In the hopes it will help make home ownership more achievable, the NSW government has announced a $780.4 million Shared Equity Scheme.

The Shared Equity Scheme aims to help home buyers by reducing the upfront and ongoing costs of taking out a home loan.

The Scheme is available to single parents with children under 18, a single person aged 50 or above, and some frontline workers (teachers, nurses and police officers) who are also first home buyers.

Under the Scheme, the NSW government will make an equity contribution of up to forty per cent on the purchase price of new homes, and a maximum of thirty per cent on the purchase price of existing homes. The Government’s lending partner will advise you what percentage of equity contribution you can access after conducting a lending assessment.

A trial version of the Scheme is set to begin in January 2023 for a period of 2 years, with three thousand places made available each calendar year.

Under the Scheme, you won’t be required to make repayments on the equity contribution by the government as long as you remain eligible for the Scheme. When you are able, you can make voluntary payments so you can progress towards owning the property outright.

There are some limits on the property purchase price that you need to keep in mind if you’re planning on applying for the Shared Equity Scheme. If you’re planning on buying a home in Sydney or another major regional centre in NSW (Newcastle, Lake Macquarie, Illawarra, Central Coast, North Coast of NSW) the maximum property purchase price is $950,000. For other regional areas in NSW, the maximum property purchase price is $600,000.

In order to access the NSW Governments Shared Equity Scheme there are a few eligibility criteria you need to meet.

• You must be at least 18 years of age
• You must be a citizen of Australia or New Zealand, or an Australian permanent resident
• You must have a minimum 2 per cent deposit of the property purchase price
• You must be intending to occupy the property as your principal place of residence
• You must not own any land in Australia or overseas at the time of purchase
• You must be unable to service the mortgage for the full property purchase price without the Government’s equity contribution
• You must be able to service the mortgage with a participating lender with the Government’s equity contribution.

There are also income caps as part of the eligibility criteria for the Scheme. For singles, the gross income must be $90,000 or less. For couples, the combined gross income must be no greater than $120,000.

Each year a review will be conducted to make sure that Applicants are still eligible to participate in the Scheme. If you’re no longer eligible to participate in the Scheme, Revenue NSW will work with you to begin repayments of the Governments equity contribution.

If your income exceeds the applicable threshold on two consecutive annual reviews, you will be required to begin repaying the Government’s equity contribution.

As well as being able to make the mortgage repayments on the property, you will be responsible for all the purchasing costs, including stamp duty. It’s expected that you will maintain the property in good working order and pay all ongoing property costs, for example, council rates and strata fees.

You should also be aware that if you purchase a property with the intention of making modifications or renovations, you must get Government approval.

The great news for first home buyers is that even if you are participating in the Shared Equity Scheme, you will also be able to apply for existing first home buyer grants if you are eligible. You can benefit from any available stamp duty or land tax concessions. 

Contact us to discuss your purchasing needs. Our property lawyers and conveyancers would be happy to discuss the equity scheme with you.

Note: This information is subject to change, pending the Legislation being passed by the NSW Parliament.