Andrea Levey, Manager HomeGround Real Estate Agency
On March 25th 2014, HomeGround Services launched Australia’s first not-for-profit real estate agency, HomeGround Real Estate (HGREA). The agency provides professional property management services for residential property owners in Melbourne and is the brainchild of Dr Heather Holst (CEO HomeGround Services). It is an innovative way to respond to the growing issue of housing affordability without the need to rely on government funding.
The main incentive to establish the agency came about as a direct result of a decrease in affordable housing in both the public and private rental sectors. HomeGround Services, as one of the main homelessness access points in the south and north of Melbourne were seeing more and more people who were unable to wait ten years on the public housing waiting list and who could not afford increasing rental prices in Melbourne. The housing and homelessness sector had already started to look to the private rental market to secure additional housing supply, to complement the range of housing responses required to end homelessness in Melbourne. HGREA is an exciting means to improve housing supply, to give people a practical way to help in the fight against homelessness while improving access to the private rental market for many people who may otherwise be homeless and priced out of this option.
Founding a not-for-profit real estate agency was a natural progression as HomeGround already had the necessary experience required having managed Office of Housing properties and head leased properties for the past 15 years. The establishment process included developing a business case and working out the logistics of becoming a registered real estate agency.
We were incredibly fortunate to have Phillipe Batters offer his services as the HGREA Principal on a pro bono basis. We were also able to secure seed funding from many philanthropic sources and local government grants. As this had never been done before we were in the position to attract a lot of interest from the media and the public.
HomeGround Real Estate operates on a model that essentially includes three tiers; commercial, affordable housing and philanthropic (tier one, two and three respectively).
The commercial tier provides property and tenancy management services just like any mainstream agency. The affordable housing initiative invites property owners to forego a percentage of their rental income (usually 25 percent) which enable us to offer a property at below market rent to low income tenants.
Finally, property owners are invited to forego all rental income and let us manage their property. We then use these tier three properties to house people on very limited incomes (usually income support recipients) who may have previously been homeless.
HomeGround Real Estate meets all regulatory and legal requirements and has a team of experienced, highly trained and dedicated staff ready to manage properties in both the commercial and affordable housing categories. At this stage we are only doing tenancy and property management with no sales and as such we are able to focus all our energies on getting the best management outcomes for the tenant and owner.
HomeGround Real Estate provides housing stability and security for people who might otherwise miss out in the private rental market. We advertise our full market rent properties (tier 1) on realestate.com and our website as well as on Facebook and if appropriate some student housing websites. We advertise the affordable housing properties (tier 2) in the same way but these properties are advertised as affordable housing and income limits apply. The social housing tenants (tier 3) are sourced through our Initial Assessment and Planning team and out Accommodation Options for Families team. We do not advertise these properties.
One question we are often asked by owners who approach us to manage their investment property is whether we will source a tenant for their property from our homelessness service. The short answer is no.
These properties are not within the price range of the clients who access HomeGround Services and as such they would not be appropriate.
We source tenants for these properties in the same way as any other agency and we check work references and previous tenancy references before making an offer.
In some ways we are able to be more flexible in that if we receive two applications for the same property and they are basically equal in terms of references and one was a single mother and the other was full time worker and they were both able to afford the property, we might strongly recommend the single mother to the owner whereas other agents may not.
We also recognise that one of the most negative aspects for tenants in private rental is the lack of any security of tenure. With most agents only offering a 12 month lease it is incredibly difficult to feel like you can make a place your home. We ask our owners if they would be willing to negotiate a longer lease for the tenants, thereby saving themselves some money by not having to pay re-letting fees or advertising fees every 12 months, while offering the tenants a longer more secure tenancy. We have found that most of our landlords are very open to this idea.
The initiative has also provided assistance to women and children fleeing family violence and individuals and families on low incomes who have been priced out of the private rental market.
The first 12 months has confirmed the need for a not for profit real estate agency that brings a new perspective to the property market. HomeGround Real Estate gives property owners an opportunity to give back to the community while receiving an industry standard service. We have been overwhelmed with the response and particularly with the number of people who choose to offer the property to us at a reduced rental, thereby making the property affordable.
We have a block of flats that is probably the best ‘working’ example of the model at work. The flats incorporate all three tiers. The owner was the first to come on board and offer us a property to manage. As a result of this relationship working we have since been given the whole block of four flats to manage. This block of flats houses an asylum seeker and his son who pay 25 per cent of their income in rent, a low-income father and school age son in another flat paying 75 per cent of the market rent. Another flat is rented out at full market rent and the last in the block is rented out as an affordable property with the owner forgoing 25 percent of the rental income.
One of the greatest things about HomeGround Real Estate Agency from my perspective is the flexibility and range of management opportunities that we can offer to people who approach us. We have been able to partner with a disability organisation who approached us not long after launching. Many of their clients were willing and able to move out of home but due to a lack of options were still living with their parents. We had an owner approach us with two fully disabled access units in Montmorency, she wanted to rent them out in the private market but faced barriers from traditional real estate agents. HomeGround Real Estate Agency took over the management of the properties, leased them to disability agency who then were able to sub-let them to their clients.
Another example of our ability to find tenants from a variety of sources other than the traditional means, is demonstrated by one of the first properties we were offered. This property had been vacant and on the market for approximately six weeks. There were two other agents advertising the property at the time that HGREA came on board.
I had previously spoken with a young person’s private rental brokerage worker wanting to access properties for her programs participants in the southern suburbs. This property met their requirements in terms of size, price and location. Through networks that traditional real estate agents would not have access to we were able to tenant the property with three young women one week after being approached.
The feedback from our tenants and landlords so far is that we are providing a great service. We have achieved significant growth since launching in March 2014 and we intent to continue to grow and make this initiative part of the solution to the serious affordable housing shortage facing us in Victoria and nationally.
Probably the question I have most been asked since we started HomeGround Real Estate Agency is why no one has ever done this before. It seems like such a no-brainer. It is wonderful to be part of a solution to the serious and ever growing issue of housing affordability. At the end of the day we are making a difference and we are getting homes for people that need them – and that is what it is all about.
Featured in Parity June 2015 Volume 28 – Issue 5 Dear Landlord: Private Rental and Homelessness(page 37)