Enabling the Maltese social market
The social market is not a separate entity to the normal market. It simply refers to an integral, wholesome market able to provide goods and services to a wider breadth of consumers.
In simpler words, a social market is a more inclusive market in that it ensures access to more and more participants.
Our role in the Foundation for Affordable Housing is to use financially sustainable methods to close the gaps which render the local property market inaccessible to what we term ‘the stretched class’.
The latter is the category of persons which was clearly identifiable in the findings of a study we conducted late last year.
It includes people who are gainfully employed but whose income still does not allow unhindered access to the home ownership or the rental market.
Various socio-cultural reasons have given rise to a tendency among local society to yearn for home ownership, to the extent that it has become a policy benchmark.
The latest European data on the rate of wealth inequality supports this stance, for the Maltese seem to experience among the lowest levels of inequality.
Much of this is credited to high rates of ownership. By contrast, those who don’t make it seem to have few options which may guarantee them stability.
In supporting those attempting to make what has become a relatively difficult task to acquire their own home, the policymaker sees a long-term investment yielding financially stable families.
The challenges for people to acquire the home required by their family have a social side but they also suggest a market issue.
Indeed, the circumstances surrounding the financial and the property market do present a situation which does not make it straightforward to provide solutions everyone may attain.
Our belief is that those who are in work should rightfully expect that they derive benefit from the goods they help to create.
Besides being a legitimate goal in its own right, it is also squarely within our mission to seek to identify the current limitations hindering people’s access and facilitating such access through a market-driven solution.
In our first intervention, known as Loan Up, the foundation is collaborating with a leading commercial bank – APS Bank – whose values are very much aligned with those of the Foundation for Affordable Housing.
Through a reduced interest rate on home loans, which remains fixed for a predetermined term, Loan Up ensures clients find themselves better placed financially to acquire the first home they need.
The product is primarily focused to offer a greater opportunity for first-time buyers on low to middle income with limited assets, enabling them to upscale their potential in attaining their homebuying goals.
The mobilisation of a €1 million fund by the Foundation for Affordable Housing and the expected leverage of more than €65 million in home-loan value to be issued is in itself an indication of the financial value that social products or, by extension, the social market may create.
Add to it the great social value of granting hundreds of young adult workers a wider access to attain their legitimate goal of buying their home and one can fully understand the reason why we are a social enterprise.
This collaboration clearly manifests the positive effects which may result from the intermediary role of an organisation placed somewhere between the public and private sector.
In that hybridity lies the potential of attaining social aims, through sustainable, market-driven means, which, in turn, strengthen and help the market provide better.
The initial feedback is promising. The public responded to the first wave of information shared and clients have started to come forward as we remain set to provide more information and more support.
We are mindful of the debate raised by Loan Up in that it is limited in focus to prospective buyers not older than 30 years old.
While being aware of the need for affordable solutions specifically targeting older categories, the foundation and its strategic partners took a conscious decision to focus efforts and available resources where we could address the largest possible share of clients in the most effective way.
The product underscores the importance of datadriven solutions, which we intend to sustain.
Indeed, introducing Loan Up is the start of a process to navigate different realities and empower many more people in the months to come.
Delivering a product in our first year of operation, which is sustainable and effective, brings with it the necessary motivation to continue on this road which we have only just started.
There are systemic, legislative and economic limitations which need to be faced as we continue to drive the message home.
There is still a considerable financing and investment gap hindering the growth of a social market whose filling requires innovative tools, new instruments and new products.
We shall continue to build on this initial intervention by forging financial and investment instruments which enable financiers and builders, with the possibility to sustain the market with more and better affordable solutions.
The Foundation for Affordable Housing’s first product on the market will help underline the role of social enterprise emanating from the third sector – a hybrid between the public and private sectors.
Initiatives of this kind demonstrate that enterprise has a social responsibility to fulfil, and that social investment provides the right kind of long-term, sustainable and rewarding opportunities.
“Social investment provides the right kind of long-term, sustainable and rewarding opportunities
Jake Azzopardi is chief executive officer of the Foundation for Affordable Housing.