Rita Panahi: Labor’s shared equity housing plan is diabolically dumb

There was a time when such ill-considered tomfoolery would only come from a minor party but Labor has launched a policy so harebrained that Adam Bandt must be feeling jealous.

Labor’s shared equity housing plan is such a thoroughly and diabolically dumb policy that one could be mistaken for thinking the Greens came up with it.

There was a time when such ill-considered tomfoolery would only come from a minor party with no chance of governing but Labor has launched a policy so harebrained that Adam Bandt must be feeling jealous.

There are of course concerns with such schemes only pushing up housing prices further but there are greater issues with sharing ownership of your home with the government.

It’s not a good idea when proposed by state or territory governments and it’s certainly not a good idea when pushed by the financially inept federal Labor Party which has not returned a surplus since 1989.

Yes, it’s been 33 years since Labor managed to deliver a federal budget surplus.

Labor’s key housing policy is scant on detail because the more you learn of the shared equity plan the more holes you can pick in the scheme.

Anthony Albanese’s Labor Party has launched a policy so harebrained that Adam Bandt must be feeling jealous. Picture: Jeremy Piper

Under the $329 million scheme (plus a further $7 billion borrowed) qualifying home buyers would have up to 40 per cent of their home (for new property) or 30 per cent (for existing property) paid for and owned by the government.

Buyers would only have to contribute a two per cent minimum deposit and a cap of $850,000 would apply for Melbourne and major regional centres in Victoria, with a marginally higher cap for NSW.

Putting to one side the fact that there are sound reasons why financial institutions require prospective most home buyers to save at least five to 10 per cent deposit and think about the administrative nightmare Labor’s plan would unleash.

It’s one thing to have the bank own most of your house but something else for the government to own a percentage.

Unlike a mortgage the government’s ownership is calculated as a percentage of the home value, not the initial dollar amount invested plus interest, meaning when the property is sold, the government would take its portion of whatever capital gains have been made.

If the house is a sound investment which has been lovingly maintained the government stands to benefit but if the place is a dump in an area with little capital growth then the taxpayer’s investment will be questionable.

A massive bureaucratic mess awaits anyone involved in the scheme who renovates or extends the property.

It’s one thing to have the bank own most of your house but something else for the government to own a percentage.

A valuation must be performed if you renovate so the government doesn’t reap the benefits of your hard work and expenditure when you sell but anyone who understands the property market knows all too well a valuation performed when improvements are undertaken can be meaningless two years or twenty years later.

A pool may see your property increase 5% at the time it’s installed.

20 years later the impact of that pool may be a 15 per cent improvement or it may be negative five per cent if it makes a subdivision more difficult or more expensive.

How do we determine who gets what when a sale takes place years after capital improvements are undertaken?

How do we determine the value added by those who do not complete a large-scale renovation but maintain their property with regular painting, planting and loving care?

Or do homeowners have to complete a formal valuation after every single improvement whether it’s new carpets, a new fence, heating and cooling installations or other small upgrades?

The only redeeming feature of this policy is that it won’t be inflicted on every Australian unlike the monstrously stupid energy policies of Labor and their ideological bedfellows the Greens and the Climate 200 ‘independents’.

The policy gives voters an insight into the modern Labor Party.

They may be running a small target strategy by pretending they are fiscal conservatives who will mirror Coalition policies from border protection to economic management but once in power we can expect a very different beast.

Labor has learned well from losing the unlosable election in 2019; they know not to scare the electorate with a detailed policy platform but their shared equity plan gives a worrying insight into the hard Left values of modern Labor.