Help to Buy scheme: Labor’s policies helping aspiring homeowners
In May, Labor was voted in at the Federal Election. If you’re an aspiring homeowner, the change of Government could mean new opportunities to help get you into your own home sooner rather than later.
In this article, we cover some of Labor’s key policies that may help those who want to get into the property market.
Help to Buy scheme
Labor pledged to help more people get into the housing market sooner by introducing the Help to Buy scheme.
Under the scheme, eligible home buyers can purchase homes with just 2 per cent deposit. This will save would-be homebuyers the dilemma of waiting until they have sufficient savings or paying sometimes tens of thousands of dollars in Lender’s Mortgage Insurance [LMI].
The government will throw in up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price of an existing home.
The shared equity scheme allows eligible homebuyers to:
Get into the market with a smaller deposit and have a lower mortgage and interest repayments (as you’re taking on a smaller bank loan).
Avoid having to pay Lenders’ Mortgage Insurance (which is usually applicable if you have a smaller deposit).
Buy an additional stake in the property (a minimum 5 per cent stake) during the loan period if/when finances permit.
Help to Buy will be available to 10,000 Australians each financial year.
To be eligible, you must:
Be an Australian citizen of at least 18 years of age.
Earn $90,000 a year or less for individuals, or $120,000 or less a year for couples (note: if your income goes up during the loan period and exceeds the Help to Buy threshold for two consecutive years, you must repay the Government’s financial contribution in part or whole based on your circumstances).
Live in the property as your principal place of residence.
Not own any other land or property – either in Australia or overseas.
Have saved the required minimum 2 per cent deposit and get approved for a home loan with a participating lender.
Pay for any associated purchase costs like stamp duty, legal and bank fees, as well as ongoing property costs like rates, strata and any other bills.
Be buying a property that falls under the price cap for your region (more info here).
Labor plans to double foreign investment screening fees and financial penalties from July 2022 and raise about $445 million over the forward estimates to pay for the scheme. It will take a share of the profits when the property is sold.
Regional First Home Buyers Support Scheme
This scheme will be available for 10,000 first home buyers a year in regional areas.
Eligible first home buyers can enter the market with a deposit of just 5 per cent, while the Government will guarantee up to 15 per cent of the purchase price.
The home doesn’t need to be new – existing houses, townhouses and units are included. House and land packages, off-the-plan apartments, and land with a contract to build are all covered.
To be eligible, you must:
Live outside a capital city.
Be a first home buyer, an Australian citizen and over 18.
Live in the property purchased.
Have a taxable income of up to $125,000 per year for singles and $200,000 a year for couples.
Have been living in the region for at least 12 months.
Meet the property price cap for the region under the existing First Home Loan Deposit Scheme.
Labor also vowed to improve the current scheme by updating property price caps every six months and improving the process of reallocating unused guarantees.
Other Labor Housing Proposals
National Housing Supply and Affordability
The new government plans to set up a council to address the housing supply problem in Australia. Experts from various fields will provide input and the council will report on issues such as land use, housing supply and demand, and rental affordability.
Housing Australia Fund
Labor plans to create a $10 billion fund to build 30,000 new social and affordable housing properties in 5 years. This will support 21,500 full-time jobs annually.
Looking to get into the market?
If you’re looking to get a foot up on the property ladder, talk to us about how to get started.
We can explain Labor’s policies further and run through the nitty gritty, including whether you are eligible. Get in touch today!