Can Property Linked Finance (PLF) be a game-changer in housing upgrades?
This could change the way we see debt and decarbonisation
Most Australians are living in homes that were built sometime ago. Most of us would like those homes to be more efficient and cost less to heat and cool and maybe generate some solar power. We also know how expensive it could be to upgrade existing homes to do all these things.
Upfront cost is part of the problem. During a period of high living costs and high interest rates, finding the money to upgrade can feel out of reach.
So what are the options? You could draw on savings, though not everyone has that much set aside. You could take out a loan, but loans come with limits. Most are short term and the debt sits with you rather than the house. Not everyone has the borrowing capacity to take one on.
Across six focus groups we completed for this project, with homeowners, new home buyers, landlords and renters, people were wary of taking on debt for their homes. There is a mismatch here. The way people want to pay for an upgrade does not line up with the finance on offer. Property LinkedFinance (PLF) is one possible alternative.
The place, not the person
PLF links the finance not to a person, but to the property itself. Payments are made through a charge linked to the property, meaning the costs of an upgrade may stay with the home if it is sold.
This may be a better fit for long-term improvements where the benefits and savings can last for decades, often beyond the current occupant.
It has the potential to unlock a new source of private investment and remove the upfront cost barriers for households trying to reduce their bills and emissions.
The question of demand
For a scheme like PLF to work at scale, there needs to be enough demand from households and confidence from investors, lenders and industry.
This project explores how Australians understand and respond to PLF, across both retrofit and new home settings, to identify what would make it work for households and bring home energy upgrades into the mainstream.
The findings will help policymakers, lenders and industry better understand PLF’s potential to support lower energy bills, lower emissions and more comfortable homes across Australia.
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