Around the country, the affordability of housing is a key and growing concern for many people. It’s a problem not only for first home buyers and key workers on minimum wages, who are often the ‘go to’ for sensationalised media, but also a concern for a growing number of Mum and Dad and the smaller portfolio property investors, who are worried about housing affordability for their children and future generations.
However, there is an opportunity for property investors to rent their property out in the normal fashion, whilst at the same time, influence the market by making a positive difference to the community. Enter; the “Social Enterprise Real Estate Agency”. These real estate agents operate like any other agents in the community, the only difference is they tend to be owned and operated by not-for-profit Community Housing Providers (usually also registered charities), thus distributing their profits back to their charitable parent entities.
Over the past 10-15 years significant interest and growth in ethical investments has been through superfunds and other direct investment options in shares and managed funds. Investors who also hold property, have not had many options to use that asset in a similar fashion – until the rise of the social enterprise real estate agents.
How does it work and what is the catch? From our enquiries and research, there is little reason why an owner of an investment property wouldn’t choose a social enterprise real estate agency. Fees are very competitive and the services on offer are the same as any agency. The kicker is, because they operate as social enterprises, their profits go back (in most cases to the Community Housing Provider parent companies), to create and develop purpose built affordable rental housing, or other tenant programs which supports those in the community most in need.
We spoke with Ashleigh Williams, the Business Manager at Key2 Realty based on The Central Coast of NSW, “At Key2 Realty, our profits are directed to three programs operated by our parent Pacific Link Housing for those less fortunate being, a learner driver program, a scholarship program and a sports and wellbeing initiative. We have received immense support from investment property owners and grown a rent roll that is now over 200 properties in less than 3 years, by offering expert services, and competitive management fees to our landlord clients”.
Whilst every social enterprise operates differently, most have not yet delved into property sales, rather, sticking to what they do well, successfully managing rent rolls of all sorts of property types on the owner’s behalf.
Just like any real estate agent, the bread and butter is managing everyday rental properties on behalf of investment property owners. However, in addition to distributing profits to their parent company charities, some social enterprise real estate agents can bring together organisations who headlease residential rental properties, such as disability organisations, not for profits and community housing providers, who in turn can offer long term leases to sophisticated property investors and developers.
Other offerings for the ethical property investor unique to these agencies is to take advantage of tax breaks such as the ‘additional Capital Gains Tax (CGT) discount for affordable housing’ (https://www.ato.gov.au/Individuals/Capital-gains-tax/Property-and-capital-gains-tax/CGT-discount-for-affordable-housing/?anchor=Communityhousingproviders#Communityhousingproviders) which can reduce their CGT by an extra 10%, as uniquely facilitated by these social enterprises.
There are more ‘win win’ opportunities on offer, contact a social enterprise real estate agency in your area.
Listed below are some examples of the leading social enterprise real estate agencies that are operating in key property markets around the country. At The Fifth Estate, we encourage you to consider these organisations if you own a rental investment property in these areas:
- QLD, Sunshine Coast: https://purposerealestate.com.au/
- QLD, Brisbane: https://elevateresidential.com.au/
- NSW, Newcastle / Central Coast: https://www.key2realty.com.au/
- NSW, Sydney: https://www.echorealty.com.au/
- VIC, Melbourne: https://www.homegroundrealestate.com.au/
This list is not exhaustive nor an endorsement, and we encourage you to do your own research and source professional legal, tax and financial advice.