What is co-housing?

Co-housing is defined as “an intentional community” of private homes built around shared facilities. These common spaces may include a common house with a shared kitchen and dining area where residents can cook and eat together.

There may be community gardens, playgrounds and recreational spaces. Some co-housing developments may even include communal swimming pools and movie rooms for residents to enjoy.

Each household in the community is independent and fully equipped with its own amenities, including private kitchens and baths. However, the idea behind co-housing is for neighbours to be part of a collaborative community.

Co-housing differs from regular retirement villages in that the community is owned and managed by the residents who live there.

The key benefits of a co-housing community are that residents may have the opportunity to collaborate over how it is set up, what amenities it includes and how much it costs.

Where did the idea originate?

The idea of co-housing started in Denmark in the 1960s. From Scandinavia, the concept spread to other parts of Europe, on to North America, and over to New Zealand and Australia.

Co-housing initiatives are now popping up in many parts of Australia, reinvigorating the concept of community. Seniors’ co-housing has been suggested as an alternative to aged care or retirement villages for those wishing to age in place.

What are the benefits?

Enthusiasts believe co-housing offers the following advantages:

• More meaningful relationships with neighbours.
• A feeling of belonging, in that you’re part of a community.
• Reduces loneliness and isolation by connecting you with others.
• A collaborative culture of sharing and caring.
• Maintenance tasks are divided among the community.
• Decisions affecting the community are based on the consensus.
• You still have privacy, as well as the support of your neighbours as needed.
• Reduces household bills, as expenses for shared space are divided between residents.
• Depending on your community, it may be less expensive than other housing options.
• Reduces your environmental impact thanks to a “greener” approach to living.

An example of a co-housing community in action

Cascade Cohousing in South Hobart is a great example of a thriving co-housing community. Established in 1991, there are currently 22 adults, ranging in age from young families to retirees, and six children living in 15 privately-owned properties (on strata title).

There’s a central common house with a shared kitchen, dining area, lounge, laundry, workshop and TV room. Three nights a week, the residents get together for a meal, and once a month they hold body corporate meetings and working bees for maintenance. There are fun activities on offer like film nights, games evenings and gardening.

You can find examples of other established and emerging co-housing communities on the Cohousing Australia website.

If you’re entering the next phase of life, co-housing may be the way to go. As your mortgage broker, we can help you secure the finance you need to start your exciting new chapter in an existing co-housing community, or even work with you and your chosen ‘community group’ to set one up. Please talk to us at Element Finance about your retirement lifestyle plans and goals today!

Interest Rate News

As expected, the Reserve Bank of Australia kept the cash rate on hold at 1.5 per cent again this month. There is some speculation that rates could start to rise toward the end of the year, provided the RBAs measures to improve inflation, employment and wages growth start to take effect.

Some local analysts are anticipating that lenders will soon start to raise rates outside of RBA movements, due to the rising costs of borrowing. Interbank lending rates (the rates that apply to Australian banks when lending money to each other) are on the rise in line with global money markets and are likely to affect home loan interest rates across the board at some point this year.

There is some good news, however. The Australian Prudential Regulation Authority (APRA) has lifted the 10% limit on property investment credit growth for eligible banks from July 1. This has resulted in some lenders cutting rates on interest-only loans already, so if you’re in the market for a property investment loan please call Element Finance.

Property Market News

Whilst our property markets had a healthy number of properties up for auction throughout May, clearance rates declined considerably and there was a general softening in home values.

For the week ending Sunday 03 June, (officially the final weekend in the busy autumn selling season), Victoria held the highest number of auctions at 1161, achieving a clearance rate of 62 per cent. NSW was next with 1001 scheduled auctions and a clearance rate of just 52 per cent. QLD held 273 auctions with a clearance rate of just 43 per cent. ACT held 107 auctions and cleared 66 per cent, and SA held 105 auctions and cleared 68 per cent. WA only scheduled 29 auctions and achieved a clearance rate of about 25 per cent, NT 11 auctions with a clearance rate of about 50 per cent and Tasmania only scheduled three auctions with no sales recorded.

According to CoreLogic, home values were softening in our larger property markets during the month ending May 31. Sydney home values fell by 0.22 per cent during the month and were showing a decline of 4.21 per cent since this time last year. Melbourne’s home values fell by 0.50 per cent but were still up by 2.22 per cent from this time last year. Canberra’s home values fell by 0.10 per cent last month but were up by 2.28 per cent YoY.

