TY  - RPRT
AU  - Pinnegar, Simon
AU  - Easthope, Hazel
AU  - Randolph, Bill
AU  - Williams, Peter
AU  - Yates, Judith
CY  - Melbourne
L1  - internal-pdf://3655657097/Â鶹Éç_Final_Report_No137_Innovative financing.pdf
M3  - FR
N1  - This two-part research project aimed to appraise the future potential of Australian shared equity arrangements (Pinnegar et al. 2009 ; Pinnegar et al. 2008). In particular, it presented the strengths and weaknesses of a range of national and international shared equity models from the perspective of consumers; investigated how aware consumers and mortgage institutes are of shared equity models; assessed the viability and constraints of shared equity models; and identified the policy and regulatory frameworks that support the viability of shared equity models.
Definition of shared equity schemes
Shared equity schemes are broadly defined as initiatives where the value of a dwelling can be divided between more than one legal entity (Pinnegar et al. 2008 10). Their characteristics vary greatly and they can be operated by government or the private sector, subsidised or unsubsidised. Agreements between the participating parties can vary greatly (Pinnegar et al. 2008 10-11).
In most shared equity schemes the primary owner reserves ‘first rights’ to the property, retains the right to incrementally buy out the secondary interest and is responsible for full maintenance and other related costs (14). Often the secondary interest is referred to as the ‘passive’ or ‘silent’ partner. This structure differs from ‘shared ownership’ schemes, which divide all responsibilities and risks according to each entity’s share of ownership (Pinnegar et al. 2008 12-13).
Shared equity in Australia
46
Australia has a long history of public policy promoting homeownership. There are currently five Australian states and territories which operate shared equity schemes. All are modest in scale. The following table outlines the shared equity products available: SEE SYN 46
In all schemes the equity partner shares proportionally if the owner makes a loss on the property (Pinnegar et al. 2008 25). The following table details eligibility requirements of select schemes as reproduced from Pinnegar et al. (2008 26). SEE SYN 46

Two private sector-led shared equity models are also operating in Australia. The first is the Rismark Adelaide Bank Equity Finance Mortgage (EFM), which is not targeted. The bank operates as the traditional ‘silent’ partner, with the owner retaining full responsibility and rights to the property. Equity share loans are offered in well-performing suburbs, and rent and interest are not charged on the loan (Pinnegar et al. 2008 27). In lieu of rental or interest the bank is entitled to a greater share of capital gains, generally double that of the original share (i.e. a 20 per cent loan results in a 40 per cent share of capital gains).
This type of investment can assist households who many find themselves ‘stressed’ to meet the cost of day-to-day living on a traditional mortgage. It can also serve as a diversification strategy whereby purchasers invest what would be the additional mortgage payment elsewhere (Pinnegar et al. 2008 27). Thus, shared equity models can provide benefits beyond overcoming affordability barriers.
The second privately-operated model is Aussie Equity ESP, which operates as a mixed loan and equity arrangement (Pinnegar et al. 2008 28). The arrangement consists of 50 per cent loan and 50 per cent shared equity. No interest is paid on the equity component for five years, after which point the bank takes a 40 per cent stake of any capital gains and the owner can refinance or pay the bank out (28). Interest rates are determined on an individual basis depending on income and credit histories. The scheme is designed to assist those who would be unable to borrow a traditional mortgage (Pinnegar et al. 2008 28).
International shared equity programs
The United Kingdom
In recent year, interest in shared equity schemes has grown in the UK. A Shared Equity Taskforce was established in 2006 to assess the feasibility of government intervention and development of shared equity models, to encourage homeownership by social housing tenants, first-time buyers and key workers (Pinnegar et al. 2008 32). Two products were developed for implementation in England to encourage these groups to purchase homes in the open market (32).

NV  - 70394
PB  - Australian Housing and Urban Research Institute Limited
PY  - 2009
RP  - This two-part research project aimed to appraise the future potential of Australian shared equity arrangements (Pinnegar et al. 2009 ; Pinnegar et al. 2008). In particular, it presented the strengths and weaknesses of a range of national and international shared equity models from the perspective of consumers; investigated how aware consumers and mortgage institutes are of shared equity models; assessed the viability and constraints of shared equity models; and identified the policy and regulatory frameworks that support the viability of shared equity models.
Definition of shared equity schemes
Shared equity schemes are broadly defined as initiatives where the value of a dwelling can be divided between more than one legal entity (Pinnegar et al. 2008 10). Their characteristics vary greatly and they can be operated by government or the private sector, subsidised or unsubsidised. Agreements between the participating parties can vary greatly (Pinnegar et al. 2008 10-11).
In most shared equity schemes the primary owner reserves ‘first rights’ to the property, retains the right to incrementally buy out the secondary interest and is responsible for full maintenance and other related costs (14). Often the secondary interest is referred to as the ‘passive’ or ‘silent’ partner. This structure differs from ‘shared ownership’ schemes, which divide all responsibilities and risks according to each entity’s share of ownership (Pinnegar et al. 2008 12-13).
Shared equity in Australia
46
Australia has a long history of public policy promoting homeownership. There are currently five Australian states and territories which operate shared equity schemes. All are modest in scale. The following table outlines the shared equity products available: SEE SYN 46
In all schemes the equity partner shares proportionally if the owner makes a loss on the property (Pinnegar et al. 2008 25). The following table details eligibility requirements of select schemes as reproduced from Pinnegar et al. (2008 26). SEE SYN 46

Two private sector-led shared equity models are also operating in Australia. The first is the Rismark Adelaide Bank Equity Finance Mortgage (EFM), which is not targeted. The bank operates as the traditional ‘silent’ partner, with the owner retaining full responsibility and rights to the property. Equity share loans are offered in well-performing suburbs, and rent and interest are not charged on the loan (Pinnegar et al. 2008 27). In lieu of rental or interest the bank is entitled to a greater share of capital gains, generally double that of the original share (i.e. a 20 per cent loan results in a 40 per cent share of capital gains).
This type of investment can assist households who many find themselves ‘stressed’ to meet the cost of day-to-day living on a traditional mortgage. It can also serve as a diversification strategy whereby purchasers invest what would be the additional mortgage payment elsewhere (Pinnegar et al. 2008 27). Thus, shared equity models can provide benefits beyond overcoming affordability barriers.
The second privately-operated model is Aussie Equity ESP, which operates as a mixed loan and equity arrangement (Pinnegar et al. 2008 28). The arrangement consists of 50 per cent loan and 50 per cent shared equity. No interest is paid on the equity component for five years, after which point the bank takes a 40 per cent stake of any capital gains and the owner can refinance or pay the bank out (28). Interest rates are determined on an individual basis depending on income and credit histories. The scheme is designed to assist those who would be unable to borrow a traditional mortgage (Pinnegar et al. 2008 28).
International shared equity programs
The United Kingdom
In recent year, interest in shared equity schemes has grown in the UK. A Shared Equity Taskforce was established in 2006 to assess the feasibility of government intervention and development of shared equity models, to encourage homeownership by social housing tenants, first-time buyers and key workers (Pinnegar et al. 2008 32). Two products were developed for implementation in England to encourage these groups to purchase homes in the open market (32).

ST  - Innovative financing for homeownership: the potential for shared equity initiatives in Australia
T2  - Â鶹Éç Final Report No. 137
TI  - Innovative financing for homeownership: the potential for shared equity initiatives in Australia
UR  - /research/final-reports/137
ID  - 227
ER  -