Labor Win – Implications for Real Estate

The election has been won by Labor and our new PM is being sworn in today with a busy list of campaign promises and initiatives. So what will this mean for real estate? Below are some of the announcements from Labor:

Help to Buy

The program involves the government providing eligible home buyers with an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.

Buyers will be able to purchase a property that they intend to live in with a deposit of as little as 2 per cent. Participating lenders finance the remainder of the purchase.

During the period of the loan, the home buyer is able to buy an additional stake in the property when they have the means to do so. Before that point, they will not have to pay rent for the portion of the home owned by the government. The government would recover its equity and its share of the capital gain when the house is sold.

New National Housing Supply and Affordability Council

The Council will be composed of experts from the finance, economics, urban development, residential construction, urban planning and social housing sectors.

The Council will work closely with states and territories on setting targets for land supply, in consultation with States and Territories, and play a key role in developing Labor’s National Housing and Homelessness Plan.

Regional First Home Guarantee

Under an expansion of the current First Home Guarantee scheme, an additional 10,000 regional Australian families a year will be assisted to buy their first home.

The scheme aims to triple the number of places that Australians living in regional areas received last year under the current FHG scheme.

Places will be reserved for Australians who have lived in the region in which they apply from for more than 12 months. It will see approved applicants purchase a home with as little as a 5 per cent deposit, without needing to pay Lenders Mortgage Insurance (LMI).

Negative gearing remains

Labor backed down from its earlier proposed changes to negative gearing in July 2021, promising to “maintain existing regimes for negative gearing and capital gains tax” during the party’s tenure in power following the 2022 election.

About the author

Ian Pepper has had a long and distinguished career as a finance and real estate professional. Originally trained as a Chartered Accountant in 1995, Ian worked in Sydney and London. He has an MBA from Macquarie Graduate School of Management and now sells real estate with Ray White Helensburgh. Ian also volunteers with local community groups including school P&Cs, sporting clubs and business chambers.