DomaCom Ltd is moving into a new and exciting stage with 2020 being a very important year, despite the challenges faced with COVID-19.
The company’s technology has opened new doors and has also enabled it to bring hard-fought but important opportunities to market, like the senior equity release for those needing money in retirement.
DomaCom’s reach includes many environmental, social and government (ESG) components including environmental aspects such as solar farms and sustainable food as well as social aspects such as diversity in working with the Muslim community to align offerings to meet their special requirements such as equity mortgages.
In the year ahead, the company expects, subject to due diligence, the bedding down of the AustAgri Group Ltd relationship and business.
It will also be creating greater awareness of senior equity release, including training of advisers.
The company will be bringing out more property to market for affordable housing and continue its renewable energy projects.
It also sees expansion of opportunities in the self-managed super fund (SMSF).
DomaCom also plans to develop equity mortgage targeted primarily for the Islamic community.
Government policy and community interest
The company’s business model aligns closely with both government policy and community interests.
➢ Senior equity release which helps retirees with money to live on as life expectancy increases;
➢ Affordable housing with structures to get young people into the housing market;
➢ Socially responsible by embracing diversity with creating products which are compliant with the Muslim community’s beliefs; and
➢ Environmental investing such as solar and wind farms and battery storage.
Senior Equity Release product
The company’s senior equity release product is set to benefit from Australia’s tax-free Downsizer Contribution allowance, which provides an opportunity for retirees to top up their superannuation savings using proceeds from the sale of the family home.
The Australian Tax Office has confirmed that a partial disposal of a home can be claimed as downsizer contributions and this has been extended to DomaCom’s Senior Equity Release product.
The company's chief executive Arthur Naoumidis said: “Although Australian retirees are amongst the world’s wealthiest, the bulk of their wealth is stored in their family home and the vast majority simply do not want to sell and move away in order to access some of that wealth.
“DomaCom has carefully designed its equity release product so that it suitable for a broad range of retirement income strategies including those that take advantage of government measures introduced to encourage retirees to access the value of their home.”
As the family home is likely to become an active asset, DomaCom believes it is critical that 'fit for purpose' financial products are made available to senior Australians wanting to stay in place and live well in retirement.
DomaCom has also partnered with leading Australian community housing provider (CHP) BlueCHP Limited, to deliver up to $250 million in affordable housing for essential workers in 2021.
The fractional investment platform provider and BlueCHP are targeting to start with an initial pilot project of $10 million.
DomaCom chief executive officer Arthur Naoumidis said: “One of the hurdles for investors in helping to deliver affordable housing is that they cannot sacrifice investment returns to deliver ethical investment outcomes.
“This is particularly important to superannuation funds as they are required to comply with the sole purpose test when investing and are not able to accept discounted investment returns even if it is for a good social purpose.
“This project will deliver attractive investment returns whilst also providing affordable housing to essential workers.”
The DomaCom Affordable Property Accelerator (RPA) program, formerly known as rent-to-own, will be used to allow investors to invest in affordable housing properties that will be managed by BlueCHP.
BlueCHP is able to access via its financier low-cost loans, that will be used to deliver a 25% rental discount to essential workers.
Based on a 40% loan to valuation ratio, this represents a commitment of $250 million to affordable housing.
Additionally, the RPA program uses a discount obtained from developers to deliver a price discount to investors as well as an additional leasing incentive of 5% equity to the essential workers, which includes teachers, nurses, firefighters and the police.
In the first quarter of financial year 2021, DomaCom reached a transformational agreement whereby DomaCom Fund will acquire AustAgri, which is set to commit $2.6 million in annual management fees for a fixed term of five years.
On completion of this transaction, DomaCom will receive at least $13 million in the first five years for which AustAgri shareholders will receive 100 million shares in recognition of the cashflow to be delivered, which will reduce the need to raise further capital.
DomaCom is now awaiting confirmation that AustAgri has completed the key foundation acquisitions before starting legal and financial due diligence of AustAgri.
Islamic leverage product market
In December 2020, the company entered into an exclusive Heads of Agreement with leading Australian Islamic financial group Crescent Group to deliver a pioneering Islamic home finance product.
The product will leverage DomaCom’s innovative fractional model that will allow Australia’s 700,000-plus Muslim population to purchase a property using Shariah-compliant financing.
DomaCom and Crescent Group have been working on a model which enables Australian Muslims to purchase a property with leverage using Islamic finance while maintaining the familiar structure of a traditional home purchase.
The company's unique fractional investment platform is being extended to be able to deliver on this goal with the product launch targeted for the third quarter of 2021.
Crescent Group will lead the Shariah certification of the product and the delivery to the Australian Muslim community and engage its extensive global Islamic network to source institutional funding for these products.
DomaCom expects the equity mortgage using Islamic compliant property finance options to be operational in 2021, becoming the first Australian Islamic compliant property finance option.
This finance option can be used by non-Islamic markets as well and is not sensitive to the property investment outlook.