The New Help to Buy Scheme!

Australia has voted. Looking forward, here are the policies property purchasers, home owners, and investors can expect from the next government. The results of the 2022 federal election are in, with Scott Morrison conceding the vote on Saturday night (21 May) and the Anthony Albanese-led Labor party declaring victory shortly after. With housing affordability for both renters and buyers one of the hot button issues of the election, Mr Albanese made several promises along the campaign trail that will impact the property market when put into practice.

Below are the policies a Labor government has promised to enact:

1. Help to Buy Scheme

Anthony Albanese pledged that a Labor government would cut the cost of a mortgage by up to $380,000 for some eligible Australians under its Help to Buy scheme.

The program involves the Labor government providing eligible home buyers with an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.

Buyers will be able to purchase a property that they intend to live in with a deposit of as little as 2 per cent. Participating lenders finance the remainder of the purchase.

During the period of the loan, the home buyer is able to buy an additional stake in the property when they have the means to do so. Before that point, they will not have to pay rent for the portion of the home owned by the government. The government would recover its equity and its share of the capital gain when the house is sold.

Anthony Albanese has promised a Labor government would cut the cost of a mortgage by up to $380,000 for some eligible Australians under its Help to Buy scheme – the details of which were largely applauded across the real estate sector.

Eligibility requirements

All Australian citizens are eligible, if they meet the income cap of up to $90,000 for individuals and up to $120,000 for couples and do not currently have a stake in a property. But they can have owned property previously – they need not be first home buyers to apply.

Price caps apply to the maximum value of the home, depending on a buyer’s region.

Price caps is as follows:

• NSW capital and regional centres, $950,000
• NSW rest of state, $600,000

In announcing the plan on Sunday, 1 May, Mr Albanese estimated that the program would cut the cost of buying a home by up to 40 per cent for 10,000 Australians per year. He noted that four decades ago, close to 60 per cent of young Australians on low and modest incomes owned their own home. Now, that figure sits at 28 per cent. Mr Albanese described this as a targeted approach for assisting that demographic.

The program is estimated to cost roughly $329 million over the forward estimates. To pay for this, and other housing affordability polices, Labor plans to double foreign investment screening fees and financial penalties. During the same announcement, Mr Albanese pledged to establish a National Housing Supply and Affordability Council to focus on increasing housing supply and improving affordability. Labor also intends to create a $10 billion Housing Australia Future Fund to build 30,000 new social and affordable housing properties in its first five years, as initially revealed last year.

2. National Housing Supply and Affordability Council 

Following calls from housing advocates across the country, Mr Albanese pledged to establish a National Housing Supply and Affordability Council to address the two interrelated issues.

The council will reportedly be composed of experts from the finance, economics, urban development, residential construction, urban planning and social housing sectors.

The council will work closely with states and territories on setting targets for land supply, in consultation with states and territories, and play a key role in developing Labor’s National Housing and Homelessness Plan.

3. Regional First Home Guarantee

Under an expansion of the First Home Guarantee, the Labor party has promised to help 10,000 regional Australian families a year buy their first home.

The scheme aims to triple the number of places that Australians living in regional areas received last year under the current FHG scheme.

Places will be reserved for Australians who have lived in the region in which they apply from for more than 12 months. It will see approved applicants purchase a home with as little as a 5 per cent deposit, without needing to pay lenders’ mortgage insurance (LMI).

4. Price cap reviews

Continuing on from the Labor party’s planned expansion of the First Home Guarantee, the party also promised to conduct six-monthly reviews of the scheme’s price caps in both the capitals and regional areas that determine the maximum price an eligible applicant can pay for their new home.

The industry reacts

The president of the Real Estate Institute of Australia, Hayden Groves, called the buyers’ assistance program “sensible”, noting the organisation has supported feasibility studies of Keystart programs such as this in the past. Though he acknowledged that instituting such a scheme comes at a hefty cost. “Whilst an expensive program to administer over the long term the benefits of home ownership to Australians are clear: they live healthier, happier and more successful lives in their working life and retirement,” Mr Groves said. He also noted that the boon for the industry was substantial. “Based on the median first home buyer home loan of $459,256 this will generate around $4.5 billion each year in sales based on current market conditions,” he said.

https://www.realestatebusiness.com.au/industry/23375-labor-s-home-ownership-and-housing-affordability-plans-backed-by-industry & https://www.theaustraliatoday.com.au/ & https://www.canstar.com.au/home-loans/help-to-buy-shared-equity-scheme/