What are the new government plans to help home buyers?
The Labor Party victory on Saturday night will see the introduction of its promised Help to Buy scheme which will assist up to 10,000 middle income earners enter the housing market with smaller deposits and mortgages.
The Labor Party's victory on Saturday night will see the introduction of its promised “Help to Buy” scheme which will assist up to 10,000 middle income earners enter the housing market with smaller deposits and mortgages.
‘Help to Buy’ scheme
It’s a shared equity scheme that would allow eligible home buyers, with at least a 2 per cent deposit, to purchase a home, with the government covering up to 40 per cent of the cost of a newly built property or 30 per cent of the cost of an existing one.
Labor’s initiative would mean the government effectively co-purchases a property with an individual buyer, even if they have previously owned a home. It will not apply to homebuyers, such as rent-vestors, who currently own real estate they don’t live in.
State governments such as those in WA and Victoria already run similar shared equity schemes, but this would take the idea to a national level.
Eligible buyers must earn less than $90,000 a year, or $120,000 if they are a couple. Participants must buy back the government’s share in their house if they start to earn more than the wage threshold amount.
“This will help many Australians on low and modest incomes to buy a home with a much smaller mortgage that they can afford to pay rather than renting for the rest of their life,” said Prime Minister Anthony Albanese during the campaign.
Housing Australian Future Fund
The ALP also plans to set up the Housing Australia Future Fund, a $10 billion investment fund where the returns will be used to build social and affordable housing across Australia. The party estimates 30,000 homes can be built in five years.
The ALP has also promised to match the Coalition’s Home Guarantee Scheme. The low-deposit loan initiative allows first timers to purchase a home with a 5 per cent deposit and the government will guarantee the remaining 15 per cent.
Without the scheme, banks expect first-home buyers to provide a 20 per cent deposit, or cough up lenders mortgage insurance, which, depending on the property’s location and price can be as much as $30,000.
The Coalition’s scheme was available for single applicants with a taxable income of up to $125,000 a year and couples with a salary of up to $200,000. Currently 10,000 places are offered, however after July 1, that total will increase to 50,000 spots. Purchase price caps are also set to be increased in the new financial year by an average of $100,000 in each city or region.
The Labor Party also promised to match a Coalition plan offering incentives for those aged 55 and above to downsize. Future retirees will be able to deposit up to $300,000 per person into their super if they sell their family homes, under the proposed scheme.