Government Unveils New Shared Equity Scheme

Sydney residents struggling to buy a home are set to benefit from a national shared equity scheme which is due to come into force in 2025.

Under the scheme the federal government will offer eligible applicants 40% of the purchase price of a house or apartment, easing the mortgage payments for thousands of homeowners across the nation. [1]

Labor claims that its Help to Buy scheme could cut the cost of a mortgage by up to $380,000, depending on the initial price of the property. [2]

Minister for Housing, Julie Collins MP, says that the much-delayed legislation will allow the government to meet its target of building 1.2 million new well-located homes by 2029.

“Right across the country Help to Buy will be life changing, bringing home ownership back into the reach of thousands of Australians, particularly renters,” she said. [3]

Labor’s housing bill was passed by the parliament at the end of November after an 11th hour backdown by the Greens who had been seeking changes to do with rental properties and negative gearing. [4]

The release of the federal scheme coincides with the demise of the state-based Shared Equity Home Buyer scheme which offered a similar level of financial support. That program came to an end on September 30, 2024.

Introduced by the Perrottet government in 2022 the NSW shared equity scheme was similar to the federal model, but specifically targeted single parents, key workers and people aged 50 and over. [5]

How the new scheme works

As outlined by the government earlier in the year the proposed Help to Buy scheme will allow approved applicants to buy a new or existing property with just a 2% deposit.

Under this model the federal government will provide upto 40% of the funds needed to buy a new property and 30% for an existing property, with the buyer or buyers stumping up the remainder. [6]

The scheme applies to apartments, town houses and freestanding houses alike. The homeowner is not required to pay interest on the government loan component, but this must be repaid when the property is sold.

In addition, recipients will not have to pay lenders mortgage insurance (LMI) ), despite having a deposit of under 20% of the purchase price.

Prime Minister Anthony Albanese says the Help to Buy scheme will benefit at least 40,000 low to middle-income people across Australia, especially those who are struggling to save for a home deposit.

“Often these Australians have done all the right things – worked hard, saved up, made sacrifices. But a deposit for a home is still out of reach,” he said.

To qualify for the scheme, you must:

• Be an Australian citizen
• Be at least 18 years of age
• Have an annual income of $90,000 or less for an individual, or $120,000 or less for a couple
• Live in the purchased home
• Not own any other land or property in Australia or overseas

Applicants are required to have at least a 2% deposit of the home price, be able to service a mortgage on the property and prove they can pay up-front costs, such as transfer duty, legal fees and bank fees. [7]

The government has indicated to that price caps will apply for the Help to Buy scheme across Australia, with the ceiling in NSW being set at $950,000 for Sydney and regional centres across the state.

Final details of the new Help to Buy scheme are yet to be released, but if you would like to know more please contact ALAND on 1800 025 263.

Sources:

[1] Treasury press release
[2] ABC news
[3] Treasury press release
[4] Australian Financial Review
[5] ABC news
[6] ABC news
[7] ABC news