Boost to home ownership for those not already in the market
Home buyers who do not presently own any land or property will see a boost to their coffers with the introduction of the federal government’s Help to Buy legislation.
The Help to Buy Scheme is proposed to be a shared equity scheme that will allow eligible home buyers to purchase a property with a smaller deposit.
Quite common in European countries, this scheme works by allowing buyers with a deposit of at least 2 per cent of the property’s purchase price to obtain a loan with an equity contribution from the government.
The size of the contribution can vary from up to 30 per cent for an existing home to up to 40 per cent of the 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 the government’s equity contribution be paid down over time or paid back if you sell.
The Housing Industry Association (HIA) has welcomed this new legislation, saying it will support more young Australians getting access to housing and address the declining rates of home ownership in Australia
HIA managing director Jocelyn Martin said the scheme was an important initiative of the federal government to enable 40,000 eligible home buyers to obtain and secure a deposit for a new home faster.
“The Scheme intends on supporting eligible home buyers with an equity contribution from the government.
“While the opportunity to own a home can be challenging, and the type of homes many families aspire to are changing shape, previous research conducted by HIA shows an overwhelming majority of Australians agree that home ownership matters.
“These and other forms of housing incentive programs are critical to boost housing supply and home ownership rates to support first home buyers raising the deposit more quickly and easily.
“We know from previous schemes, such as the first Home Buyer Grant, that grants such as Help to Buy, are effective to getting people into their own home, and new housing supply is stimulated by these schemes.”