Australians will soon be able to buy a home with their friend as major changes are made to help millions of residents enter the property market.
The federal government is expanding three major grant programs that were originally available only to married couples or people in de facto relationships.
From 1 July, ‘any two persons’ can claim the first home guarantee, the regional counterpart and the family guarantee.
Friends, siblings or parents are now among those who can now work together to benefit from the scholarships.
Millions of Australians are frustrated at not being able to enter the property market with a major change that allows friends to buy a house together.
Under the three schemes, the federal government guarantees up to 15 percent of a homebuyer loan.
This allows residents to buy a home with a down payment of just five percent.
The arrangements allow homebuyers to avoid paying the lender’s mortgage insurance, or LMI, saving them thousands more dollars.
Federal Housing Secretary Julie Collins said the change would go a long way in helping people get their foot in the door of the real estate market.
“We know things are changing and we have friends, brothers and sisters, all sorts of people who are going to buy their own homes all over Australia and we have to move with the times,” she told Channel Nine’s Today on Sunday.
Ms Collins said that from 1 July singles and permanent residents of Australia will also be eligible to apply, rather than just citizens.
“We want to help more Australians move into homes, especially those who have been renting for a long time [and] those who have struggled to cross the 20 percent mortgage threshold,” she said.
“With this arrangement, they can get their own home faster, and we’re saving them tens of thousands of dollars because they don’t need mortgage insurance from the lender because the government guarantees that other 15 percent of the security deposit.”
Currently, on an $800,000 property where a buyer has made a five percent down payment, they can pay an LMI of up to $41,300, depending on the lender.
The family home guarantee is extended to include single legal guardians of children in addition to permanent residents of Australia, meaning aunts, uncles and grandparents are also eligible.
It is currently only open to single parents with at least one dependent child.
Ms Collins said caps will be put in place over concerns that broadening eligibility criteria would make housing even more unaffordable by driving up prices even further.
“We are focusing on it, we are limiting the number so that there are 50,000 places in the guarantee for family homes across the country in the [next] years,” she said.
Ms Collins said ‘price caps’ would also be used.
“What we don’t want to do is influence prices, but of course we want Australians to get their own homes sooner,” she said.
Ms Collins said more is being done on other issues contributing to the housing crisis, which is affecting not only homebuyers but millions of renters.
She said the Albanian government wants proceeds from the Future Fund, Australia’s sovereign wealth fund established in 2006, to be “invested in social and affordable housing”.
Federal Housing Secretary Julie Collins said the change would go a long way in helping people get their foot in the door of the real estate market
The change paves the way for people to buy with friends, siblings or parents to access the first home guarantee, regional equivalent or family home guarantee
She urged the Greens and the opposition to pass that reform through the Senate.
The announcement about grant eligibility comes after state and territory housing ministers announced last week that they would meet to discuss reforms that “enhance tenants’ rights.”
On Friday, Ms. Collins announced that the government would allocate an additional $2 billion to the National Housing Finance and Investment Corporation for more social and affordable rental housing in next month’s budget.
“This budget boost will help get more Australians into affordable rental housing faster,” she said.
“This is an action that will have a real impact on people’s lives and supports our plans to build tens of thousands of additional social and affordable rental homes across the country.”
The government will also introduce incentives in the budget next month to increase the supply of rental homes by changing the agreements on investments in owner-occupied homes.
They include an increase in the depreciation rate from 2.5 percent to 4 percent per annum for eligible new construction projects where construction begins after May 9, 2023.
After July 1, 2024, the government will also reduce the withholding tax rate for eligible fund payments from managed investment funds to foreign residents on income from new-build homes from 30 to 15 percent.