OSHCstudents – Single parents will be backed to buy their own home with a deposit as modest as 2 per cent under a new housing program to be announced in Tuesday’s budget.
The program, to be known as the Family Home Guarantee, is designed to help single mothers and fathers overcome one of the “biggest hurdles” to achieving the dream of homeownership. The new Family Home Guarantee for single parents will support up to 10,000 single parents with dependants over four years, commencing 1 July 2021.
But it will help not only first home buyers but also single parents attempting to re-enter the housing market after divorce and family breakdown.
Like the existing First Home Loan Deposit Scheme, it will be subject to property price caps that restrict the benefits based on the state where the single parents live.Treasurer Josh Frydenberg told news.com.au the new policy was designed to address the challenges experienced by single parents trying to enter the housing market.
“The Morrison Government understands the importance of owning your own home and the significant economic and social benefits home ownership provides,” he said.”The Family Home Guarantee recognises that the challenge of saving a deposit is even harder when you’re on a single income while raising children.”
Housing Minister Michael Sukkar said the policy idea was the product of many months of discussions with banks and single parents over the challenges around getting into the market and securing a home for their family and retirement. “I’ve long been of the view that the challenges for single parent families are not given the prominence they deserve,” Mr Sukkar told news.com.au.”As Housing Minister I want to ensure that everyone who aspires for the security and stability of home ownership, gets that opportunity.”So in developing the Family Home Guarantee, I’m so pleased that more families will be able to realise the dream of home ownership which importantly means more Australian children will be given the additional stability this provides.”
In a separate measure, the government will also roll out another 10,000 places for couples and single parents to access the New Home Guarantee allowing first home buyers to build a new home, or purchase a newly built home with a deposit as little as 5 per cent.The maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme (FHSSS) will also be increased from $30,000 to $50,000.
Single parent households traditionally have lower home ownership rates than other household types.
As a result almost half of all single-parent families rent from a private landlord and do not own property.
By comparison, only one in four of dual-parent families are living in rental properties because it’s easier to save for a deposit and secure finance with two incomes.Around 125,000 single parents with children are expected to be eligible for the new scheme and if demand is strong the Morrison Government has the option of considering an extension to the scheme if the 10,000 places are snapped up.
The vast majority of those eligible for the scheme – around 105,000 families – are headed by single working mothers.
To be eligible to participate in the Family Home Guarantee you will need to demonstrate you earn $125,000 or less, but child support payments will be excluded from determining income.
Single mothers and fathers will also have to demonstrate they do not currently own property but they will still be eligible to apply if they have owned property in the past, for example when they were married. Under the scheme a minimum 2 per cent deposit will be required, although a 5 per cent deposit will be required for the New Home Guarantee with the Government to cover up to 18 per cent of the property purchase price. The sole parent will also need to be the only person listed on the title and the loan.
Dependant children will need to be under 16 where the adult is legally responsible for child’s day to daycare, welfare and development and children aged 16-21 that are wholly or substantially dependent on the other person as long as the child does not earn more than $6,403 in income in a financial year. Higher price caps apply to the New Home Guarantee and the price caps will differ depending on the state where you live.
In NSW the price cap is $700,000 for any home in a capital city or regional centre and $450,000 for the rest of the state.
- In Victoria, the price cap is $600,000 in Melbourne and regional centres and $375,000 elsewhere across the state.
- Queenslanders face a $475,000 price cap in Brisbane and $400,000 in smaller towns in the state.
- The price cap is $400,000 in Perth, Adelaide and Hobart and $500,000 in the ACT.
The new measures to help single parents are described as a “non-ongoing measure, used to stimulate construction, support jobs and secure Australia’s recovery.”
For couples and singles eligible for the new home scheme that does not apply to existing housing stock a combined taxable income of less than $200,000 in the preceding financial year will need to be established. There’s also an Owner Occupier Requirement that applicants move into the property from 6 months from the date of settlement, and live in the property so long as your home loan has a New Home Guarantee.
- The price caps for the New Home Guarantee scheme are higher rising to $950,000 in Sydney and $850,000 in Melbourne.
- In Brisbane, the price cap for the New Home Guarantee is $650,000.
The price cap in Perth, Adelaide and Hobart will be $550,000.
The majority of applicants for the New Home Guarantee are younger couples entering the market in were concentrated in the 25-34 age bracket.
Annalink OSHCstudents (Source: https://www.qt.com.au)