Page up to date as of 11 April 2023
Labor’s Help to Buy Scheme has been proposed by the federal government to allow eligible home buyers to enter the property market sooner.1 Similar to previous state initiatives – VIC HomeBuyer Fund and WA HomeShare Scheme - this scheme will be a shared equity scheme meaning the contribution of up to 40% made by the government is in exchange for a share, or proportional interest in the property.
This initiative has been proposed by the government as part of the 2022 federal election campaign and has not yet commenced.2
What is the Help to Buy Scheme and how does it work?
The Help to Buy Scheme will be a shared equity scheme that will allow eligible home buyers to purchase a property with a smaller deposit. This scheme works by allowing buyers with a deposit of at least 2% of the property’s purchase price to obtain a loan with an equity contribution from the Labor Federal Government.3
The size of the equity contribution available can vary from up to 30% for an existing home to up to 40% of the purchase price for a new home. This aims to assist eligible home owners to enter the property market sooner with a smaller deposit and benefit from a smaller mortgage and smaller mortgage repayments. While you would not be required to pay rent on the portion of the home held by the Government, it is expected that the Government’s equity contribution be paid down over time, or paid back if you sell.
Labor announced that 10,000 places for the Help to Buy Scheme will be available each year for eligible homebuyers.
Eligibility criteria for the Help to Buy Scheme
According to the announcement, the following eligibility criteria will apply:
- Citizenship: Be an Australian citizen, at least 18 years of age
- Income: Yearly income is $90,000 or less for individuals, or $120,000 or less for couples
- Residential property: You must live in the purchased home
- Ownership: You must not currently own any other land or property in Australia or overseas
- Deposit: Have saved the required minimum 2% deposit of the home price and are able to finance the remainder of the purchase through a home loan with a participating lender
- Costs: Be able to pay for all associated upfront costs, such as stamp duty, legal fees and bank fees. You will also be responsible for ongoing costs associated with the property such as rates, strata, electricity bills, etc.
Property price caps for the Regional First Home Buyer Support Scheme
It is expected that the scheme will have property price caps. These are yet to be announced however similar schemes like the First Home Guarantee have the following price caps.
|
State |
Property price cap |
|
|
Capital city & regional centres |
Rest of state |
|
|
NSW |
$950,000 |
$600,000 |
|
VIC |
$850,000 |
$550,000 |
|
QLD |
$650,000 |
$500,000 |
|
WA |
$550,000 |
$400,000 |
|
SA |
$550,000 |
$400,000 |
|
TAS |
$550,000 |
$400,000 |
|
ACT |
$600,000 |
$600,000 |
|
NT |
$550,000 |
$550,000 |
Source: https://www.alp.org.au/policies/helping-more-australians-into-home-ownership
