Australians will soon be able to buy a house with their friend as major changes are brought in to help millions of residents enter the property market.
The federal government is expanding three major grant schemes that were originally only available to married couples or people in de facto relationships.
From July 1, ‘any two eligible individuals’ will be able to apply for the first home guarantee, the regional equivalent and the family home guarantee.
Friends, siblings or parents are among those who will now be able to team up to take advantage of the grants.
A lifeline has been thrown to millions of Australians frustrated at being unable to enter the property market with a major change that allows friends to buy a home together
Under the three schemes, the federal government acts as guarantor on up to 15 per cent of a loan for home buyers.
This allows residents to buy a property with a deposit as low as five per cent.
The schemes allow homebuyers to avoid paying lender’s mortgage insurance, or LMI, saving them thousands of dollars more.
Federal housing minister Julie Collins said the change would go a long way to helping people get their foot in the door of the real estate market.
‘We know that things are changing and we’re having friends, siblings, all type of people going into home ownership right across Australia and we need to move with the times,’ she told Channel Nine’s Today on Sunday.
Ms Collins said from July 1 single people and Australian permanent residents would also be eligible to apply, instead of just citizens.
‘We want to support more Australians to get into a home particularly those who have been long term renting [and] those who have been having difficulty overcoming the 20 per cent mortgage deposit threshold,’ she said.
‘With this scheme they can get into home ownership sooner and we’ll save them tens of thousands of dollars because they won’t need lender’s mortgage insurance because the government will guarantee that other 15 per cent of the deposit.’
Currently on an $800,000 property where a buyer has a five per cent deposit they could pay LMI of up to $41,300, depending on the lender.
The family home guarantee will be expanded to include single legal guardians of children alongside Australian permanent residents, meaning aunts, uncles and grandparents would also become eligible.
It is currently only open to single parents with at least one dependent child.
Ms Collins said caps will be introduced over concerns widening eligibility criteria would make housing even more unaffordable by driving up prices even further.
‘We’re targetting it, we’re capping the number so there’s 50,000 places across the family home guarantee across the country in the [next] year,’ she said.
Ms Collins said ‘price caps’ would also be used.
‘What we don’t want to do is impact prices, but obviously we do want to support Australians into home ownership sooner,’ she said.
Ms Collins said more is being done on other issues contributing to the housing crisis, which is affecting not just home buyers but millions of renters as well.
She said the Albanese government wants to see returns from the Future Fund, Australia’s sovereign wealth fund which was established in 2006, be ‘invested in social and affordable homes’.
Federal housing minister Julie Collins said the change would go a long way to helping people get their foot in the door of the real estate market
The change clears the way for people to buy with friends, siblings or parents to access the first home guarantee, the regional equivalent or the family home guarantee
She urged the Greens and the opposition to support by passing that reform through the Senate.
The announcement on grant eligibility comes after state and territory housing ministers announced last week they would be meeting to discuss reforms that ‘strengthen renters’ rights’.
On Friday Ms Collins announced the government would allocate an extra $2billion to the the National Housing Finance and Investment Corporation for more social and affordable rental housing in next month’s Budget.
‘This boost in the Budget will help get more Australians into affordable rental homes sooner,’ she said.
‘This is action that will have a real impact on people’s lives, and will support our plans to build tens of thousands of additional social and affordable rental homes right across the country.’
The government will also offer incentives in next month’s budget intended to increase the supply of rental housing by changing arrangements for investments in built-to-rent accommodation.
They include increasing the depreciation rate from 2.5 per cent to 4 per cent per year for eligible new build-to-rent projects where construction commences after 9 May 2023.
The government will also reduce the withholding tax rate for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties after 1 July 2024 from 30 to 15 per cent.
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