The Guardianship Housing System
The 'Guardian Right' is a modern asset designed to benefit the housing industry. Tenants, owners, investors, developers and retirees can all benefit using the Guardianship housing system.The Guardianship housing system was designed as a depreciating housing system to reduce the cost of housing for future benefit. It uses a form of co-ownership that does not include the land, which can be used over existing properties or vacant land, where the Guardian can build and occupy the house for a time, without the cost of rent.
Using depreciation and call options instead of rents and leases, makes guardianship a less expensive form of property ownership, acting similarly to a new car which perpetually reduces in value the longer you have it.
Guardianship uses its Guardian Right Terms Agreement to provides co-owners with distinct rights and responsibilities and provides investment guidance for market forces to move away from rents and inflation and toward fixed price secure sales.
A 'Guardian Right' is defined as the appurtenances, the 'bundle of fixtures' specific to the property, and a physical and equitable share of the property. It does not use the conventional and complicated co-owner share arrangement which commonly includes a percentage of the landholding and the splitting of property costs.
Guardianship cuts out the middle men which drive costs higher, replacing this with a new market that drives property values lower. Not only is a house cheaper without the land cost, but its further depreciation impacts the cost-of-living crisis and benefits society.
A Guardian can use a Development Right on vacant land, uninsurable property, and derelict houses, opening the door to a tenancy investment which modifies how we think about housing, providing investors with a choice to invest upward or downward, depending on which housing system we wish to use.
What is a Guardian Right?
A 'Guardian Right' is an equity share of a property covering the appurtenances, the 'bundle of fixtures' on a property, but not a co-owner of the land.
The Guardian Right is a depreciating asset which loses 10% p/a, and the landholder uses Call Options to buy back the share on specific dates for specific prices.
A Guardian Right is 'restricted' in 4 ways.
01
It is to be predominantly or exclusively occupied by the Guardian.
02
It holds a fixed value reducing by 10% per annum calculated monthly on the 1st day of each month.
03
It has a recurring Call Option where the landholder has an option to buy it 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 provides with clarity what the Share of the property entails, where the Value stems, how the Right is future valued, and what the responsibilities are, to ensure there is no blending of the shares or grey areas of doubt.
Guardians hold responsibility for the properties repairs and maintenance which includes the residence, outbuildings, fencing, roading, services, gardens and trees, and the water rates, while the Landholder is solely responsible for the land rates and taxes, government charges and contractual agreements over his holding.
This form of split ownership is similar to a leasehold type tenancy but without rent or a lease in place.
By breaking a property into two, retiree landholders can now sell the Guardianship part of their holdings to offload debt or to use some of their own equity without any institution using 'snag and catch' tactics of reverse mortgages to take the home using compounding interest and fees, saving money while occupying the property because they have a value to sell when they leave.
Guardianship allows vacant land holdings to be developed by a Guardian who only need to finance the build, and without a deposit, creating demand and opening up stuck supply. Yes the landholder gets the equity gain, and can sell off the land at anytime but the Guardian gets the property for 10-years for a lesser cost than paying rent over the same period.
Uninsurable houses and derelict structures are also poffered a new lease on life using the Guardianship system, where investment can replace insurance, enabling people to do up these structures for habitation each time a 100 year weather event hits home.
One can see the Guardian Right as a tenancy paid for through depreciation rather than rent, operating like a new car which gets cheaper by the day, however if the option is not exercised, the guardian enjoys another 10 years, but this time rent free, so it is not quite the same. Investors profit by charging interest, and the car or house in this instance always holds a residual value...
Rules and Regs
A Guardian Right value stems from the CIV (capital improved value) of a rates notice, and property owners can increase this through a registered valuation if required. These values are required to be witnessed by a JP or solicitor to authenticate ownership of the property and the Value of the fixtures before a Guardian Right and Call Option can be setup and registered into the system.
Once this value is approved and set by the Registry, the value of the 'Guardian Right' begins depreciating in value by 10% per annum calculated monthly on the 1st of each month. This creates the fixed value for each and any 'Guardian Right' exchange, including the next Call Option value and date which is detailed on each property share.
Vacating Guardians may sell their Right at any time for the fixed price based on the depreciation schedule, and the landholder is required to give no less than 3-months' notice if they want to exercise a Call Option through the Terms Agreement. Vacant possession is agreed to be given at the time of sale.
Lenders are guided to use straight-line loan calculations which reduce the principal evenly over the yearly term, use a 50-week year and a 10 year (500 weeks) maximum term, and fixed interest for the entire term to protect borrowers and lenders with transparency.
Further lender protection is to use market rent as the upper limit for repayments to protect the investment and the Guardian from being unable to pay.
In Comparison
On a 750k property with a 5% gross return, and a debt of 300k, rent is around $700p/w and then we have interest to pay, repairs and maintenance and management costs, insurance and rates. If we split the property into 2, where the land is 450k and the house 300k, we get to sell the Guardian Right for 300k and we can set up the Call Option for when we would like to buy the house back. If the value of the property doubles to 1.5 million in 10-years, the call option buy back would be 104k at that time.
Guardianship removes the volatility of the current housing market, reducing risks for the landholder, the investor and the guardian. With loan values half that of what is normally required, the landholder getting the capitol gain he is after, the guardian getting a secure occupancy for a time and getting paid when they leave either voluntary or through a call option, and an investor who is securing a tenancy which contrasts its reducing value with increasing market rents, guardianship protects and that is very important as the global financial system makes changes.
Further benefits specific to the type of user you are, is who holds the responsibility. The user of the property is and should have always been responsible for for the property, and guardianship ensures that this is now the case. The guardian can rent rooms to help them through tough times, fix up problems that landlords would normally ignore, and now there can be no complaints or problem tenants which raises the vibration of the community.
Specific cost increases for the guardian are the repairs and maintenance of the property, however the benefits of no inspections, renting rooms, having pets and so on, as well as getting paid for the Right when they leave, in my opinion, far outweigh the negatives of this change. And when we include interest if we borrow for the Right, the repayment for the whole term of the loan will not change, where rents could have increased 20 times through 6 month intervals over a 10 year period.
The real comparison however is in the spliting of property debt over 2 parties, which makes affordability so much easier. Buying a property with 2 parties in mind outside the guardianship system may be a great strategy for parents to help their kids?
Whatever the choice, both systems are now available where we can mix and match, buy a home outright or in steps, or simply own something and be happy for a time.