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 of the Help to Buy Scheme:
- Government Equity Contribution: The government will provide an equity contribution of up to 40% for new homes and up to 30% for existing homes.Eligibility Criteria:
- Income Limits: Eligible participants include singles earning up to $90,000 and couples earning up to $120,000 annually.
- Owner-Occupier Requirement: Participants must reside in the purchased property.
- Minimum Deposit: A minimum deposit of 2% of the property’s value is required.
- Property Price Caps: There are maximum purchase price limits based on location. For example, in Sydney, the cap is $950,000.Program Scale: The scheme aims to assist up to 10,000 home buyers annually, with a total of 40,000 participants over its duration.
The scheme is designed to lower the financial barriers to home ownership by reducing the amount buyers need to borrow. When the property is sold, the government will recoup its initial investment along with a proportionate share of any capital gains.
While the initiative has been welcomed as a step towards improving housing affordability, some experts caution that without corresponding increases in housing supply, such demand-side measures could contribute to rising property prices.
The passage of this legislation follows negotiations between the government and the Greens, who agreed to support the bill despite expressing concerns about the need for additional measures to address rental affordability and housing supply.
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
