Key points
  • The Albanese Government will introduce its shared equity scheme to federal parliament this week
  • Once the bill has passed, the Help to Buy scheme will be available in the ACT and Northern Territory
  • Its introduction elsewhere will depend on state legislation 

The shared equity scheme is expected to see the Federal Government funding up to 40% of the cost of a house for first home buyers from 2024.

The scheme is expected to allow 40,000 eligible home buyers to enter the property market with as little as a 2% deposit without paying lenders mortgage insurance (LMI) and potentially with a more competitive home loan.

Those using the scheme won’t pay interest or rent on the government’s share of their home. 

Though, they will be subject to strict price caps and ongoing income limits. 

“It won’t just be a leg up into home ownership with savings from a smaller deposit – it will provide long‑term relief to Australians who are part of the scheme,” minister for housing Julie Collins said. 

“In fact, Help to Buy could help eligible new homeowners save hundreds every month on their mortgage. ”

The scheme will see the government contributing up to 30% of the value of an existing home - or up to 40% of the value of a new home - and retain an equivalent interest in the property. 

If a buyer later sells their home, the government will take a share of any capital gain or loss, equivalent to the portion of its stake. 

It will operate in the ACT and the Northern Territory following the passage of Commonwealth legislation, however it won’t operate in any of the states until each state passes its own legislation.

All states agreed to progress such legislation at the National Cabinet earlier this year.

Low and middle-income earners, single parents, mature-aged women, and long-term renters will be among those able to access the Help to Buy scheme. 

To be eligible, Australians must have an annual taxable income of less than $90,000 for singles and $120,000 for joint applicants, intend to live at the property, and be unable to purchase property without the scheme’s help.

They also cannot be participating in the Home Guarantee Scheme or any other shared equity scheme.

Those utilising the scheme can choose to pay back the government’s contribution. 

If their income exceeds the caps before they do, they might be forced to work with their lender to repay some or all of the government’s stake. 

Property price caps are expected to range from $950,000 in NSW capital cities and regional centers to $400,000 in Christmas Island and the Cocos (Keeling) Islands.

Image by Bench Accounting on Unsplash.