It is our privilege to present the inaugural National Housing Finance and Investment Corporation Annual Report. This report highlights our achievements in making a positive difference to Australians from across the housing spectrum.
The National Housing Finance and Investment Corporation (NHFIC) was established by the Australian Government in June 2018 and is dedicated to improving housing outcomes for Australians. In our first year we focused on establishing our operations, engaging with our stakeholders and progressing initial financing transactions to support the community housing sector.
During the year, an independent, skills-based Board was appointed and Executive team put in place. We recruited key staff with skills drawn from finance, legal and public policy backgrounds and developed and implemented credit, risk and other governance frameworks and policies to ensure sound decision-making practices.
The Board and Executive are highly experienced and are fully committed to delivering on NHFIC’s strategic objectives. An Audit and Risk Committee and a Bond Issue and Due Diligence Management Committee were established to assist the Board in its work, as well as a Credit Committee to facilitate objective oversight of credit assessments and proper credit risk management.
To ensure that NHFIC operates in the public interest, fit-for-purpose policies and procedures were developed and implemented that balance our public sector accountabilities, particularly being disciplined with taxpayers’ money, with our mandate to also meet commercial lending discipline.
During the year, the Board made decisions to offer finance of more than $450 million to community housing providers (CHPs) through the Affordable Housing Bond Aggregator (AHBA), funding more than 400 dwellings and supporting the ongoing operations of CHPs that are providing affordable homes and support services to Australians. The longer finance also provides more certainty for CHPs and reduces refinancing risks and costs.
In March 2019, NHFIC issued its first social bond of $315 million, which was four times over-subscribed. This was the largest social bond aligned to international principles issued in Australia to date and represented a significant milestone towards building a new investment asset class for affordable housing in Australia. The funds raised by the bond were lent to CHPs that are providing social and affordable housing. The strong investor demand enabled NHFIC to provide a fixed interest rate of under 3 per cent for 10-year, interest-only loans to CHPs involved in the first round of NHFIC loans.
During the financial year, we announced the upcoming launch of our Capacity Building Program. This is a $1.5 million grant program to help CHPs access NHFIC’s transformative financing to support the delivery of additional social and affordable rental homes.
The year ahead
We made significant progress in 2018–19 in setting NHFIC up to effectively and efficiently deliver on its purpose. We are working towards our second bond issuance with a strong pipeline of projects in the application phase from across Australia.
In 2019–20, we will roll out the Capacity Building Program providing grants to assist tier 2 and 3 CHPs with the upfront finance and business planning work required to support a NHFIC loan application. This will broaden the range of CHPs successfully accessing NHFIC finance.
Based on the progress we have made, the support from various stakeholders and the strength of our organisation, we are confident that NHFIC will continue to grow and support affordable housing outcomes for Australians. Our Corporate Plan 2019-20 also outlines how we will build on the initiatives and relationships developed during our first year of operation.
We look forward to helping improve housing outcomes for Australians and contributing to efforts to increase the supply of affordable housing.
Signed for and on behalf of the members of the Board in accordance with a resolution of the Board and in accordance with Section 46 of the Public Governance and Performance Accounting Act 2013 (PGPA Act).