Australian Property Guardianship
Overview of Australian Property Guardianship (APG) Australian Property Guardianship is an innovative housing system developed by EmpowerUs Australia Pty Ltd with a tool called a Guardian Right®.The Guardian Right functions as a "beneficiary" mechanism to facilitate the trading of property interests within a controlled market environment, benefiting a range of "trustee" stakeholders including owners, lenders, developers, retirees, charities, and government entities.
APGs core aim is to reduce housing costs, addressing social issues by introducing a new participant into the housing sector. This approach is designed to resolve the traditional tensions between renters and landlords, and reshape investor behavior by providing new opportunities that challenge established finance models, encouraging more equitable and efficient outcomes.
APG adopts a dualistic approach to property arrangements by distinctly separating houses from land, and use from title. This method is comparable to how a rates notice differentiates between Land and the Capital Improved Value, recognizing the individual components within property ownership. APG implements a trustee-beneficiary relationship model, fundamentally different from traditional forms of property ownership. Under this structure, the roles and responsibilities are clearly defined, allowing for the guardian interests to be distinct from the conventional titleholder arrangement.
The APG system provides guardians with significant flexibility regarding the timing, location, and selection of parties whom they may sell their interest. This stands in stark contrast to the more rigid occupancy rules and fee structures imposed by CLT's and retirement villages. Moreover, APGs are not restricted to a specific parcel of land, further enhancing the adaptability and appeal of this model.
The CIV/ Guardian Right, typically represents approximately 25-50% of the whole property value, making a Guardian Right a more affordable ownership option. However, under finance, this property interest requires a shorter term loan aligned to the Guardian Right Call Option. Also, money lenders are advised to provide loans using market rent as the upper repayment limit, to further derisk.
The Guardian Right Terms Agreement separates the roles and responsibilities of landholders and guardians clearly, but where existing mortgages do not identify the CIV as belonging to another party these terms become secondary. Landholders are responsible for existing arrangements, and guardians can protect their interests by placing a caveat over the property. Under terms, Guardians can sell to other guardians, and landholders can transact amongst themselves, however when a call option is due, the guardian cannot prevent the current landholder from his right to exercise a Call Option.
APG enables families to safeguard their children, support retirees in downsizing by selling their homes while retaining land for capital growth, and provides guardians the chance to restore abandoned or flood-affected property, and to develop vacant land without needing title ownership. Developers can now achieve greater profits, and money lenders can profit while contributing to affordable housing
Strategically, APG is a runway tor smart housing solutions, strategicly understood by the trustee as to the purpose and outcome of each additional property registered into the system. The intention of each trustee body may be to simply maximise profits or to address the social and moral need, and this will be highlighted when the call options become due.
What is a Guardian Right?
A 'Guardian Right' is an equitable interest in a property, created by the landholder as trustee.
The Guardian Right is a depreciating Asset, holding a reducing market value, and is reunited with the landholding through a sale.
A Guardian Right has 4 functions.
01
The Guardian Right interest is to be predominantly or exclusively occupied by the Guardian.
02
The Guardian Right value depreciates by 10% per annum calculated monthly on the 1st day of each month.
03
The Landholder holds a recurring Call Option to purchase the Guardian Right once every 10-years.
04
And the Guardian is responsible for the repairs and maintenance of the residence, outbuildings, fencing, roading, gardens, water rates and trees.
The System
The Guardian Right Terms Agreement clearly defines the roles and responsibilities of both the Guardian as beneficiary and the Landholder as trustee. The agreement provides structure and clarity regarding each parties ownership interest, the origin of the initial value, the method of future valuation, and the duties required to prevent any overlap or ambiguity between parties.
Guardians are tasked with the upkeep and maintenance of the property. This includes responsibilities for the residence itself, any outbuildings, fencing, roading, services, gardens, trees, and payment of the water rates. On the other hand, the Landholder is solely responsible for the land rates and taxes, government charges, and any contractual agreements that pertain to the property holding.
While dual ownership arrangements exist elsewhere, APG is distinctive. It bears similarities to native leasehold tenancies, but stands apart because the trustee beneficiary relationship bound to a form of trust deed which replaces traditional rental arrangements with a depreciation schedule.
Guardianship positions itself between Property Owners and Renters, representing both a form of ownership and a form of tenancy. This hybrid model opens up a new segment in the property market, offering both flexible and fixed options. It also provides greater price certainty for landholders, cost effective occupancy for guardians, and reduced risk lendering options.
Guardianship eliminates the need for reverse mortgages to access home equity, and it avoids the complexities of rent to buy arrangements, which require two separate contracts and result in higher than market rents as well as upfront deposits. APG simplifies government schemes and approved management services. Furthermore, it challenges superannuation rules for funds to buy land in the name of the super company, while occupants own the use under a different entity.
For those seeking to provide affordable housing in urban areas where services are already established, new tower developments designed primarily for guardians can address both developer cost recovery needs, and owner affordability requirements. This approach can deliver exactly what society needs in terms of certainty and accessibility.
