On 21 May 2022 Australians went to the polls to vote in the 47th Parliament of Australia.
A long tense night ended in a victory for the Australian Labor Party, with a drastically expanded cross bench winning seats at the expense of blue ribbon Liberals.
But what does the result mean for home owners, would-be home owners and tenants? All three groups have felt the pinch recently. A dramatic increase in house prices in the last few years have put home ownership out of reach for many. Tenants are also feeling the squeeze, with tight vacancy rates and soaring rent. Meanwhile, those who have taken out a mortgage in the last couple of years, believing that interest rates would stay low, are now facing increases in their repayments.
There has been a lot of rhetoric in the preceding weeks, and it can be hard to sort through the various promises. Here’s a summary of what the ALP have undertaken to put in place:
Help for first home buyers
Labor is offering 10,000 buyers a year the chance to buy a house under the ‘Help to Buy’ scheme. The scheme is available to individuals earning less than $90,000 or couples earning $120,000. It works as a shared-equity model. The government purchases up to 40% of the home if it is a new build, and up to 30% for an existing home, which it owns unless you choose to buy it back. If your income increases over the threshold, you have got to start paying it back in a similar manner to a HECS-HELP debt.
Because you only own 60% of the house, you’ll only need 60% of the deposit and mortgage that you would if you owned it outright. This means that you’re not just getting into the market with a smaller upfront fee; your ongoing costs are also significantly lower. For example, if you build a new $650,000 house in Melbourne, you can save up to $260,000.
You have all the rights of a home owner in terms of private enjoyment and can make changes to the house. However, when you sell it, the government will take back its share of the equity (including any capital gains) unless you’ve bought back their proportion over time.
New social housing
The ‘Housing Australia Future Fund’ is a $10 billion investment fund which Labor promises to use to build 30,000 new social and affordable housing properties in its first five years. These break down as follows:
20,000 social housing properties, with 20% of those prioritised for women and children fleeing family violence and for older women on low incomes who are at risk of homelessness.
10,000 affordable housing properties for front line workers such as police, nurses and cleaners who may otherwise struggle to afford housing near where they work.
Investment returns from the Future Fund will also be allocated to:
• Repairing and improving housing in remote Indigenous communities, which have some of the worst housing standards in the world
• Crisis and transitional housing for women and children fleeing family violence, and for older women at risk of homelessness
• Housing and specialist services for veterans who are experiencing homelessness or are at risk of homelessness
Regional deposit guarantee scheme
Labor is also offering 10,000 places under a regional guarantee scheme. As with previous Coalition schemes, the scheme would allow buyers to purchase with only a 5% deposit, and government would back the remaining 15%. This removes the need for lenders’ mortgage insurance and reduces repayments. For example, Labor estimates that a buyer in Geelong buying a $700,000 property can save up to $27,954 in mortgage repayments over the term.
How is all of this funded?
Labor will double the foreign investment screening fees and penalties from July 2022. For example, a foreign buyer acquiring residential land worth under $1mill currently pays $6,350. After July this will be $12,700. This may have the added result of discouraging foreign acquisition of Australian property.