The New South Wales Government is launching an initiative called the Shared Equity Home Buyer Helper, designed to make it easier for first home buyers from groups such as single parents, older single people, and key workers to own their own home. Eligible buyers will be able to purchase a property with a deposit of as little as 2%. What criteria must be met? What should applicants watch out for?

1. How the Shared Equity Home Buyer Helper works

The NSW Government will contribute a portion of the property’s purchase price in exchange for an equivalent equity share in the property. The maximum amount the government contributes depends on whether the property is new or existing.

The contribution percentages for different property types are as follows:

• New home: the NSW Government contributes up to 40%
• Existing home: the NSW Government contributes up to 30%

As long as participants remain eligible for the scheme, no repayments are required, and no rent or interest will be charged. Participants may also make voluntary payments to gradually increase their ownership share in the property.

The Shared Equity Home Buyer Helper initiative launched on 23 January 2023. Applications will be accepted across two financial years (2022-2023 and 2023-2024), with 3,000 places available in each financial year.

2. What eligibility criteria must be met?

The NSW Government has indicated that the Shared Equity Home Buyer Helper is open to:

• single parents with one or more dependent children;
• single people aged 50 or over; or
• first home buyers working as nurses, midwives, paramedics, teachers, early childhood educators, or police officers.

Applicants’ gross income must meet the following conditions to participate in the scheme:

Gross income must not exceed AUD 90,000 for a single person, or AUD 120,000 for a couple.

Applicants must also meet property price requirements — the home must be purchased in New South Wales, with the maximum price determined by location:

• AUD 950,000 in Sydney and major regional centres (Newcastle & Lake Macquarie, Illawarra, Central Coast and North Coast of NSW); or
• AUD 600,000 in other regional areas of New South Wales.

In addition, participants must satisfy the following requirements:

• be aged 18 or over;
• be an Australian or New Zealand citizen, or an Australian PR;
• have a minimum deposit of 2% of the purchase price;
• intend to use the property as their principal place of residence;
• not currently own any land or property;
• be unable to afford the mortgage for the property without the government’s contribution, but be able to service the mortgage alongside a participating lender with the government’s contribution.

To quickly assess your eligibility, you can click the link below and answer the questions for a preliminary check:https://www.nsw.gov.au/housing-and-construction/shared-equity/eligibility-assessment

3. Costs of buying the property

All costs of purchasing the property (including stamp duty) will be borne by the participant. It’s worth noting that participants in the scheme remain eligible for the First Home Owner Grant, any applicable stamp duty or land tax concessions, and the First Home Buyer Choice, where applicable.

4. Ongoing obligations of participants

Participants’ ongoing obligations include the following:

• Paying property-related costs (including home insurance, council rates, and utilities bills).
• Maintaining the property properly — approval is required for any alterations.
• Complying with periodic reviews, the first of which will be no earlier than 2 years after purchase.
• In certain circumstances, participants may be required to start repaying the government’s equity share in the property — including where they no longer meet certain ongoing eligibility criteria. Revenue NSW will work with participants to fulfil this obligation.

5. Worked examples

If the applicant is a single parent, then for an eligible single parent buying a new home in Sydney at the maximum price of AUD 950,000, the government’s 40% contribution would be up to AUD 380,000. This government contribution would reduce monthly mortgage repayments by approximately AUD 2,200 (assuming an interest rate of 6% over a 30-year term).

If the applicant is a nurse, then for an eligible first home buyer purchasing an existing home in the Wagga Wagga area at the maximum price of AUD 600,000, the government’s 30% contribution would be up to AUD 180,000. This government contribution would reduce monthly mortgage repayments by approximately AUD 1,080 (assuming an interest rate of 6% over a 30-year term).

6. Selling the property

If a participant sells the property, the sale proceeds will be distributed in the following order:

• First, to the participating lender.
• Second, to the state government. The government will be paid its equity share in the property and will share proportionally with the buyer any gain or loss from the sale.
• Third, to any other parties with claims against the property.

Final thoughts

Based on the above, the Shared Equity Home Buyer Helper is an initiative from the NSW Government to help lower-income earners and those facing certain challenges more easily acquire property. It is therefore not open to everyone and comes with a number of requirements to meet. The designated lender for the scheme is Bendigo Bank, which will also be the first-ranking creditor when the applicant sells the property. If you’re considering applying, we recommend seeking professional legal advice and assistance.