Home values also fell in Darwin by 0.22 per cent in May and are down by 7.88 per cent from this time last year. They also fell in Perth by 0.14 per cent in May and were down by 1.84 per cent since this time last year. Adelaide and Hobart are the only markets showing increases – Adelaide’s home values were up by 0.50 per cent in May and by 0.62 per cent since this time last year and Hobart is still proving to the outstanding performer, with home values up by 0.81 per cent in May and by 12.71 per cent since this time last year.

Winter is generally a quiet season, so we can expect to see a further slowing in auction numbers, clearance rates and home value rises in the next few weeks. This may provide a chance to pick up a bargain for those willing to brave the cold weather. If you need pre-approval on a loan as a first-home buyer, next home buyer, or property investor, please get in touch with Element Finance today!

However, when faced with the challenge of fitting years of accumulated stuff into a space that’s a quarter the size, it’s easy to come undone. In this article, we’ve put together some cool ideas for maximising every inch of your new small space home, to help you make it more liveable and drive up its value.

Get creative with storage

Before we even start talking about cool storage ideas, you’ll want to get tough on yourself and get rid of the stuff you don’t need. Consider a garage sale or selling it on eBay.

Once you’ve paired it back to the things you can’t live without, you can start thinking about incorporating clever storage solutions into the design of your home. Stairs are a hidden bonanza of wasted space that you can reclaim in a variety of different ways (check out these imaginative ideas on Buzzfeed).

Another great tip is to use space vertically, not horizontally – that means thinking of creative ways to make use of your wall and ceiling space instead of the floor. For example, try creating personality with floating wall shelves.

Use your furniture as extra storage Multifunctional furniture is also a great idea – look for a coffee table with a shelf under it for books, or one that converts into a desk. There are plenty of beds and sofas available with hidden storage underneath, and you can position attractive storage baskets to hide your clutter. Want to get even more creative? Consider a vertical wall bed that transforms into a revolving bookcase. Or this wall bed that converts into a home office or study.

Grow up!

If you love your garden, think vertical! There are plenty of fun ideas on Pinterest for small spaces and balconies, from pallet herb gardens to exotic-looking cactus displays. Click here for inspiration.

Conceal the laundry

Why not tuck your washer and dryer away inside a kitchen cupboard and reclaim the laundry for a different use? You might even like to include a fold-out drying rack and ironing board into the design for ultimate efficiency. Another option is to combine your bathroom and laundry into one, so that you can optimise the use of the plumbing.

Recess where possible

You could remodel the toilet and go for a wall-hung throne. By concealing the tank in the wall, you’ll save space and achieve a more modern look. When it comes to the bathroom, recessing cabinets and installing a pedestal basin will free up room. Another tip is to use neutral colours and larger mirrors to create the illusion of space.

Call us about financing your reno!

Renovating can do wonders to improve the liveability of a smaller home and boost its value – we hope these ideas help with your plans. If you’d like to know how you can finance your renovation dreams, please get in touch. You may be able to refinance and use the equity in your home, or you may benefit from a home loan with features such as a line of credit. There are all sorts of other finance options available, so talk to us at Element Finance and we’ll help you set the wheels in motion for your renovation project.

Taking on a boarder could be a viable way to help you pay your mortgage, but it won’t all be beer and skittles! If you’re going to take in a boarder, there are some very important implications to consider first, as we explain in this article.

The pros of having a boarder

• • Additional income
  • You can offset your household costs
  • Potential tax deductions for property expenses
  • The social factor.

The cons of having a boarder

• Loss of privacy
• Extra responsibilities as a live-in landlord
• The income may push you into a higher tax bracket
• You may be subject to Capital Gains Tax (CGT) when you sell
• Many lenders don’t take rent from roommates into account when assessing whether you can afford a home loan.

Legalities to consider

The money received from your boarder will generally be considered accessible income by the Australian Taxation Office (ATO), and you must declare it on your tax return. You may be able to claim deductions for expenses associated with renting out part of your home, such as interest on your mortgage. However, if you rent to a relative at a discounted or less than market rate, it can affect what you can claim. In some instances, payments from a family member for board or lodging may be considered a domestic arrangement and not rental income, so you may not be able to claim tax deductions.

You won’t have to pay Goods and Services Tax (GST) on the rent you charge, nor will you be able to claim GST credits. However, when it comes time to sell, you may not be entitled to the full main residence exemption from Capital Gains Tax (CGT) – generally you don’t pay this when you sell the home you live in. You can find more details via the ATO website, however, it’s wise to speak to your accountant about the financial implications before proceeding.

