1 00:00:03,870 --> 00:00:06,210 Sean Aylmer: Welcome to the Fear and Greed business interview. I'm Sean 2 00:00:06,450 --> 00:00:09,809 Sean Aylmer: Aylmer. Even with the post COVID downturn, house prices have 3 00:00:09,809 --> 00:00:13,200 Sean Aylmer: grown enormously in recent years. In Sydney, the median house 4 00:00:13,200 --> 00:00:15,450 Sean Aylmer: price has more than doubled over the last decade and 5 00:00:15,450 --> 00:00:18,780 Sean Aylmer: almost doubled in other capital cities, including Melbourne, Brisbane, and 6 00:00:18,780 --> 00:00:23,100 Sean Aylmer: Adelaide. It's created an affordability crisis for first home buyers, 7 00:00:23,130 --> 00:00:26,940 Sean Aylmer: but the crisis hits particularly hard for essential workers. These 8 00:00:26,940 --> 00:00:30,780 Sean Aylmer: are nurses, police, firefighters, teachers, people who can't work from 9 00:00:30,780 --> 00:00:33,479 Sean Aylmer: home and need to be near their place of work. 10 00:00:33,540 --> 00:00:36,419 Sean Aylmer: Also, people that we can't live without. But in many 11 00:00:36,420 --> 00:00:39,809 Sean Aylmer: cases, they're entirely priced out of their local market, forced 12 00:00:39,810 --> 00:00:43,530 Sean Aylmer: into long commutes, shared accommodation, or renting, which comes with 13 00:00:43,530 --> 00:00:46,470 Sean Aylmer: its own affordability problems. My guest today runs a fund 14 00:00:46,650 --> 00:00:49,259 Sean Aylmer: that aims to help these workers get their foot in 15 00:00:49,259 --> 00:00:52,439 Sean Aylmer: the door when it comes to property ownership. Tim Buskens 16 00:00:52,469 --> 00:00:56,580 Sean Aylmer: is the Chief Executive Officer of HOPE Housing, H- O- P- 17 00:00:56,580 --> 00:00:59,760 Sean Aylmer: E, HOPE Housing, a not- for- profit shared equity fund 18 00:00:59,760 --> 00:01:01,320 Sean Aylmer: manager. Tim, welcome to Fear and Greed. 19 00:01:01,710 --> 00:01:04,319 Tim Buskens: Thank you, Sean. Thanks very much for having me here, 20 00:01:04,319 --> 00:01:05,459 Tim Buskens: and thanks for that introduction. 21 00:01:07,020 --> 00:01:11,429 Sean Aylmer: Before I jump into how HOPE Housing works, how bad 22 00:01:11,430 --> 00:01:16,140 Sean Aylmer: is the affordability crisis for essential workers? Because unlike many 23 00:01:16,140 --> 00:01:19,500 Sean Aylmer: of us, like myself, who I can work remotely, they 24 00:01:19,500 --> 00:01:23,190 Sean Aylmer: can't. So how much does that resonate in terms of affordability? 25 00:01:23,819 --> 00:01:28,409 Tim Buskens: Yeah, that's a great question, Sean. And we have, without 26 00:01:28,410 --> 00:01:33,480 Tim Buskens: doing any marketing, without doing any promotion, 3, 000 essential workers 27 00:01:33,480 --> 00:01:36,720 Tim Buskens: in Sydney alone have sought out HOPE Housing and are 28 00:01:36,720 --> 00:01:39,690 Tim Buskens: sitting on our waiting list looking for help. If I 29 00:01:39,690 --> 00:01:44,520 Tim Buskens: look at the last census data, Sean, there's 400,000 essential 30 00:01:44,520 --> 00:01:49,830 Tim Buskens: workers in Sydney, of which 75% can't get into homeownership. 31 00:01:49,890 --> 00:01:55,770 Tim Buskens: 75% cannot get into homeownership. And those that are in 32 00:01:55,770 --> 00:02:00,630 Tim Buskens: homeownership, those lucky few that are in homeownership, do you know how long it 33 00:02:00,630 --> 00:02:03,269 Tim Buskens: takes them to get into work? Over an hour on 34 00:02:03,270 --> 00:02:06,810 Tim Buskens: average. That massive, massive issue. 