Federal election 2022: Labor unveils Help to Buy housing plan
Labor has a revolutionary and arguably risky plan to help Australians enter the market. But there is a big catch.
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A Labor government would help Australians enter the market by taking out a 40 per cent stake in their property, reducing mortgages by up to $380,000.
The scheme, to be called Help to Buy, is modelled on state-shared equity programs where governments effectively lend low-income earners a percentage of the purchase price of a home in return for a share in the profits when the property is sold.
The announcement will be the centrepiece of Labor Leader Anthony Albanese’s campaign launch in Perth on Sunday.
Mr Albanese said Help to Buy was part of Labor’s plan to tackle the housing crisis.
“After nine long years in Government, housing affordability has only got worse under the Liberal-National Government,” Mr Albanese said.
Under the scheme, the Commonwealth would give eligible homebuyers an equity contribution of up to 40 per cent of the purchase price of a new-build home and up to 30 per cent of the price of an existing dwelling.
It will be capped at 10,000 loans a year and be open to all individuals earning up to $90,000 and couples earning $120,000 – not just first home buyers.
Buyers will only need a deposit of 2 per cent and qualify for a standard home loan with a participating lender to finance the remainder of the purchase.
They will also be freed from the need to buy lenders mortgage insurance during the life of the loan.
The scheme will be capped at different levels in different parts of Australia reflecting different housing markets.
In Sydney and NSW regional centres the scheme will operate for homes costing up to $950,000, saving the purchaser up to $380,000 on a new home, while in the rest of the state it will be confined to properties worth up to $600,000.
In Melbourne and Victorian regional centres the scheme will operate for homes costing up to $850,000, saving the purchaser up to $340,000 on a new home, while in the rest of the state it will confined to properties worth up to $550,000.
In Brisbane and regional centres in Queensland the scheme will operate for homes with $650,000 saving the purchaser up to $260,000 on new home, while in the rest of the state it will be confined to properties worth up to $500,000.
The scheme has been costed by the PBO which estimates it will cost $329 million over the forward estimates, mainly on administration.
“Help to Buy will help Australians buy a home with a smaller deposit, a smaller mortgage and smaller mortgage repayments,” Labor’s Shadow Minister for Housing and Homelessness Jason Clare said.
“This will help a lot of Australians buy a home with a smaller mortgage that they can afford to repay, instead of renting for the rest of their lives.”
Shared equity schemes have operated at a state level for many years, most successfully in Western Australia, with Victoria introducing one in 2017.
NSW is also shortly to introduce one.
In the past Prime Minister Scott Morrison has also spoken in favour of them.
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