Recently, the Australian Labour Party declared victory at the federal election which has left many people wondering – where does that leave us?
In the below, we have provided a summary of the initiatives planned by the Labour Government – but don’t forget! If you have any queries about the initiatives or the property market in general, you can always request a complimentary strategy session with one of our Senior Property Wealth Planners.
Help To Buy
Help to Buy is part of Labor’s plan to tackle the housing crisis by allowing Australians over 18 to buy a home with a smaller deposit, a smaller mortgage and smaller mortgage repayments.
Under the scheme, home buyers will only be required to have a deposit of 2 per cent (or more) to qualify for a standard home loan with a participating lender and will not require borrowers to pay lenders mortgage insurance (LMI).
The Labor government intends to pay an equity contribution of up to 40 percent of the purchase price for a new home, and up to 30 per cent for an existing home. For example, dwellings in Sydney and NSW regional centres such as Newcastle – which feature the highest cost cap under the scheme – the property price would be maxed at $950,000, offering a maximum saving of $380,000 on a new home (40%).
During the period of the loan, the home buyer is able to buy an additional stake in the property when they have the means to do so. Before that point, they will not have to pay rent for the portion of the home owned by the government. The government would recover its equity and its share of the capital gain when the house is sold.
Eligibility:
Australians aged 18 and over with a taxable income of up $90,000 per annum or couples with a combined figure of $120,000, who currently don’t own or have an interest in a residential property, will be eligible for the initiative.
Regional First Home Guarantee
Under an expansion of the First Home Guarantee, the Labor party has also pledged to assist 10,000 regional Australian families per year, purchase their first home.
The expansion of the program seeks to triple the number of places Australians living in regional areas received in 2021 under the same scheme. Places will be reserved for Australians who have lived in the region in which they apply from for more than 12 months. It will see approved applicants purchase a home with as little as a 5 percent deposit, without the need to pay lenders’ mortgage insurance (LMI).
Price Cap Review
Expanding on the existing First Home Guarantee, the Labour party has promised to conduct half-yearly reviews of the scheme’s price caps in both the capitals and regional areas that determine the maximum price an eligible applicant can pay for their new home.
Social Housing
Labor has pledged $10 billion to the Housing Australia Future Fund which will build 30,000 new social and affordable housing properties in its first five years. Each year moving forward the investment returns from the Housing Australia Future Fund will be transferred to the National Housing Finance and Investment Corporation (NHFIC) to pay for social and affordable housing projects.
Over the first 5 years the investment returns will build around:
- 20,000 social housing properties – 4,000 of which will be allocated for women and children fleeing domestic and family violence and older women on low incomes who are at risk of homelessness.
- 10,000 affordable homes for the frontline workers like police, nurses and cleaners who kept us safe during the pandemic. This will mean they can live closer to where they work, and it will mean better services for everyday Australians.
Additional Elements
The Labour Government is currently lodging an inquiry into the affordability crisis by reviewing current processes pertinent to approving permits and developments, in an effort to accelerate housing supply at a more affordable price point.
While the intent of the Labour Government’s initiatives are needed for the widespread affordability crisis, it offers very little for investors.
If you are interested in getting into the market to generate a passive income, OR would like some further assistance to accelerate your deposit for an investment, AllianceCorp offers a broad range of services and solutions to assist, no matter which stage of your investment journey.
Simply fill out the form below for more information!