35 00:02:07,290 --> 00:02:09,810 Sean Aylmer: Okay, so let's take a step back. What does HOPE 36 00:02:09,900 --> 00:02:13,590 Sean Aylmer: Housing do? What's your goal and how do you do it? 37 00:02:14,460 --> 00:02:17,609 Tim Buskens: Well, I guess as we've sort of set up that 38 00:02:17,610 --> 00:02:21,960 Tim Buskens: introduction, Sean, I mean, really simply, our goal, our mission, 39 00:02:22,079 --> 00:02:27,600 Tim Buskens: is to support those essential workers into homeownership close to 40 00:02:27,600 --> 00:02:31,020 Tim Buskens: where they work. So not only are we getting them 41 00:02:31,020 --> 00:02:35,459 Tim Buskens: into homes sooner by supporting with the homeownership, they're actually 42 00:02:35,460 --> 00:02:38,698 Tim Buskens: getting from work back home sooner. We're going to reduce 43 00:02:38,700 --> 00:02:42,600 Tim Buskens: their travel time, enable them into homeownership, put them on 44 00:02:42,600 --> 00:02:46,500 Tim Buskens: the path that we all aspire to. We've delivered a 45 00:02:46,500 --> 00:02:53,580 Tim Buskens: shared equity solution, which essentially comes alongside the bank and their mortgage 46 00:02:53,758 --> 00:02:57,958 Tim Buskens: and their deposit, and co- invests as a silent partner 47 00:02:58,139 --> 00:03:01,679 Tim Buskens: with the homeowner into a property that they're on title 48 00:03:01,680 --> 00:03:05,669 Tim Buskens: for and they can live in as their own. How it 49 00:03:05,669 --> 00:03:10,290 Tim Buskens: works, it actually is quite simple. It's no different right 50 00:03:10,290 --> 00:03:14,549 Tim Buskens: now to homeowners that won't go into their bank. In 51 00:03:14,549 --> 00:03:18,089 Tim Buskens: their bank, they apply for their mortgage, the bank determines ... 52 00:03:18,090 --> 00:03:21,149 Tim Buskens: And we've got a partner bank, our initial banking partner 53 00:03:21,150 --> 00:03:24,510 Tim Buskens: is Police Bank, a mutual bank in Sydney. The bank 54 00:03:24,510 --> 00:03:28,499 Tim Buskens: determines what the loan will be based on the homeowner's 55 00:03:28,650 --> 00:03:33,360 Tim Buskens: financial criteria. Because this is about affordability, not putting people 56 00:03:33,360 --> 00:03:37,080 Tim Buskens: into homes that they can't afford. The bank determines the 57 00:03:37,500 --> 00:03:41,940 Tim Buskens: home mortgage and the financial criteria. And if they can't 58 00:03:41,940 --> 00:03:44,549 Tim Buskens: support that homeowner into the home that they wish to 59 00:03:44,550 --> 00:03:47,910 Tim Buskens: buy, then that bank will pass them on to HOPE, 60 00:03:47,940 --> 00:03:52,199 Tim Buskens: HOPE will assess them. For our criteria, they're a essential 61 00:03:52,199 --> 00:03:56,610 Tim Buskens: worker. And then with the essential worker, we'll help them 62 00:03:56,610 --> 00:03:58,290 Tim Buskens: find the home closer to where they work. 63 00:03:59,040 --> 00:04:01,710 Sean Aylmer: So the shared equity model, if it's ... Let's take a 64 00:04:01,710 --> 00:04:04,260 Sean Aylmer: worked example. Let's say the home is, I'm going to 65 00:04:04,260 --> 00:04:05,849 Sean Aylmer: say a million dollars only because the numbers are a 66 00:04:05,849 --> 00:04:10,080 Sean Aylmer: lot easier. It's a million dollars, and they are passed 67 00:04:10,080 --> 00:04:13,980 Sean Aylmer: to HOPE Housing. Is it, how much do you take 68 00:04:13,980 --> 00:04:15,780 Sean Aylmer: in terms of shared equity? Do you come up with 69 00:04:16,320 --> 00:04:19,320 Sean Aylmer: 50% of that to pay that, or how