Precautions

It’s also important to familiarise yourself with your rights and responsibilities, and those of your boarder. Contact your local tenancy authority for advice. You’ll also need to follow the rules about lodging the bond with the residential tenancy authority in your state or territory.

Having a solid contract or tenancy agreement in place will help protect you, should things go wrong. The agreement should stipulate exactly what’s included (e.g. furniture and parking), when and how rent is due, details about notice required and room inspections, and bill arrangements. Also, consider your insurance needs. We partner with some of Australia’s leading insurance providers, so please ask us for help.

When interviewing candidates, be sure to ask plenty of questions and request references from previous landlords (even if it’s someone you know). Being clear from the start will help you avoid issues down the track. Talk openly about your expectations about things such as:

• privacy
• paying rent
• noise
• cleanliness
• overnight guests
• Lastly, before they move in, fill out a condition report and take photographic evidence.

Becoming a live-in landlord can help you pay off your mortgage and cover living expenses, whilst also allowing you to claim tax deductions in some instances. However, there are important implications to consider, which is why it’s so important to consult your accountant or financial planner first. If you’d like to know more about your finance options for purchasing your home, please speak to us at Element Finance. We can help you find a home loan that suits your specific financial needs and goals – and perhaps make it affordable without Cousin Jimmy’s contributions!

Step 1: Talk to us about your borrowing power

The first step involves a friendly chat with us about the finance set-up. We’ll run through your personal financial circumstances and help you determine your borrowing power – which is the amount a lender may be willing to lend you. Your borrowing power may be very different for an investment property than for a home to live in yourself.

Like all property purchases, you’ll need a deposit. If you already own your home and it has appreciated in value, or you’ve paid down your mortgage somewhat, you may be able to refinance to access equity to fund it. We can explain how this works and the kind of loan that will best suit your situation. We can also organise pre-approval so that you can set a purchasing budget and be confident a lender will come through with the finance when the time comes to start investing.

Step 2: Formulate an investment strategy

Ask yourself what your ultimate objective is – do you want to build a big investment portfolio of 10 properties or more and make a business out of it? Or are you more interested in concentrating on paying off your own home, perhaps using an investment or two on the side to generate some money to do it?

We recommend seeking advice from your financial planner or professional tax advisor when formulating your investment strategy. Maximising tax advantages is a big part of property investing and knowing what they might be in your personal situation is key. Ask us for a referral if you don’t already have a professional on board.

Step 3: Set your budget

There are many costs to factor into your budget when buying an investment property. The financial side of a successful property investment is a balance between costs, income, tax deductions and how they affect your overall cash-flow. The costs to factor in may include the following:

Initial costs

• • Deposit
  • Loan establishment fees
  • Lenders’ mortgage insurance (if you have less than 20% deposit)
  • Stamp duty (calculators are available here)
  • Conveyancing and legal fees
  • Building and pest inspection reports
  • Quantity Surveying fees – to create your Depreciation Schedule for the fixtures in the property, so you can maximise your tax deductions (after purchase).

Ongoing costs

• Rates/government taxes
• Insurance
• Mortgage repayments
• Body corporate fees
• Utilities not paid by the tenant
• Property management fees
• Repairs and maintenance costs.

Step 4: Do your research 

The key to buying the right investment property is to spend plenty of time researching. Property investors usually focus on two key financial returns – capital growth potential (which is the growth in the property’s value) and rental yield (the income the property will generate from the tenants).

These factors are driven by supply and demand, so try to find a property that will be in high demand by tenants and future potential buyers. Ask us for assistance with the right property market data to inform your property searches.

Once you’re set on a property, be sure to organise building and pest inspections. You’ll want to know that the property is structurally sound and free of unwanted guests before making an offer or going to auction.

Step 5: Finalise your finance

The final step involves us helping you secure an investment loan that suits your financial circumstances and goals. Ask us to get you pre-approval on a loan for the specific property you want to buy before you make an offer or buy it auction, so you can have a realistic ceiling price to work with during the negotiations.

This step is the most important one of all if you’re buying at auction – you will be required to put your deposit down on the spot and it is not refundable if the lender does not agree the property is worth the price you paid and won’t lend the amount you need to complete the purchase. If you are buying under offer, we recommend you include a ‘subject to finance’ clause in the sales contract, to cover this contingency.

If you’re thinking about joining the thousands of Australians building wealth for the future through property investment, don’t wait to give Element Finance a call. Our mortgage brokers are here to give you expert guidance about investment loans and structuring your finance. Talk to us today!