NSW Shared Equity Scheme - Raiz Invest

The proposed NSW shared equity scheme recently announced and coming soon is designed to give more Aussies a chance to co-own their own home. This scheme would mimic the Federal Equity Scheme of property co-ownership, but the key difference is it that will be offered to key worker first home buyers (teachers, nurses or police) as well as older singles 50 years of age or older and single parents with children aged under 18.

 

How does it work?

The NSW State Government co-purchases part of your new home, up to a maximum of 40% of the purchase price of a new home. Or 30% of the purchase price for an existing home. There are 3,000 spots in the scheme, available each financial year.

What it means in practice is that the Government co-owns the property with you, but you are free to treat the home as your own. You can buy them out over time, and when you go to sell the house, the Government gets to keep whatever percentage of sale price that it still owns.

Questions still outstanding are, what happens to your share when you renovate a home? Does the government get a free carry on this, or do you re-adjust the equity you own in the home? Other than those questions it is straightforward. Just like buying a home with your brother or sister, but with no back chat 😬

 

Eligibility for the NSW Shared Equity Scheme

To qualify, you must be an Australian or New Zealand citizen or a permanent Australian resident aged 18 and over with a taxable income of up $90,000 per annum or couples with a combined figure of $120,000, who currently don’t own or have some sort of financial ownership in a residential property.

You must either be a key worker (teachers, nurses or police), single aged 50 years or older , or a single parent with children aged under 18. Another eligiblity is you must not own property or have an interest in any land in Australia or overseas.

 

Possible risks

  • The 2.00% equity contribution is very low. For example, if home prices dipped by 5.00%, you would have negative equity in the property. However, if you are a long-term holder of the property, you may see growth in value if property prices increase over time.
  • We need to understand whether you can get financial recognition for making improvements to the property. Most people will want the government to pay for their percentage of the improvements or revalue the property to get a higher percentage of ownership.

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If you would like to find out more about Raiz Home Ownership, please contact the team at home@raizhomeownership.com.au, or register your interest.

 


 

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