does it work? 70 00:04:20,160 --> 00:04:25,620 Tim Buskens: Yeah, basically we look up towards 50%. So the homeowner 71 00:04:25,620 --> 00:04:28,500 Tim Buskens: will have their mortgage and their deposit, and then we'll 72 00:04:28,500 --> 00:04:31,560 Tim Buskens: be looking to support them up to 50. Let's take 73 00:04:31,680 --> 00:04:34,950 Tim Buskens: Sophie as an example, a nurse that we recently helped 74 00:04:35,580 --> 00:04:38,159 Tim Buskens: obtain a home close to an inner city hospital where 75 00:04:38,160 --> 00:04:42,238 Tim Buskens: she worked. She already had a mortgage that was approved 76 00:04:42,300 --> 00:04:43,980 Tim Buskens: by one of the Big Four, one of the four 77 00:04:43,980 --> 00:04:49,049 Tim Buskens: majors, of 630,000. That really not only put her under 78 00:04:49,050 --> 00:04:53,010 Tim Buskens: some financial stress because she was really stretching herself to 79 00:04:53,010 --> 00:04:56,969 Tim Buskens: borrow that amount, it also put her into a purchasing 80 00:04:56,970 --> 00:05:01,650 Tim Buskens: power of around 700K. And 700K in Sydney, particularly in the 81 00:05:01,650 --> 00:05:04,649 Tim Buskens: city, is not going to get Sophie anything. So when 82 00:05:04,650 --> 00:05:07,829 Tim Buskens: she came to Police Bank, our partner bank, we immediately 83 00:05:07,860 --> 00:05:11,849 Tim Buskens: wanted to make her mortgage more affordable. They reduced it 84 00:05:12,450 --> 00:05:16,380 Tim Buskens: down to 450, reduced her mortgage down to 450. Then 85 00:05:16,380 --> 00:05:19,678 Tim Buskens: with her deposit on top of that and then with 86 00:05:19,678 --> 00:05:23,010 Tim Buskens: HOPE's help, that enabled her to buy a two- bedroom 87 00:05:23,010 --> 00:05:28,440 Tim Buskens: apartment in Kensington for around 930. Their real numbers, that's a 88 00:05:29,010 --> 00:05:32,729 Tim Buskens: real example in a way that HOPE helps. So we 89 00:05:32,730 --> 00:05:35,580 Tim Buskens: come alongside that mortgage and help her into the apartment 90 00:05:35,610 --> 00:05:37,889 Tim Buskens: by reducing her financial commitments. 91 00:05:38,670 --> 00:05:42,779 Sean Aylmer: In that instance, does HOPE Housing pay the hundreds of 92 00:05:42,779 --> 00:05:45,390 Sean Aylmer: thousands of dollars upfront to the bank so the actual 93 00:05:45,390 --> 00:05:48,480 Sean Aylmer: mortgage is smaller, or is it something that you're repaying 94 00:05:48,480 --> 00:05:50,010 Sean Aylmer: that mortgage along with Sophie? 95 00:05:50,970 --> 00:05:53,789 Tim Buskens: No. So what happens is the bank has its own 96 00:05:53,790 --> 00:05:57,810 Tim Buskens: mortgage and as arranged with Sophie. We'll turn up at PEXA 97 00:05:58,230 --> 00:06:02,460 Tim Buskens: when we eventually settle the house, or settle the unit 98 00:06:02,460 --> 00:06:06,960 Tim Buskens: in this example. We pay the vendor, the bank pays 99 00:06:06,960 --> 00:06:09,479 Tim Buskens: their mortgage and Sophie. So we are part of the 100 00:06:09,480 --> 00:06:13,259 Tim Buskens: transaction at the PEXA. We have a registered charge over 101 00:06:13,259 --> 00:06:17,339 Tim Buskens: the property. So we are there with our security at 102 00:06:17,339 --> 00:06:21,660 Tim Buskens: the transaction, but we're all party to that transaction. 103 00:06:22,140 --> 00:06:23,820 Sean Aylmer: Stay with me, Tim, we'll be back in a minute. 104 00:06:30,000 --> 00:06:33,480 Sean Aylmer: I'm speaking to Tim Buskens, Chief Executive of HOPE Housing. 