Would you buy a house knowing that the government will own nearly half of it? And that, should you have the luck to suddenly increase your income above a certain amount, you could be forced to sell? How would you feel, knowing that the gimlet eye of the state will be watching every improvement you make to the place as well, figuring out what their cut will be?
These are just some of the ramifications of Labor’s latest election policy: “Help to Buy”. And it sounds about as likely to work flawlessly as “Kiwibuild”.
Anthony Albanese has a new policy to help first home buyers buy a home that means Labor would own a 30 to 40% stake in your property.
Labor’s key election policy announced on Sunday called “Help to Buy” (worth $329m) would be available for up to 10,000 households each year, should Labor win the federal election.
Labor’s housing minister Jason Clare told The Australian they might increase the number of available places depending on the “appetite”.
Well, we all know how the “appetite” for government big-spending promises goes: once introduced, they almost never go away. They nearly always metastasise.
For a new house, Labor would pay for up to 40% of it, and for an existing house, they would pay up to 30%.
The homebuyer would need a deposit of just 2% and would need to qualify for a regular home loan from a lender. They would not have to pay lenders mortgage insurance.
You can buy out the government’s stake over time, Labor says.
Shared ownership isn’t new – the United Kingdom has a scheme by the same name, Help To Buy.
Unfortunately, the UK’s scheme was only introduced last year, so there’s no hard data yet to indicate whether it’s worked, or just gone the usual route of government meddling in the housing market.
The scheme is open to singles on pre-tax incomes of up to $90,000 and couples on $120,000.
Is there any fine print?
You can only sell the property after two years.
When you go to sell the house and if the value of the property has increased, you will need to split the capital gains with the government (based on the stake you each have in the house).
You cannot rent the property except under special circumstances and unless you receive an exemption from the government. This includes if you needed to move for compassionate reasons or relocate for work.
If you renovate the property, you would need to get an independent assessment to claim the added value when you decided to sell.
The Australian
Naturally, the Coalition has gone on the attack.
Scott Morrison this morning seized on suggestions that participants in Labor’s home equity scheme would have to sell their property if they came to exceed the income caps in the program and were unable to buy out the government.
“If you are one of the lucky ones who get one of these 10,000 places where a Labor government can own 40 per cent of your house, if your household income goes above $120,000 a year, Anthony Albanese will put a for sale sign on your lawn,” he told 3AW.
“You actually have to dispose of the asset and pay back the government […]
“On top of that, if something terrible happens and your property is passed to your children, the children have to sell the house if their income is not eligible for the scheme.”
Labor’s housing spokesman and deputy leader, while defending the scheme, confirmed that in the case above, the children would be forced to sell.
In the case where an Australian who accessed the scheme begins earning more than $90,000, or acquires additional assets, they are able to refinance the loan to pay back the government, or negotiate with the government to pay back their contribution in instalments.
The Australian
Governments getting involved in the private housing market — what could possibly go wrong?
