Single parents, nurses, police officers, and teachers in New South Wales will be given the opportunity to break into the housing market under the state government’s two-year trial run of a shared equity scheme — here’s what you should know.

What is the scheme about and how will it work?

The New South Wales government announced a two-year trial run of a $740m shared equity scheme aimed at helping single parents and first home buyers who are key workers such as teachers, nurses and police in the state to enter the housing market.

NSW’s shared equity scheme mirrors the shared equity scheme being developed by the new Albanese government.

The scheme will commence in January 2023, with applications set to be accepted during the 2022-2023 and 2023-2024 financial years. For each financial year, only 3,000 places will be available.

Under the scheme, the NSW Government will be paying a proportion of the purchase price of a property in exchange for an equivalent stake.

The state government’s contribution is up to 40% of the purchase price of a new dwelling and up to 30% of an existing one.

The applicant must have at least 2% of the purchase price as a home loan deposit. No lenders mortgage insurance will be required for transactions under the scheme.

Participants can make voluntary payments to the state government to increase their equity in the property.

It is important to note that the government will not require repayments on the equity contribution and will not charge rent or interest while the participant remains eligible for the scheme.

What are the eligibility requirements?

To be eligible to NSW’s shared equity scheme, applicants must be any of the following:

  • Single parent of a child or children under 18 years of age
  • Single persons aged 50 and above
  • First-home buyers who are key workers (including nurses, teachers, police).

The state government also set a gross income threshold of $90,000 for single applicants and $120,000 for couple applicants.

As for the property price caps, applicants must be buying a home valued no more than $950,000 in Sydney and major centres or $600,000 in regional areas.

Upon application, homebuyers must now own an interest in any land in Australia or overseas.

When accepted, the participants must occupy the property as their principal place of residence.

What are the obligations of accepted participants?

To keep the eligibility for the scheme, participants must complete an annual review, where they will provide supporting information and documents.

Participants will also be required to maintain the property and keep it in good shape. Any planned renovations or modifications in the property must be approved by the government — these changes will be factored in the eventual sale price of the property.

The homeowner will be responsible for all other property costs, including council rates, body corporate fees, water, and loan repayments.

Participants will be compelled to begin the repayment for the state government’s contribution once they no longer meet the criteria. For instance, if their income exceeds the applicable threshold for two consecutive years, participants will be required to start paying for the state government’s equity.

Frequently asked questions

Further details of the scheme are still in the works but here are some of the most common questions about the program:

How can I apply for the shared equity scheme?

The application process will open in January 2023 and will be through the approved lending partner. Once the application opens, interested homebuyers will be able to apply through the website of the approved lending partner.

Will I be able to apply for both NSW and the federal government’s equity schemes for one property?

While you can apply to both schemes, you will only be able to benefit from one of the shared equity programs.

Will I still be eligible for other homebuyer assistance?

Yes, accepted participants of the shared equity scheme will still be able to apply for First Home Buyer assistance and any duty or land tax concessions.

Can I decide on how much the NSW Government will contribute to the purchase of the property?

No, the approved lending partner will be the one to advise on the percentage of equity contribution of the state government.

Photo by @space_launch_system on Unsplash.