105 00:06:35,039 --> 00:06:37,560 Sean Aylmer: And so at the end, let's say Sophie in 10 106 00:06:37,560 --> 00:06:42,060 Sean Aylmer: years wants to sell that place and it's worth $ 1 107 00:06:42,060 --> 00:06:45,150 Sean Aylmer: million. There's been no appreciation. Sorry, Sophie, I'm just doing 108 00:06:45,150 --> 00:06:47,849 Sean Aylmer: this for ease of numbers. What percentage of the house 109 00:06:47,849 --> 00:06:49,769 Sean Aylmer: does she get back, assuming she's paid it off? 110 00:06:50,099 --> 00:06:53,909 Tim Buskens: Yeah, so whatever equity share is, we participate in the 111 00:06:53,910 --> 00:06:56,820 Tim Buskens: capital growth on that basis. We don't take any more, 112 00:06:56,820 --> 00:07:00,240 Tim Buskens: we don't take any less. But what we've designed here, 113 00:07:00,240 --> 00:07:04,080 Tim Buskens: and this goes into, Sean, the real part of the 114 00:07:04,110 --> 00:07:08,128 Tim Buskens: HOPE system that's superior to other shared equity systems, we've 115 00:07:08,130 --> 00:07:10,320 Tim Buskens: designed it in a way that integrates with that bank 116 00:07:10,320 --> 00:07:14,070 Tim Buskens: mortgage. As I gave you that example, Sophie's already got 117 00:07:14,070 --> 00:07:17,190 Tim Buskens: headroom from year on. So she's not borrowing as much 118 00:07:17,190 --> 00:07:20,400 Tim Buskens: as one of the four majors would've lent her, she's 119 00:07:20,400 --> 00:07:23,489 Tim Buskens: borrowing much less. So we're not waiting 10 years for 120 00:07:23,490 --> 00:07:25,679 Tim Buskens: Sophie to sell the place. Sophie has now got the 121 00:07:25,679 --> 00:07:28,950 Tim Buskens: ability every single year, and we've got a process designed 122 00:07:28,980 --> 00:07:33,720 Tim Buskens: for that, every single year, Sophie can progressively buy us 123 00:07:33,720 --> 00:07:37,470 Tim Buskens: out. We value it at market, we set the price 124 00:07:37,470 --> 00:07:42,030 Tim Buskens: up at market and gives Sophie the opportunity to step 125 00:07:42,030 --> 00:07:44,400 Tim Buskens: into a home. That's not only great for Sophie, who's 126 00:07:44,400 --> 00:07:47,759 Tim Buskens: increasing her own ownership, it's great for investors who are 127 00:07:47,760 --> 00:07:51,390 Tim Buskens: able to liquidate their position along the way. Now what 128 00:07:51,390 --> 00:07:55,500 Tim Buskens: we find is most people, particularly in Sophie's example, are 129 00:07:55,500 --> 00:07:59,429 Tim Buskens: generally selling their homes around year three to four because 130 00:07:59,429 --> 00:08:02,670 Tim Buskens: they always want to upgrade, but we don't have to 131 00:08:02,670 --> 00:08:04,949 Tim Buskens: wait for her to sell. In fact, she can, in 132 00:08:04,949 --> 00:08:08,010 Tim Buskens: your example, never sell, but she'll progressively buy us out 133 00:08:08,010 --> 00:08:08,610 Tim Buskens: along the way. 134 00:08:09,240 --> 00:08:12,870 Sean Aylmer: Okay, so who's funding it? So you have family foundations 135 00:08:12,870 --> 00:08:14,520 Sean Aylmer: and high- net- worth individuals. Is that right? 