Matt Comyn
Commonwealth Bank chief executive Matt Comyn was caught off guard yesterday when Stockland CEO Tarun Gupta asked him to consider offering a loan that would allow people to buy into land lease developments.
Stockland is a developer of land lease projects for the over-50s, which usually involves people downsizing from a family home and using the proceeds for the transaction.
Gupta said Stockland is keen to extend the land lease concept to younger households as an affordable housing option but there is limited finance available for such arrangements.
Comyn and Gupta were sharing the stage at CBA’s sustainability conference, Momentum, in Sydney yesterday. The off-the-cuff exchange was brief, with Comyn saying it was a good idea and promising to look into it, but it highlighted the lack of innovation in home lending, which may be playing a role in poor housing affordability.
Under a typical land lease arrangement, residents purchase the dwelling and sign a long-term lease for use of the land. They then make lease payments to the estate operator.
It is an affordable form of housing because the cost of the dwelling without the land is significantly less than a standard purchase.
Stockland is one of the bigger players in the market, with plans to build around 12,000 dwellings across a number of sites.
Another land lease developer Ingenia Communities provided funding in 2021 for a start-up, Land Lease Home Loans, to develop a loan.
Ingenia Communities chief executive Simon Owen told Mortgage Business that the company had met with “literally scores of financiers” about developing a loan but none were prepared to commit to it.
Owen said funding is well established in the US, where land lease is much bigger.
More generally, it has been up to non-bank lenders to provide new lending options.
Over the past couple of years groups like Bricklet, FrontYa, OwnHome and Home Owners’ Partnering Equity have launched a range of shared equity, deposit bond and rent-to-own schemes.
Last year, a new entrant Midkey started offering a home loan with deferred payments that can be used as a first or second mortgage.
AFG launched an interest-only mortgage, Retro Thrive, for older borrowers who want to refinance investment property loans and reduce monthly repayments. And Athena Home Loans offers loans with a pricing structure that lowers the rate as the size of the loan reduces.
It is hard to find anything comparable being developed by the banks.