The Australian Federal Parliament has passed the “Help to Buy” legislation, introducing a shared equity scheme aimed at assisting low to middle-income earners in purchasing homes.
Key Features:
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Government Equity Contribution:
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Up to 40% for new homes
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Up to 30% for existing homes
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Eligibility Criteria:
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Singles earning up to $90,000 per year
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Couples earning up to $120,000 per year
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Must be owner-occupiers
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Minimum 2% deposit required
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Property price caps apply (e.g. Sydney: $950,000 maximum)
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Program Size:
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Up to 10,000 buyers per year
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A total of 40,000 participants over the scheme’s life
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How It Works:
The scheme reduces the size of the mortgage required, as the government co-invests in the property. Upon sale, the government will reclaim its share of the initial investment plus a proportionate share of any capital gains.
Considerations:
While the initiative has been broadly welcomed for improving housing affordability, some housing experts warn that without an increase in housing supply, such schemes may inadvertently push prices higher by stimulating demand.
The legislation passed following negotiations with the Greens, who supported the scheme but emphasized the ongoing need for further reforms to tackle rental affordability and housing supply challenges.
When does it commence?
Help to Buy will be open to any Australian citizens who do not currently own a home and who intend to live in the property they purchase. Buyers will need a deposit of only 2% and will not need to pay lender’s mortgage insurance.
However, while the scheme has been approved at the federal level – and therefore in the ACT and Northern Territory – it has not yet been approved at the state level. For that to happen, each individual state will need to pass supporting legislation; once a state does so, it will be able to participate in Help to Buy. Ideally, that will happen sometime in 2025, although it depends on each state’s circumstances.
How to source home?
When sourcing a property, there are many opportunities that offer some excellent characteristics for buyers. There are many factors and fundamentals that should be considered to measure if the property is best suited to you or not. Seeking advice from a property adviser (buyers’ agent) will be the best way to buy the right property for you.
If you’d like some assistance sourcing a brand new or off the plan property, please don’t hesitate contact us.
We would welcome the opportunity to help with your property purchase. Our YouTube channel and Market Insights also provide a wealth of information to assist you with many areas relating to property.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
December 2024