Arguments show the Guardian Right as a way to pay for an occupancy in advance, however this does not address the residual value realized when the occupant sells the property. Try the Call Option Calculator to reveal advanced prices, serving as both a warning and a guarantee for lenders, guardians, and landholders. APG is a transparent system designed to ensure that all actions are visible and cannot be concealed by mere promises or words, and although results both raise and lower prices depending on perspective, it is not a universal solution according to GROK.
APG Rules and Regs
A Guardian Right initial value is established using the property's rates notice, which details the Land and CIV (capital improved value) separately. Property owners have the option to increase these values by submitting a registered valuation if they wish prior to creating the trustee beneficiary relationship. Upon registration of any property into the system, the ownership and valuations must be authenticated by a JP or solicitor to confirm the property relationship, of which form an integral part of the Guardian Right / Guardian Right Call Option documentation for future reference.
Once these values are approved and the property registered, the CIV portion covering the 'Guardian Right' begins to depreciate in value by 10% per annum calculated monthly on the 1st of each month. This depreciation creates a steadily reducing fixed value for each and every 'Guardian Right' exchange.
Guardians are free to sell their Guardian Right at any time for the fixed price determined by the depreciation schedule. If the Landholder wishes to exercise a Call Option, they are required to give no less than 3-months' notice through the registry's call option process, as outlined in the Guardian Right Terms Agreement, and Vacant possession is provided at the time of sale.
Lenders are guided to use straight-line-reducing loan calculations which evenly reduce the principal over the loan term, and these calculations use a 50-week year and a maximum 500 week term to ensure loans are repaid within the Call Option period. Interest should be fixed for the entire term to protect borrowers and lenders, and provide greater transparency. Under terms, lenders can permit the Guardian to onsell the property with the remaining debt attached, which ca offer benefits to both lenders and new guardians, and promoting financial system flexibility.
Furthermore, protection for lenders is provided by using market rent comparisons to determine the upper limit for repayments. This helps to derisk their investment by ensuring that guardians are not burdened with unaffordable repayment costs, and as oustide market rent increases, their fixed repayment investment will suit more tenants.
In Comparison
Ownership Perspective.
Consider a property valued at 750k with a debt of 300k, and with a rates notice showing 450k for land and 300k for the capital improved value. Market rent is $700p/w, showing a gross return of 4% less the usual costs which include principle and interest, repairs and maintenance, management costs, insurance, land rates and water rates.
Now lets make an conservative assumption that in 10 years, the property will have increased in value and be worth 1 million dollars.
A loan calculator (which bank) shows we may have paid off 70k if we are early into a 30-year loan or 100k if we are late into one, and we know insurance, repairs, and management costs will rise, and so we must put the rent up or negative gear our wage to cover it. Alternatively, by selling the Guardian Right and clearing the 300k debt, most costs except for the land rates can be passed on. This already presents a more favourable scenario.
However the call option must be considered. On its arrival, you can choose to exercise it for 104k, or wait for the next option at 36k. Under these assumptions APG shows a 126k advantage over the rent model.
The Rich Dad Poor Dad series may be dated, the distinction between these two systems reflects the difference between freedom and stability. A freedom mindset differs marketly from a stability mindset: one is content to work for a wage and pay things off, while the other is not.
Occupant Perspective
Tenancy terms are typically set in 6-month increments, allowing landlords to regularly increase rent. In the scenario above, the tenant is paying $700 p/w which is more than he can afford, and he is restricted from subletting to others not listed on the lease. Alongside concerns about job security and inspections, the tenant faces potential rent reviews, possible rent increases, bond top-ups, lack of savings, and possible eviction and moval costs.
Financial difficulty ensures he cannot buy a property by conventional means, though he may qualify for a car loan (personal loan). Guardian Right equity also falls under personal loans.
Using the existing scenario, the tenant is not likely to afford the 300k loan over 10 years unless the interest is Zero, though subletting rooms could help meet the repayments, albeit with difficulty.
Instead the tenant should look for a Guardian Right around 240k / 10 years where @ $700 p/w without a deposit will cover it. After 10 years the Guardian Right would be worth 83k, offering an incentive to switch from insecure renting to the greater stability and predictability of guardianship.
A Change of Mindset.
Guardianship helps remove the volatility from the housing market, reducing risks for landholders, lenders and guardians alike. With loan values at roughly half of the typical amount, landholders still capture the desired capital gain, guardians secure stable occupancy and receive compensation when they leave, and lenders are assured of a tenancy. APG's reducing value structure contrasts with rising market rents, allocating responsibilities appropriately and delivering what society needs.
The end user, now responsible for the property, can rent out rooms during tough times and address maintenance issues directly, eliminating common landlord/ tenant disputes and enhancing community standards. Guardianship provides flexible financial solutions for titleholders, guardians, and families supporting their children with deposits, keeping debts manageable for all. This approach assists everyone with the rising cost of living often driven by bureaucracy.
Ultimately, both ownership and guardianship options are now available, enabling individuals to purchase a home outright, or in installments, or simply to enjoy a stable tenure for a set period.
Disclaimer: EmpowerUs Australia is not a financial or legal institution. The information provided on this website is designed to inform post and future clientele with as much information as possible about the inner workings and outer applications of the APG system to the best of our ability.