26th Nov 2024, 1:20 PM – Senate Help to Buy Bill 2023, Help to Buy (Consequential Provisions) Bill 2023 - Third Reading - Pass the bill

The majority voted in favour of a motion to agree with the remaining stages of the bills so they can now be passed. In parliamentary jargon, they voted to give the bills a third reading. The bill will now return to the House of Representatives, where our MPs will consider whether to agree with the Senate's amendments.

What do these bills do?

According to the bills digest (which is an overview of the bills prepared by the parliamentary library):

• The Help to Buy Bill 2023 and the Help to Buy (Consequential Provisions) Bill 2023 establish the framework for a new national shared equity program – called the Help to Buy program – aimed at assisting low to middle income earners to purchase new or existing homes by accessing an equity contribution from the Commonwealth.

• Housing Australia will administer Help to Buy and states will ‘opt in’ to participate in the scheme by either a referral under section 51(xxxvii) of the Constitution, or adoption of the Commonwealth legislation. Section 122 of the Constitution enables Commonwealth operation of the program in the territories.

• Under a ‘Help to Buy’ arrangement, Housing Australia (on behalf of the Commonwealth) will enter into a contract with eligible purchasers to contribute part of the purchase price of a residence.

• The Commonwealth’s equity contribution of up to either 30 or 40 per cent of the purchase price (depending on whether the property is new) will be recognised as a second mortgage or other right secured against the property. Thus the Government will own that share in the property. This equity contribution is intended to lower a borrower’s monthly repayments.

• Help to Buy will be open to up to 10,000 eligible purchasers per year, assisting up to 40,000 households to make a home purchase affordable.

• Homebuyers will need a minimum 2 per cent deposit to participate and will qualify for a standard home loan (with no need for lenders mortgage insurance).

• While alluded to in Australian Labor Party policy documents, many of the details of the Help to Buy Program – including the upper limit of Commonwealth contribution and minimum deposit requirements – will be found in the Program Directions, a legislative instrument not subject to disallowance and exempt from sunsetting. Consultation with states and territories on the Program Directions can begin prior to commencement of the Bill, to support timely operation of the Bill.

• Key concerns raised about shared equity schemes as a policy for tackling housing affordability are that they may contribute to further growth in house prices, that they may encourage those for whom home ownership may not be the most suitable option to take on undue financial risk, and that they divert resources from supporting people who are homeless or at risk of homelessness (including because of rental stress).

• On the other hand, key interest groups have expressed support for shared equity schemes as a vehicle for assisting people in overcoming barriers to home ownership. For instance, the Australian Housing and Urban Research Institute (AHURI) has predicted, based on microsimulation modelling, that a well-designed national shared equity scheme has the potential to assist a large number of eligible aspiring first home buyers.