136 00:08:14,639 --> 00:08:18,660 Tim Buskens: That's right. In Australian market, when you're starting something new, 137 00:08:18,660 --> 00:08:22,199 Tim Buskens: something really innovative, you've got to find those sources of 138 00:08:22,199 --> 00:08:25,860 Tim Buskens: wealth, sources of capital, the catylitical capital allocated, as I 139 00:08:25,860 --> 00:08:29,160 Tim Buskens: call them. That say, " Hey, this is something we are 140 00:08:29,160 --> 00:08:32,730 Tim Buskens: going to back to really make a difference." And that's 141 00:08:32,730 --> 00:08:36,629 Tim Buskens: really important because they not only get it up and 142 00:08:36,630 --> 00:08:40,289 Tim Buskens: running and get us an ability to launch our pilot, 143 00:08:40,920 --> 00:08:43,500 Tim Buskens: but it also enables us to deliver and prove the 144 00:08:43,500 --> 00:08:46,860 Tim Buskens: track record, show the machinery is working, show that something 145 00:08:46,860 --> 00:08:51,030 Tim Buskens: we are doing now, show that there's the 26 workers that 146 00:08:51,030 --> 00:08:54,208 Tim Buskens: are giving us the net promoter score of 100, show 147 00:08:54,210 --> 00:08:57,450 Tim Buskens: how they're satisfied with the system, how we integrate with 148 00:08:57,450 --> 00:09:01,200 Tim Buskens: the bank, and show their track record or returns that 149 00:09:01,200 --> 00:09:04,949 Tim Buskens: we're already delivering. And that's why, now that we're so 150 00:09:04,950 --> 00:09:08,580 Tim Buskens: happy with what we've done to date, we're opening it 151 00:09:08,580 --> 00:09:12,630 Tim Buskens: up for our next round of investors and taking it 152 00:09:12,630 --> 00:09:13,320 Tim Buskens: to the next level. 153 00:09:13,830 --> 00:09:17,759 Sean Aylmer: So Tim, in a sense, the pilot has proven the 154 00:09:17,760 --> 00:09:23,100 Sean Aylmer: theory, so you're open to presumably tens of millions of 155 00:09:23,100 --> 00:09:26,189 Sean Aylmer: dollars, hey, to actually start eating into that 3, 000 156 00:09:26,370 --> 00:09:28,468 Sean Aylmer: essential workers who need help with getting a home. 157 00:09:28,860 --> 00:09:30,929 Tim Buskens: Yeah. Well, on the run rate of what we've done 158 00:09:30,929 --> 00:09:35,010 Tim Buskens: today, that 3, 000 represents about a $ 1. 5 billion fund, 1. 159 00:09:35,010 --> 00:09:42,330 Tim Buskens: 5 billion. But we recognize that like with any business, 160 00:09:43,200 --> 00:09:45,569 Tim Buskens: we'll look at them, we'll look at that 3, 000, we'll make sure 161 00:09:45,990 --> 00:09:49,770 Tim Buskens: that they're all qualified. They all need our help, because 162 00:09:49,770 --> 00:09:52,858 Tim Buskens: again, it's important that going through the banking system, which 163 00:09:52,859 --> 00:09:55,559 Tim Buskens: is where they start, if they can get in on their 164 00:09:55,559 --> 00:09:58,230 Tim Buskens: own, that's what they should be doing because that's all 165 00:09:58,230 --> 00:10:01,588 Tim Buskens: about homeownership. If they need us, then we'll look at 166 00:10:02,160 --> 00:10:06,690 Tim Buskens: them to support. So there will be an assessment process 167 00:10:06,690 --> 00:10:08,970 Tim Buskens: around that. But yeah, it's a big number. 168 00:10:09,690 --> 00:10:12,000 Sean Aylmer: Congratulations, Tim. Thank you very much for talking to Fear 169 00:10:12,000 --> 00:10:12,539 Sean Aylmer: and Greed. 170 00:10:13,350 --> 00:10:15,480 Tim Buskens: Thank you, Sean. Thank you once again for having me, 171 00:10:15,480 --> 00:10:17,641 Tim Buskens: and I appreciate your time. 172 00:10:17,641 --> 00:10:21,900 Sean Aylmer: Thank you. That was Tim Buskens, CEO of HOPE Housing. This 173 00:10:21,900 --> 00:10:24,299 Sean Aylmer: is the Fear and Greed business interview. Join us every 174 00:10:24,300 --> 00:10:26,670 Sean Aylmer: morning for the full episode of Fear and Greed, Australia's 175 00:10:26,670 --> 00:10:29,399 Sean Aylmer: best business podcast. I'm Sean Aylmer, enjoy your day.