The Commonwealth Bank of Australia’s Business Bank has agreed to accept pre-sale contracts secured through Coposit, a PropTech platform that gives buyers a chance to buy off-the-plan homes sooner than if they had to save a full, lump sum, deposit.
The arrangement will apply to residential developments funded by the bank.
Traditionally, property developers need 10 per cent of the purchase price when a buyer signs an off-the-plan contract for a new apartment or townhouse.
Achieving a certain level of off-the-plan sales is also normally required before a lender, such as a bank, would be prepared to advance the construction loan for the development to proceed.
This means buyers often have to come up with thousands of dollars two to three years before getting keys to their new home.
But Coposit lets qualified home buyers purchase off-the-plan properties with a minimum deposit of $10,000.
Prior to settlement the buyer pays the balance of the required deposit in weekly, interest-free payments during the construction phase and then finalises settlement through traditional financing channels upon completion.
The innovative service allows buyers to secure a property purchase while continuing to accumulate savings until the project is finished and ready to move-in.
CBA Group Executive Business Banking, Mike Vacy-Lyle, said working with Coposit formed part of CBA’s ongoing commitment to support the construction sector and back innovative solutions aimed at tackling Australia’s housing shortage.
“Housing affordability and undersupply are some of the most pressing issues nationally, requiring a multifaceted approach involving innovative, sustainable solutions and cooperation between all industry stakeholders,” he said.
“Initiatives like this could make a real difference, particularly for first home buyers, by allowing them to secure the purchase of their first home while continuing to save for the initial deposit until the property is built.”
Mr Vacy-Lyle said accepting Coposit contracts meant CBA was able to deliver greater certainty for property developers, who could include those sales when seeking finance for their projects.
“This is an important step in facilitating better lending outcomes for new residential developments, to help fast-track new supply to the market,” he said.
Coposit’s Chief Executive Officer and Co-Founder Chris Ferris said Coposit had onboarded 65 projects on its platform across the eastern seaboard in NSW, Queensland, and the ACT.
“In an environment where house prices continue to increase, it has become even harder for buyers to accumulate the savings required for an initial deposit,” he said.
“Coposit is changing the pathway to owning property – we believe in breaking the barriers to homeownership for all Australians and we are thrilled to see that Australia’s largest bank agrees.
“Coposit’s agreement with CBA will help more developers secure the pre-sales needed to get their projects underway and start their builds sooner, which is critical in helping the industry increase supply.”
CBA’s Business Bank has also updated its lending criteria for built-to-rent housing.
“With residential vacancy rates at record low levels across the country, our new lending standards will support more rental housing developments, including the construction of social and affordable housing where we look to support Community Housing Providers,” Mr Vacy-Lyle said.
