Saturday, 18 November 2017 Sydney
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Is shared home ownership the answer to Australia’s affordability crisis?::

With property prices in Melbourne and Sydney increasing at five times the rate of inflation, Australians are searching for new and innovative ways to get into the property market, with the added challenge of being outbid by Chinese money competing for the same property.


According to the latest report released by the Foreign Investment Review Board (FIRB), overseas buyers invested $60.75 billion into Australian residential real estate in 2014-15. That’s 75 per cent more than approved investment in 2013-14 and 254 per cent more than 2012-13.


If you’re at the crossroads of struggling to save for your 1st home or an investment property, or salary sacrifice into super, or be entrepreneurial and start your own business, we would like to introduce you to the concept of ‘residential shared ownership’ or ResiShare for short.


A retired commercial lawyer, Peter Llewellyn, developed ResiShare in 2016 as a way of addressing housing affordability. Peter’s basic concept was to alter the way homes were being offered to the market.

 

Instead of the standard way a home (whether marketed by an owner, a builder or a real estate agent) is offered to the market for purchase by one buyer who needs to have a large deposit for the purchase of the whole property and who is able to qualify to get a large mortgage, ResiShare allows every property put to market to be available for purchase by a single buyer (or couple) in the usual way, while at the same time also being available for purchase by a number of co-owners, on a ‘whichever occurs first’ basis.


Properties being marketed the ResiShare way help address the ‘affordability’ issue by allowing almost anyone to get a foothold on the property ladder and can be identified by the ResiShare sticker on the ‘For Sale’ sign and in other forms of advertising.

Co-owners receive monthly rental income in ratio to the percentage owned. ResiShare also has a built-in secondary sale mechanism for co-owners, as there is always someone willing to purchase an income-producing asset that has potential future capital growth.


 

The benefits in using of ResiShare?


It simply makes sense to buy & sell property the ResiShare way, because not everyone wants to, needs to or can afford to own 100% of an investment property. ResiShare lets an investor own anywhere from 10%, through to 100% and they receive monthly rental income in ratio to the percentage owned.


“Whether it's a home in the suburbs, a townhouse or an apartment, ResiShare provides a simple, safe & reliable way for homebuyers, investors, or anyone, to get a foothold on the property ladder.” 


A ‘managed investment’: All our listed properties, if purchased by a number of co-owners, are managed by a local real estate agent (or resident letting agent) to deliver the best possible returns.


SELLERS are able to tap into a much larger buyer demographic. If your property fits our criteria we have investors, seeking monthly rental income, ready to move their cash out of shares, bonds & fixed term deposits and into a residential investment property like yours.

 

CRITERIA: ResiShare investors prefer the new or established residential property that has strong rental potential or an existing tenant, low maintenance and future capital growth potential.


More ways to get your property SOLD! By listing with an accredited ResiShare agent, your property can be sold either to a handful of co-owners, or to a single buyer in the usual way, on a whichever occurs first basis.


Secondary Sales – No worries: Each ResiShare listed property has on-going provision for any co-owner to sell their fractional interest at any time during the term of their investment if needed.


 

ResiBonds for small-scale property projects

 

Residential investment bonds (ResiBonds) are a type of hybrid security that developers, builders or renovators can issue to investors to fund a small-scale residential development project.


For developers, builders or renovators, ResiBonds are a viable alternative to Bank lending, which has become more difficult to obtain.


For investors ResiBonds generally deliver higher returns of around 8% per annum or more compared to the low returns investors are getting from fixed term deposits.  ResiBonds are short-term investments of between 12 to 36 months.


A ResiBond is a written promise, legally enforceable; to pay on demand, or on one or more specified dates, a specified sum. The note sets forth the terms and conditions of the loan arrangement between the individual or company (issuing the ResiBonds) and the investor.


ResiBonds are primarily a debt instrument, but can be converted into bricks & mortar at the discretion of the investor. This enables astute investors to acquire an (ResiShare) interest in a property at wholesale rates.


ResiBonds offer non-traditional fixed income to investors from 10% per annum.


A developer, builder or renovator can issue ResiBonds to fund development of small, medium and large-scale, real estate projects such as high-rise, land acquisition and sub-division and townhouse developments in major Australian locations from Brisbane to Perth.


Small private proprietary companies can use ResiBonds to raise amounts from $100,000 up to $1,000,000.


An independent party (stakeholder) holds investor’s funds in trust until milestone and time-related Payment Claims are called upon as set out in the Building Contract.  The contractor submits a Payment Claim to the stakeholder for each milestone payment.


Practical completion is when the works are completed in accordance with the Building Contract and all relevant statutory requirements have been met (with the exception of minor defects or minor omissions).


Types of stakeholders:

  1. The Master Builders Association – Holding Account;
  2. A Real Estate Agent’s Trust Account;
  3. The investors’ solicitor’s Trust Account.


Note: As well as being used as a security account, stakeholder’s accounts are also used in case there is a monetary dispute between parties where a building contract is in place. The primary purpose of these accounts is to hold the disputed amount of money in trust until the matters are resolved.


The unlisted public company structure is a more suited structure for undertaking larger projects requiring from $1 million and up to $5 million or more. 


Redemption: Interest on ResiBonds is paid either monthly, quarterly, annually or cumulative to investors with a maturity date that dictates when the principal will be paid back in full (redeemed) together with any interest accrued (usually at project's end) or, part or all of the ResiBonds (plus any accrued interest) may be converted into bricks & mortar real estate ResiShare ownership on title (as a tenant-in-common) at the option of the investor(s).


There are at least three ways ResiBonds can be redeemed:


  • Once the proceeds of (retail) sale of the finished project have been received, or;
  • Bank financing has been received, or;
  • The lenders agree to convert their ResiBonds into bricks & mortar.


A ResiBond investment can provide a way for people to get a foothold on the property ladder at wholesale rates by converting the loan plus any accrued interest into ResiShare bricks & mortar. ResiBonds, if converted into bricks & mortar, waive any obligation of the borrower (the ResiBond issuer) to repay the principal and any accumulated interest.


ResiBond holders are often protected by a series of covenants such as a negative pledge, restrictions of indebtedness and gearing covenants and in a period of insolvency are entitled to recover unpaid principal and interest.


In Australia companies can raise capital via a compliant ResiBond offer under Section 708 of the Corporations Act 2001; as a small-scale offer which significantly reduces the high cost of preparing a corporate bond issue and listing on a national stock exchange.


To enquire about Accrutus Capital raising division and how to use ResiShare and ResiBonds, call us +61 2 9006 1327 or email; finance@accrutus.com.au 


Accrutus Capital (the Corporate Advisor) provides a business introduction service in accordance with ASIC Class Order CO [02/0273] (as of 24 March 2017, replaced by (Repeal and Transitional) Instrument 2017/186) which provides exemptions to the disclosure requirements under section 708 of the Corporations Act.

This press release does not constitute an offer of, or an invitation by or on behalf of, Accrutus Capital, the Corporate Adviser, or the Company to subscribe for, or purchase, any ResiShare investment or ResiBond Notes.