The Government has released for public consultation a draft Investment Mandate for the proposed National Housing Finance and Investment Corporation (NHFIC), a new Commonwealth entity dedicated to improving housing outcomes for Australians.
The draft Investment Mandate provides details of the activities of the NHFIC and is issued under the NHFIC Bill. The establishment of the NHFIC was announced in the 2017-18 Budget and effect will be given to this commitment through the National Housing Finance and Investment Corporation Bill 2018 (NHFIC Bill).
The Investment Mandate provides a mechanism for the Government to articulate its broad expectations of how the NHFIC invests and is managed by the independent, skills-based Board.
Key aspects of the Investment Mandate are:
- It provides directions about the two core functions of the NHFIC which will support investment in Australian housing. The NHFIC's core functions are:
- the establishment and operation of an Affordable Housing Bond Aggregator to provide finance to registered community housing providers by aggregating their lending requirements and issuing bonds to institutional investors; and
- the establishment and operation of the National Housing Infrastructure Facility to provide grants and finance to support the creation of housing-related infrastructure.
- The IM provides detail on the NHFIC, specifically eligible projects and project proponents, the financing mechanisms and lending criteria related to its activities.
- It authorises the NHFIC to provide support to registered community housing providers to develop their financial and management capabilities.
- It states that, of the $1 billion allocated to the NHFIC's Infrastructure Facility function for loans, investments and grants, a combined cap of $175 million applies to the infrastructure grants and capability building activities.
- The IM provides that up to $150 million of NHFIC's funding may be allocated to provide an interim 'warehouse facility' that extends bridging finance to registered community housing providers until a bond issuance can be made through the Bond Aggregator function.
- It also outlines various general governance matters and sets requirements in relation to the maintenance of funds, benchmark rates of return and risk management.