Shared Equity

Shared equity

About shared equity

The Victorian Government will provide funding for two new shared equity schemes that will help low to moderate income Victorians own their own homes.

Shared equity involves the Government, or another entity, taking part ownership or equity in a dwelling in partnership with the home buyer. By allowing the home buyer to pay less than 100 percent of the property they require a smaller loan and deposit – thereby allowing them to enter the market earlier. This initiative addresses two key barriers to entry for Victorians who would like to become home owners – the difficulty of saving an ever increasing deposit while paying rent and insufficient capacity to service a large loan that would have otherwise been required to enter home ownership.

How will the schemes work?

Two complementary shared equity schemes are being established:

— HomesVic is a Victorian Government shared equity scheme; and

— Buy Assist is a national scheme run by a consortium assembled by the National Affordable Housing Consortium (NAHC).

HomesVic

The pilot scheme will be introduced from 1 January 2018 with an initial allocation of $50 million over two years. It will and be administered through State Trustees Limited.

The Government will provide up to 25 per cent equity for first home buyers. The home buyer will be required to have a five percent deposit, and a mortgage from the private sector for the remainder of the property’s value. The Government’s equity contribution allows the home buyer to avoid paying mortgage lenders insurance.

The scheme will apply to the purchase of both new and existing homes.

Singles with incomes of up to $75 000, and couples or families with income up to $95 000 would be eligible.

When the properties are sold, HomesVic will recover its share of the equity and reinvest it in other homes to support more first home owners achieve their goal of home ownership. Buy Assist

The Victorian Government is providing a $5 million grant to the National Affordable Housing Consortium’s (NAHC) national shared equity scheme to support Victorians purchase their first home. The State investment is a grant to the scheme, but not an equity contribution. The NAHC will match dollar for dollar the Victorian Government’s contribution.

NAHC is a Queensland based not for profit housing company that specialises in affordable housing. Buy Assist, which is wholly owned by NAHC, is a for profit entity enabling it to work effectivity with commercial institutions and developers.

Under NAHC’s scheme, eligible households would secure a mortgage with little or no deposit, without paying mortgage insurance due to the assistance provided by NAHC. NAHC’s interest would be secured by a registered second mortgage over the property and is subordinate to the private sector finance.

The scheme will target low-medium income, waged employee households. It will apply to the purchase of new homes.

How many people will be helped?

The HomesVic pilot shared equity scheme will assist 400 first home buyers and the Buy Assist shared equity program will assist up to a further 100 home buyers.

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