A novel solution to financing a house purchase is shaking up the market in Auckland, writes Maria Slade.
A private property developer has set up a scheme to help struggling home buyers into Auckland's crazy housing market. Ockham Residential has launched a shared equity scheme whereby owner-occupiers of its apartments can get an interest-free, 10-year loan equal to 15 per cent of the purchase price.
The setup saves the homebuyer a chunk of their housing costs, allowing them to get into a property they otherwise might not have been able to afford, Ockham co-owner Mark Todd said. Ockham aims to sell up to a third of the 33 apartments in its latest development, The Daisy in the city's Mt Eden district, on this basis.
The developer has established the scheme in conjunction with its education-based charity, the Ockham Foundation. "We can only offer this because effectively part of each project is built by a charitable foundation," Todd said.
Scott Figenshow, director of Community Housing Aotearoa which represents the social housing sector, said there were a number of existing shared equity schemes run by not-for-profit organisations, but one set up by a developer was less common. A buyer purchasing an apartment for $600,000 for example, with a 25 per cent deposit, would usually have to take out a mortgage for the other 75 per cent or $450,000. But if they take part in the new scheme, they only borrow $360,000 because Ockham puts in the other $90,000. This saves the owner 20 per cent on their mortgage servicing costs over the life of the 10-year loan.
Ockham gains if the apartment increases in value, as the buyer must pay back the 15 per cent at whatever the property is worth at the time of repayment. Other rules mean they can repay the loan at any time within the decade in amounts of no less than a third, and borrowers must live in the property for seven of the 10 years.
The one and two bedroom Daisy apartments are up to 56sqm in size and range in price from $410,000 to $660,000. The site is a Special Housing Area (SHA) and construction is due to start in April. Ockham also plans to offer its shared equity scheme in another SHA it is developing on former Auckland Council land next to Avondale Racecourse.
The Ockham Foundation is not a housing charity, but an education-focused entity that aims to build a school. The shared equity scheme is a means of helping to fund that, Todd said. He and his business partner, Houston-based former investment banker Ben Preston, set up the foundation because "we're both really annoyed about the narrowness of the public discourse", he said. "Ultimately we would like to set up an education based institute that supports students to think independently, creatively, and also to foster a sense of social justice among students," he said.
Ironically the housing market was an area where the full range of solutions was not being pursued, he said. "Its cost relative to income has doubled in the last 10 years and everyone's holding their hands up going, 'can't do anything about it'. You imagine if the literacy or numeracy rates halved over a 10-year period, there'd be a public outcry."
The idea is that Ockham Residential and the Ockham Foundation jointly build the developments, and the 15 per cent shared equity is held by the foundation. That asset, released over 10 years, would help the foundation fund a school. The novel structure had not been easy to set up and Ockham had spent around $100,000 in legal fees, Todd said.
Figenshow said the New Zealand regulatory environment hadn't kept pace with new solutions to the housing crisis. This had been seen when the Queenstown Lakes Community Housing Trust, which offers a shared equity scheme, lost its charitable status in 2011. "We have an environment of significant housing need across the continuum, parties have responded with innovation, and our regulatory system has been slow to adequately handle that innovation," he said. Scaling up initiatives such as shared equity schemes was always a matter of funding, and it was something the country should be encouraging through robust structures, he said. "We need to be operating more housing choices ."
The 2016 Ockham New Zealand Book Awards will be judged by 12 eminent academics, writers, journalist, commentators, former publishers and booksellers from around New Zealand; a three-fold increase on the number of judges in previous years which reflects the Awards’ new judging structure.
Each of the Awards’ four categories - Fiction, Poetry, General Non-Fiction and Illustrated Non-Fiction - and the awards for Best First Book in those categories, will be judged by a panel of three judges, all specialists in their fields. A Maori language adviser will judge the Maori Language Award.
The judges will announce their longlist finalists on November 25, 2015, and their shortlist on March 8, 2016.
New Zealand Book Awards Trust chairwoman, Nicola Legat, says the judges selected for the Ockham New Zealand Book Awards are second-to-none.
