The NSW Shared Equity Scheme for homebuyers explained

KEY TAKE-OUTS:

• The NSW Government is trialling a scheme to make home ownership more achievable for single parents, older singles (50+) and key worker first home buyers
• The NSW Government will pay a part of the purchase price of a property in exchange for an equivalent ownership share
• While you remain eligible, you will not be required to make repayments on the Government’s contribution, nor will any rent or interest be charged

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What is the shared equity scheme for homebuyers?

The scheme has been designed to make home ownership more achievable for single parents, older singles (50+) and key worker first home buyers.

It’s where the NSW Government pays a part of the purchase price of a property in exchange for an equivalent ownership share. For new properties, the Government will contribute up to 40% of the purchase price. For existing properties, the Government will contribute up to 30% of the purchase price.

How does the shared equity scheme work?

Who decides what percentage the Government’s equity contribution will be?

The Government’s lending partner after conducting an assessment.

When will the shared equity scheme be available?

The scheme is anticipated to begin in January 2023.

Applications will be accepted during two financial years (2022-2023 and 2023-2024).

How many places will be available for the shared equity scheme?

There will be 3,000 places available per financial year.

Who is eligible for the shared equity scheme?

Those that fall into one of the following three categories:

• Singles parents with a child/children under 18 years of age; or
• A single person 50 years of age or over; or
• First Home Buyers who are key workers (nurses, teachers or police).

What is the eligible income threshold for the shared equity scheme?

• For singles, your gross income cannot be more than $90,000
• For couples, your gross income cannot be more than $120,000

Does the value of your property affect your eligibility?

• In Sydney and major regional centres, the purchase price of the property must not exceed $950,000.
• In all other areas of NSW, the purchase price of the property cannot exceed $600,000

What is the age limit to apply for the scheme?

• You must be at least 18 years of age

What are the citizenship requirements to access the scheme?

• You must be an Australian Citizen, New Zealand Citizen or permanent Australian Resident

Do you need to save a certain percentage of the house deposit to be eligible?

• You must have a deposit of at least 2% of the purchase price

Are there any residential requirements or limits on property ownership?

• You must occupy the property as your principal place of residence (the scheme is not available for the purchase of an investment property)
• You cannot own an interest in any land in Australia or overseas at the time of purchase

Other approvals, requirements, and conditions for the shared equity scheme

• You must not be able to get the loan yourself without assistance of the scheme. However, you must be able to get a loan with the assistance of the scheme
• You are liable for all costs associated with the purchase and sale of the property including stamp duty, council rates, water rates and mortgage repayments
• You are required to maintain the property and keep things in good working order
• For certain modifications or renovations, you must obtain approval from the Government

Do I need to pay back the NSW Government?

While you meet the eligibility criteria for the shared equity scheme, you will not be required to make repayments on the Government’s contribution, nor will any rent or interest be charged.

If you no longer meet the eligibility criteria, you will have to start making repayments on the Government’s contribution. So far as the income requirement is concerned, if your income exceeds the threshold on 2 consecutive annual review reporting dates, you will be required to start making repayments.

Despite this, you can make voluntary payments to progress toward full ownership of the property.

Whether or not you continue to meet the criteria will be determined by an annual review. Each year you will be required to complete a review and provide supporting information.

First Home Buyers

Key worker first home buyers who are eligible for the shared equity scheme are also eligible for stamp duty exemptions or concessions under the First Home Buyer Assistance Scheme (where they meet this eligibility criteria).

Examples of how the shared equity scheme will operate for different demographics

Single parent in Sydney

For an eligible single parent in Sydney buying a new home at the maximum price of $950,000, the 40 per cent equity contribution would be a maximum saving of $380,000. This equity contribution would lower monthly mortgage repayments by around $1,800 (assuming an interest rate of 4 per cent over a 30-year term).

First home buyer teacher in Wagga Wagga

For an eligible first home buyer who is a teacher in Wagga Wagga buying an existing home at the maximum price of $600,000, the 30 per cent equity contribution would be a maximum saving of $180,000. The equity contribution would lower monthly mortgage repayments by around $860 (assuming an interest rate of 4 per cent over a 30-year term).

Here’s what we don’t know…

Information regarding the exact process of applying for the scheme is not yet available. The process is likely to be set out on the approved lending partner’s website before the scheme begins in January 2023. Once the scheme is open, applications will be able to be made through the website of the approved lending partner.

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