Introducing the Assemble Model
With property prices escalating and a lack of quality housing options, many people have given up on their dream of home ownership. At the same time, the conventional off-the-plan development model is largely failing to address people’s expectations of quality and aspirations for community. In response to these challenges, Make Ventures (MAKE) and Assemble have partnered to launch the Assemble Model providing a pathway to agree on the price of your home today, start saving towards your deposit and experience your home and community before committing to buy.
Home buyers, not property investors, are at the heart of the Assemble Model, to deliver projects where good design, community and sustainability go hand in hand. The model is made possible by taking a socially conscious and patient approach to property development, through the support of capital partners whose annual returns are capped at roughly half that of the ‘off-the-plan’ approach.
- Before building commences, you secure a five-year lease with the option to purchase your home at the end of your lease by paying a refundable amount of 1 per cent of your home’s purchase price.
- Your home’s purchase price is agreed up front and is calculated as today’s price with fixed 1.75 per cent increases per year, until you buy it approximately seven years later (i.e. two years of construction and five years of leasing).
- Your rent is agreed up front and is calculated at a market rate with fixed 2.5 per cent increases per year over the five-year lease period. For comparison, the average rent of a house in Melbourne has increased by 4.2 per cent per year over the last 15 years*.
- Once the build is complete, you move in! A five-year lease means you have stability while you save. You’ve got time – time to save, plan, get to know your home, your neighbours and your community, before you commit to buy.
- If work, life or love takes you elsewhere, no problem. You can always sublet your home for up to two years. If you decide to make a more permanent move, you can exit the lease or decide not to purchase at any time. The refundable amount of 1 per cent will be returned to you minus the cost of repairing any damage – just like a rental bond.
- After five years, of living ‘try-before-you-buy’ style, your space has become home and you decide to take the plunge to buy. The 1 per cent you paid is deducted from your home’s purchase price. Any increase in market value above your home’s purchase price is to your benefit. With the average house price in Melbourne having increased by 7.6 per cent per year over the last 15 years*; in the end, your home could be worth a lot more than you pay for it.
Assemble will support residents on their pathway to home ownership through the following initiatives:
- Not-for-profit financial coaching services through construction and the leasing period to help with your budgeting and savings plan.
- Bulk-buying initiatives to leverage economies of scale and offer the best value for money (e.g. internet, utilities, farm-direct groceries, insurance).
- An on-site team to help with the day-to-day chores (e.g. parcel pick-up and drop-off, dry-cleaning, dog walking and apartment cleaning) and an on-site building manager who will know the building back to front.
- Community infrastructure including a ground floor mixed use space operated by Assemble (e.g. a café, co-working space or short-term crèche), a multi-purpose workshop for all the messy jobs you don’t want to do in your home, a communal room for entertaining and an on-site team to help with community building initiatives.
The first project under the Assemble Model has been acquired at 393 Macaulay Rd, Kensington. Equity has been secured for the first three projects and discussions are progressing with superannuation funds to become the medium to longer-term capital partner for the business. ANZ has approved its first development and investment facility for the Kensington project, whereby it will provide construction funding without the usual pre-sale requirements.
With the first project underway and site acquisitions pending, the medium to long-term plan for Assemble is to develop and manage a portfolio of up to 40 residential assets totalling approximately 4000 homes across major capital cities, providing a platform for institutional investment into residential housing and a pathway to home ownership for those currently locked out of the inner-city housing market.
* Source: Charter Keck Cramer, data from 2003 to 2017.