Bond Aggregator model adopted for Treasurers’ affordable housing plan

AHURI research informs report accepted by Council on Federal Financial Relations

7 Dec 2016

Federal, State and Territory Treasurers have endorsed a recommendation to establish an expert taskforce to design a bond aggregator model and to report to Heads of Treasuries by mid-2017.

AHURI research on a bond aggregator model was central to the Affordable Housing Working Group report which was presented to the Treasurers at a meeting of the Council on Federal Financial Relations.

The AHURI research outlined the creation of an Affordable Housing Finance Corporation (AHFC) to source funding from the bond market so as to provide lower interest, long-term loans to not-for-profit organisations developing housing for lower income households. As the AHFC would source large amounts of capital, it means money would be raised efficiently with reduced financing costs rather than in expensive one-off transactions such as when borrowing from a bank.

the AHFC ... means money would be raised efficiently with reduced financing costs

The AHFC model has been adapted to Australian financial market conditions from established Swiss and UK schemes. Its benefits are that it is relatively simple and transparent; minimises the impact of debt on government budgets; draws on the successful experience and expertise of other countries; provides lower cost finance to community housing providers and therefore is likely to maximise the sustainable expansion of affordable housing stock.

The research into the AHFC model is detailed in AHURI Final Report no. 220.

Download the report