Up to 40,000 low-income earners will get additional government help to purchase a home under the new Help to Buy scheme.
At last week’s National Cabinet, the states and territories agreed to the shared equity scheme, which will see the Federal Government will contribute up to 40 per cent of the cost of a new home, and 30 per cent for an existing home, to 10,000 eligible buyers per year.
The program is being offered to low and middle-income earners, single parents, mature-aged women and long-term renters and will be available in all states and territories.
When a property purchased through the scheme eventually sells, the government will take a proportionate share of the capital gains.
However, the home buyer can also progressively buy out the government’s stake.
Prime Minister Anthony Albanese said the scheme will help thousands of low-income earners.
“So 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,” Prime Minister Albanese said.
“Our government will step up and assist, opening the door of home ownership to tens of thousands of Australians.”
PropTrack senior economist Paul Ryan says the Help to Buy scheme makes it easier for people like first home buyers who were struggling to save a deposit.
“The good thing about this policy is that it recognises that the big burden for first-home buyers is saving a deposit, so the homebuyers who are accepted can jump that hurdle much more easily,” Mr Ryan told realestate.com.au.
He says the advantage of this type of policy is that it wouldn’t increase home prices, unlike the first-home buyer grant and stamp duty concessions.
“These policies are likely to get first-home buyers into their homes sooner,” he said.
To be eligible, individuals will need to earn less than $90,000 annually, while couples will need to earn under $120,000.
Buyers will also be required to come up with a two per cent deposit and intend to live in the property bought through the scheme.
There are still a number of questions about the details of the scheme, including whether home buyers are required to pay the government rent on their portion of the home, or what might happen if the home buyer’s income level changes.
The scheme is expected to cost $553.5 million and is due to start sometime next year.
