 million sustainability bond released the month before which also drew solid interest.
Harrington explained that the bonds are desirable for institutions as they offer a comparatively higher yield than a pure Commonwealth government bond yet they are guaranteed by the Australian government and are issued with a AAA rating. They also add ESG value to an investor’s portfolio.
“More and more the institutions, whether they be domestic or global, are looking at the residential space and particularly social and affordable housing because of the whole ESG and impact investing association,” Harrington said.
Through funding from the sustainability bond alone, NHFIC was able to provide a fixed rate of 2.34 per cent for 15-year interest only loans to Community Housing Ltd, which has supported the delivery of 600 social homes 450 affordable and private rental homes and 50 disability accommodation in Melbourne.
“That’s extraordinarily cheap debt for this consortium. If they went to the banks they would only be able to do short term loans and it would be significantly more expensive than that,” Harrington said.
“The reason it’s cheap is the government is guaranteeing the bond, so the bond investors are effectively relying on the federal government to stand in if there’s a default in the bond.”
Other main initiatives of the NHFIC are designed to assist first home buyers enter the property market. The Family Home Guarantee for single parents with dependants, announced in the recent federal budget, will join the existing First Home Loan Deposit Scheme and New Home Guarantee.
“With prices rising…it’s getting harder and harder for first home buyers to participate.”
Research from AHURI estimated that in 2016, Australia had a shortfall of around 431,000 social housing dwellings, and that this deficit would grow to 727,300 dwellings by 2036.
The research concluded that 36,000 new social housing dwellings per year were required to meet this need.
Harrington said he would continue to work with the residential sector to improve housing outcomes for Australians.
While Charter Hall does not deal in the residential sector, being able to interface with institutions through the company has helped Harrington understand and engage with capital markets and institutional capital which benefits his work with the NHFIC.
“I’ve had a long term passion for social and affordable housing and I’m keen to help make a difference in this space,” he said.
“I think there’s a lot of work we can do to bring institutional capital in and to work with all parts of the housing market to look at ways to increase the supply and make sure more people have quality housing wherever they’re sitting along that spectrum.”