Residual Stock? We’re Buying and Lending!

Unlocking capital at the completion of a development project remains a significant challenge for many Property Developers in the current market.

With interest rates remaining high and housing affordability still a lingering problem, a paradox exists in Australia in that developers have stock to sell, and buyers are keen to acquire but both are finding it hard to meet on price because buyers are struggling with deposits and servicing requirements.

With many Developers looking to residual stock loans to help retire remaining debt through a wholesale exit or holding on to that stock in the hope that market conditions improve, a new solution has just been launched to try and free up this sector of the market and it is unique.

Working exclusively with the charity Platypus Impact Housing Australia Limited (“PIHA”) Semper is seeking development projects in which it can fund PIHA’s acquisition of multiple apartments or townhouses in metro areas (up to 30 units per development).

Under PIHA’s unique scheme developers sell in bulk to PIHA at full market price and enjoy generous tax benefits for doing so. After PIHA acquires the properties it on-sells to investors who place tenants to some units under an affordable rental scheme, providing investors tax benefits and purchase prices at discount to market value without affecting the contracted market value. This is important to developers. PIHA also sells units to buyers under its shared-equity scheme where the PIHA retains an agreed percentage in a way that reduces the deposit burden and lowers the cost of mortgage servicing for the buyer.

Government housing affordability initiatives take longer than an electoral cycle to complete which leaves them vulnerable to changes in political strategy, but this scheme invigorates existing stock now and puts it to immediate use while providing immediate benefits to the entire supply-chain. PIHA’s scheme also offers affordable rental accommodation in a manner recent government initiatives do not.

This initiative suits any developer holding residual stock, but the tax benefits are highest for those who have not applied the Margin Scheme. This also suits financiers of developments who are keen to see a reduction in exposure to developments with lingering stock.

If devolopers, or their financiers, are interested to discuss refinance or bulk purchases of residual stock, call Semper TODAY!