Online property portal Aofun has unveiled its Nominee Sale Platform, an off-the-plan resale facility, which can provide SMSFs with an alternative avenue for acquiring property and at a discount.
The platform was developed as a direct response to the growing number of buyers, many of whom were foreign investors, who were facing difficulties settling their off-the-plan property purchases, Aofun founder and chief executive Jason Zhu said.
“Taking what real estate agents have been doing individually, I essentially wanted to create a marketplace that has more transparency, streamlined property information and live communication for the buyers, along with an online price offer mechanism where the buyer can submit an offer, so it doesn’t have to be the asking price, just like any other purchase negotiation,” Zhu told selfmanagedsuper.
“The platform presents an attractive proposition for potential investors and that includes SMSFs as they can purchase these types of properties but at a much better value.
“So this gives SMSFs another option [when it comes to property investment].”
He said the potential discount was an enormous benefit as overseas buyers, now sellers, had already paid a 10 per cent deposit on average.
“Aside from the deposit being paid, there will be circumstances where the original buyers may be willing to sell below the original contract price to avoid a potential lawsuit from the property developer or get a bad credit rating that may have negative implications for any future immigration applications to Australia or investment in Australia,” he noted.
“And there are other factors that make these off-the-plan properties attractive to SMSFs.
“Many of them are inner-city apartments in prime locations, ideal rental property for the growing overseas student accommodation market and those seeking an inner-city lifestyle.”
According to recent figures from property information consultancy CoreLogic, in the next 12 months about 92,000 units would need to be settled and over the next 24 months that number increased to 231,139.
“This open market platform will allow sellers to reach out to a wide network of potential new property buyers, including SMSF trustees,” Zhu said.
“Many of these potential sellers have looming settlement dates with little or no chance of securing finance, having been caught out by the major Australian banks’ decision to freeze lending to foreign investors.
“The inevitable result will be an oversupply on the market.”
He added the government’s decision to retain limited recourse borrowing arrangements (LRBA) as part of the superannuation system meant SMSF trustees had the capacity to use debt to fund those acquisitions.
“However, I am very conscious of the fact that using an LRBA is complex, and I would think any trustee wanting to use debt to acquire an off-the-plan property to get specialist advice and to ensure such a purchase dovetails with their SMSF’s long-term investment strategy,” Zhu said.