“Authors and publishers can expect to receive the rigour and respect from this year’s line-up that their books deserve. Rather than four judges reading 150 or more books, as has been the case previously, these specialists will read only the books in their category, allowing for a more detailed examination of the works,” she says.
The Fiction category, whose $50,000 prize is now known as The Acorn Foundation Literary Award, will be judged by distinguished writer Owen Marshall CNZM; Wellington bookseller and reviewer Tilly Lloyd, and former Director of the Auckland Writers Festival and Creative New Zealand senior literature adviser Jill Rawnsley.
The Poetry Prize will be judged by former Auckland University Press publisher Elizabeth Caffin MNZM; James K Baxter expert Dr Paul Millar, of the University of Canterbury, and poet and University of Auckland academic Dr Selina Tusitala Marsh.
The General Non-Fiction Prize will be judged by Metro Editor-At-Large Simon Wilson; Professor Lydia Wevers, literary historian, critic and director of the Stout Research Centre at Victoria University of Wellington, and Dr Jarrod Gilbert, a former Book Awards winner for Patched: A History of Gangs in New Zealand, of the University of Canterbury.
The Illustrated Non-Fiction Prize will be judged by former publisher Jane Connor, publisher of the magisterial The Trees of New Zealand, which won the Book of the Year award in 2012; Associate Professor Linda Tyler, Director of the Centre for Art Studies at The University of Auckland, and Leonie Hayden, the editor of Mana magazine.
“It’s always an honour to be invited to judge these prestigious and important awards but also a major commitment of time.” says Ms Legat. “So we are enormously grateful that these very busy and skilled people are happy to demonstrate their support for the awards by diving in to months of reading and debate. We very much look forward to their final longlist, shortlist and winner selections.”
The winners will be announced on May 10, 2016, at an event at the Auckland Writers Festival.
Entries to the 2016 Ockham New Zealand Book Awards can be made via http://booksellers.co.nz/awards/new-zealand-book-awards/submissions . Books published between June 1, 2014 and December 21, 2015 are eligible for entry.
The New Zealand Book Awards is enormously grateful to the generosity of its partners: Ockham Residential, The Acorn Foundation and enduring funder Creative New Zealand.
The future of the country’s premier book honours - the New Zealand Book Awards - is now firmly secured, thanks to sponsorship from Ockham Residential.
The newly minted partnership provides the financial underpinning required for the prestigious literary awards to flourish, alongside support from the Auckland Writers Festival which will produce and showcase the awards event.
Ockham Residential co-founder and director, Mark Todd, says there are strong synergies between the Book Awards’ aims and Ockham’s philosophy.
“We set up the Ockham Foundation, an education-focussed charity, concurrently with our commercial development company. Right from the start, we knew we wanted to operate a business that had ambitions wider than profitability. Original thinking and critical thought are two key elements of public discourse we wished to promote by way of education."
“Currently we are working with the University of Auckland to fund First Foundation Scholars studying science and we are funding two postgraduate scholarships in Statistics. We recently funded an outdoor classroom and nature trail at Grey Lynn Primary School."
“Partnering with the New Zealand Book Awards in their pursuit of critical thought, creativity and literary excellence is a great fit for us,” says Mr Todd.
The Ockham Residential sponsorship announcement comes just weeks after the announcement of a $50,000 prize for the top adult fiction work each year, to be provided by Tauranga community organisation, the Acorn Foundation, on behalf of one of its donors.
New Zealand Book Awards Trust chairwoman, Nicola Legat, says Ockham Residential is a truly outstanding sponsor.
“To have an organisation so philosophically aligned to the awards makes for a robust and rewarding partnership for us all. We look forward to a long and happy association.”
The New Zealand Book Awards winners will be announced at an event during the country’s largest literary gathering - the Auckland Writers Festival - in May 2016. As part of its awards sponsorship, Ockham also joins the suite of Auckland Writers Festival gold partners.
“It is so heartening when businesses recognise the value of working with the literary arts,” says Festival Director Anne O’Brien.
“The Auckland Writers Festival attracts some of New Zealand’s and the world’s biggest writing names. With attendance growing exponentially year-on-year (more than 62,000 in 2015), we are a future-focussed marquee proposition for businesses.”
