With the Labor government taking out the Federal Election win, we unpack all the key housing policies you need to know about, and share the thoughts of our Managing Director, Damian Collins.
While the 2019 Federal election saw Labor’s negative gearing proposals spark widespread controversy across the real estate sector, this year’s election lead-up saw both parties taking a less contentious approach to their housing policies.
With affordability pressures mounting in Australia’s largest capital city markets, accessibility to housing unsurprisingly emerged as a central issue both Labor and the Liberal-National Coalition sought to address in their respective promises.
With the Australian Labor Party ultimately claiming victory, and negative gearing changes firmly off the table, what are the key housing policies we can expect to see in the months and years ahead?
“Help to Buy” Scheme to help lower-income buyers
Labor’s policies place a strong focus on helping low income and first-home buyers into the market.
This is a goal they hope to achieve through several means, starting with their proposed shared equity scheme.
The “Help to Buy” Scheme will see the Government assist eligible buyers by purchasing as much as a 40% share of their property alongside them, or 30% in the case of existing homes.
The Scheme means buyers would avoid the costs of Lender’s Mortgage Insurance, and could see them get into the market with as little as 2% deposit.
While not just limited to first-home buyers, the shared equity program isn’t available to everyone.
It’s capped at 10,000 places a year and is only open to buyers who don’t currently own a property, providing they also meet the eligibility criteria. This includes:
- Individuals earning less than $90,000 or couples earning less than $120,000
- Buyers purchasing within the set price caps in their respective state and territory
- Must be an Australian citizen
- Must subsequently live in the property for two years
Under the Scheme, the Government would own a share in your house, which you can choose to buy back over time. If your income increases over the threshold, you would be required to start purchasing more of the property.
And in the event where you sell the house, the Government would take back its share of the property along with the relevant portion of any capital gains realised.
“This is a promising step in giving lower-income buyers a helping hand into the market and towards home ownership.”
As for concerns the Scheme would put upwards pressure on property prices, Damian notes:
“The limited number of places available and the fact it is targeted at the lower end of the market means any impact on prices will be minimal, particularly weighed up against the benefits this kind of initiative could bring for eligible buyers.”
Deposit-guarantee scheme to support regional first-home buyers
Furthering their bid to enhance market accessibility, the Labor Government has also committed to supporting the expansion of the various loan guarantee schemes put forward by the Liberal-National Coalition.
Included amongst these is their proposed Regional First-Home Buyer Support Scheme. The Scheme will help 10,000 first-home buyers per year in regional Australia by covering up to 15% of their home deposit, meaning eligible buyers would only need a 5% deposit to get into the market without paying LMI.
In a slight deviation from the Coalition’s proposed regional Scheme, Labor’s initiative will be applicable to both new and existing homes, although it is limited to first-home buyers only.
The Scheme is set to run until late 2025.
“Along with the expansion of the deposit-guarantee scheme for first-home buyers, this initiative is a real positive for buyers in regional areas where demand has grown over the course of the COVID-19 pandemic. We’re proud to have been able to get access to the first-home buyer Scheme for a number of our clients in recent years and look forward to helping more buyers access these initiatives when they launch.”
Housing Australia Future Fund targets availability of affordable housing
Amongst its election promises, the Labor Party has included initiatives to support the availability of social and affordable housing across Australia.
It aims to do this through a $10 billion investment fund, whereby the fund’s returns will be transferred on an annual basis to the National Housing Finance and Investment Corporation (NHFIC) to support the construction of new social and affordable housing.
The Government is anticipating the fund will finance the build of 30,000 properties in its first five years. This includes 10,000 affordable homes for frontline workers (i.e. police, nurses and cleaners) as well as 20,000 social housing properties, 4000 of which will be allocated for women and children fleeing domestic and family violence and older women at risk of homelessness.
As part of its “Help to Supply” initiative, the Labor Government has also committed to establishing a National Housing Supply and Affordability Council.
The Council will have various responsibilities aimed at tackling housing affordability and supply issues. These include consulting with individual State and Territory Governments to set land supply targets, improving the collection and availability of data surrounding housing supply and affordability, and advising on strategies to improve land use planning.
“This is a great first step in addressing the availability of social and affordable housing across Australia, especially in the nation’s largest capitals where record property prices and the rising cost of living are placing increasing pressures on vulnerable people in the community.”
When it comes to the supply side of the equation, Damian notes:
“There is more to be done in addressing the issue of limited supply from an individual state and territory perspective, but this is certainly a great initiative at a federal level.”
Rightsizer initiatives to free up housing for young families
Labor has agreed to match the Coalition’s pre-election promise to expand tax incentives for pensioners, retirees and working older Australians looking to downsize their property.
The initiative includes an extension of an existing tax break which allows up to $300,000 from the sale of a home to be placed into superannuation without a penalty. Under the extension, eligible Australians aged 55 years and over will soon be able to make voluntary contributions – an extension from the current eligibility age (65+) that will see an additional one million Australians qualify.
Under the new proposal, the proceeds from the sale will also be exempt from the assets test for two years rather than the original one, providing a further incentive for older Australians to “rightsize” earlier.
“These proposals provide much-needed incentives that will not only free up the availability of larger homes for young families, but also enable older Australians to move into properties that better suit their lifestyle and needs as they approach and progress through retirement.”
Damian notes, “Overall, this year’s Federal Election represented one of the least contentious when it came to housing policies, and it was encouraging to see both major parties looking to address issues of housing accessibility.”
As for the next step, Damian says “it really comes down to addressing issues of housing supply, much of which will lie with the individual State and Territory Governments.”
Want to learn more about this year’s Federal Election policies? Check out some of the resources below for more information: