Labor to help low and middle income earners buy home with shared ownership scheme

Anthony Albanese will provide help for Australians on low and middle incomes to buy houses by giving eligible applicants a commonwealth equity contribution of up to 40% of the purchase price of a new home, and up to 30% for an existing home.

To qualify for help under the shared ownership scheme, eligible homebuyers will have to have saved a deposit of 2% and qualify for a standard home loan with a participating lender to finance the remainder of their purchase.

Australians with a taxable income of up to $90,000 for individuals and up to $120,000 for couples will be eligible to participate in the program which Labor has called Help to Buy.

Successful applicants will need to be Australian citizens and not current home owners. Labor says successful applicants for the scheme will also avoid the need to pay lenders mortgage insurance, which represents a saving of around $30,000.

Home buyers under the scheme will have the option of taking additional equity in the property over the life of the home loan. They will not have to pay rent on the proportion of the house owned by the commonwealth.

The new scheme is modelled on programs that already exist in the UK and in some Australian states, including Western Australia, which has the Keystart scheme.

Over time, the program is expected to deliver income for the commonwealth as the government recovers its equity and its share of the capital gain when the properties are sold.

The new policy comes as the campaign conversation has shifted to the economy, rising cost of living pressures and home mortgage rates.

A surge in inflation over the past 12 months confirmed in the latest official figures from the Australia Bureau of Statistics has led to speculation the Reserve Bank of Australia will increase interest rates during the election campaign, creating a political headache for the Morrison government.

Albanese said 40 years ago, almost 60% of Australian on low and modest incomes owned their own home, but because of price trends, the percentage of homeowners in those income brackets had fallen to 28%.

He said after nine years in government, housing affordability had only gotten worse under the Morrison government.