There are four main awards categories: Fiction, Poetry, General Non-Fiction and Illustrated Non-Fiction and, should there be sufficient entries, a Māori Language category. Three Best First Book Awards are also given.
Each category will be overseen by specialist judges, three per category, plus a Māori language adviser for the Māori language award.
The judges will select a longlist of around eight books in each category, which will be announced on November 25 2015. The shortlist of four books in each of the categories will be announced in early March 2016.
Entries to the 2016 Ockham New Zealand Book Awards open today via http://booksellers.co.nz/awards/new-zealand-book-awards/submissions . Books published between June 1, 2014 and December 31, 2015 are eligible for entry.
The New Zealand Book Awards are the country’s premier literary honours for works written by New Zealanders. First established in 1968 as the Wattie Book Awards (later the Goodman Fielder Wattie Book Awards), they have also been known as the Montana New Zealand Book Award and the New Zealand Post Book Awards. The honours, now given for Fiction, Illustrated Non-fiction, General Non-Fiction and Poetry, as well as for Best First Book and Māori language, are governed by the New Zealand Book Awards Trust (a registered charity). Members of the Trust are Nicola Legat, Karen Ferns, Paula Morris, Kyle Mewburn, Stella Chrysostomou, David Bowles and Julia Marshall. Creative New Zealand is a significant annual funder of the awards.
The Trust also administers the New Zealand Book Awards for Children and Young Adults and National Poetry Day. Sponsors are still being sought for these awards.
Developers of a new Auckland apartment block are building without pre-sales and offering 15% interest-free 10-year vendor finance to owner-occupiers. The 60-unit Hypatia residential development in the central suburb of Grafton is being developed by Ockham Residential and Ockham Foundation, a not-forprofit charity focused on education.
One-third of the apartments will be sold under the interest-free vendor package for the six-level development. The interest-free loan is for the amount equal to 15% of the purchase price. Ockham Residential director Mark Todd says the development can start without presales as the company is well funded by private equity and the vendor finance package is a genuine business deal.
“We have set up a facility, so owner-occupiers who have a 20% deposit can take the interest-free loan, go to the bank and negotiate a 65% mortgage, instead of the usual 80% mortgage. “This will result in a weekly reduction of 18.75% on their mortgage servicing costs for up to 10 years,” Mr Todd says. The vendor finance package can be paid back at any time within the 10-year time limit either at the greater of the issued value or 15% of the apartment’s value at the time of repayment. Mr Todd says vendor finance can only be offered in a charitable environment and it has been done to benefit the Ockham Foundation. “We have been working on this concept for 18 months with tax lawyers and charity specialists.”
“The objective is to build a capital base through property, such as Dilworth has done over the past 20 years, to carry on charitable work in the education field. It was always our intention to do this when we set the business up.” Mr Todd says he and his business partner Benjamin Preston want to prove they can do something different as well as show apartment development can be profitable.
“If we are successful in proving this concept, we will use it on other projects. It is a sensible piece of business and banks like it as it lowers funding costs for buyers. Potentially it will allow us to scale up the foundation."
Entry prices for the two levels of basement parking and four levels of one, two and three bedroom 48sq m to 145sq m apartments start at $427,000, going up to $2 million for the most expensive. There will only be eight apartments at the most in the development under 50sq m. Many banks will not lend on apartments under 50sq m. Mark Todd and Ben Preston set up Ockham Investments the day after Lehman Bros crashed at the beginning of the global financial crisis. They named their company after Ockham’s Razor (a principle devised by mediaeval monk William of Ockham who suggested the simplest answer is often correct). In keeping with their theme, they have given their developments the names of famous mathematicians and physicists. The latest development is called Hypatia after a 5 century Greek philosopher and mathematician.
Mr Todd says the foundation’s money is spent on scholarships to foster a sense of justice in students for social problems. “There are myriad solutions for social problems but debate has been narrowed on the subject largely as a result of the wealth gap. “We want to encourage students to think for themselves on these and other issues,” Mr Todd says.