Labor’s shared equity plan for home buyers, Help to Buy, which was announced at the party’s election campaign launch yesterday, complements a range of ambitious housing policy initiatives it has announced previously.
Labor has also said it will create a A$10 billion Housing Australia Future Fund and add to current first home buyer support with a regional scheme.
Under the proposed Help to Buy scheme, Labor said it will help 10,000 low and middle income home buyers enter the housing market each year by taking an equity stake of up to 40 per cent.
The scheme will be available to home buyers with taxable income of up to A$90,000 for individuals and $120,000 for couples. Eligible buyers must not have an existing interest in a residential dwelling.
The government will pay 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 dwelling.
The buyer will need to have a 2 per cent deposit and qualify for a standard home loan. The buyer will not have to pay lenders mortgage insurance.
The government will recover its investment when the hose is sold, although the buyer will have the option of acquiring additional stakes in the dwelling. The scheme is not limited to first home buyers.
There will be a price cap on eligible properties, varying in each state and territory.
Under the Housing Australia Future Fund plan, investment returns from the $10 billion fund will be transferred to the National Housing Finance and Investment Corporation. The funds will be used to build social housing properties, with a target of 20,000 over five years, and affordable homes for “frontline workers”, with a target of 10,000 over five years.
The funds will also be used for the repair and improvement of housing in remote indigenous communities, building crisis housing for women and families escaping domestic violence and older people at risk of homelessness, and housing for veterans.
Labor said it will expand the Home Guarantee Scheme by introducing a regional first home buyer support scheme, guaranteeing up to 15 per cent of the purchase price for up to 10,000 people a year.
The government matched this commitment. Under revisions to the program announced in the Budget, a Coalition government would provide the following:
• from July 1, the government will provide 35,000 guarantees a year, up from the current allocation of 10,000 a year (to be eligible for the first home guarantee, individual income cannot exceed $125,000 and a couple’s income cannot exceed $200,000);
• starting on October 1 and running until June 2025, the scheme will support up to 10,000 home buyers a year, including non-first home buyers, to purchase or construct a new home in regional areas; and
• from July 1 and running until June 2025, 5000 guarantees will be allocated to support single parents trying to buy a home.