Scott Morrison has criticized Labor’s proposal designed to assist Australians in purchasing homes, which involves the government acquiring a 40 percent interest in new properties.
According to the Prime Minister, Anthony Albanese is essentially ‘profiting from you’, as the Labor leader indicated the initiative would generate revenue for the government.
The newly introduced Help To Buy scheme by Labor would allow the government to cover up to 40 percent of the price for a new home and up to 30 percent for an existing one.
Eligible individuals include couples earning less than $120,000 and singles with an income below $90,000.
Scott Morrison has voiced opposition to Labor’s strategy aimed at supporting Aussies in homeownership by government taking a substantial stake in the property. Pictured: Anthony Albanese on Monday
When the homeowner eventually sells their house, the Government would pocket 30 or 40 per cent of the sale, making money for taxpayers.
But Mr Morrison said this would be immoral if the homeowner spent thousands on renovations only to see the Government make money from their improvements upon sale.
‘So, what happens if you decide to renovate your home,’ he said.
‘As your home value increases, they are making money off you. So, as your home price goes up, your home value goes up, they are taking a cut, and so you have to pay the Government back on their equity and with the capital appreciation.
‘I mean, they are basically riding on your decision to buy your own home.’
Mr Morrison said another major flaw in the scheme was that it would just push house prices up further.
‘You will be going along to an auction, and there will be someone who is bidding against you, and they will be bidding with the Government and you will be bidding on your own,’ he said.
‘So I don’t think Labor have thought these things through.’
Prime Minister Scott Morrison plays pool with residents at Lifestyle Communities Mount Duneed retirement village in outer Melbourne
HOW LABOR’S HELP TO BUY SCHEME WILL WORK
Help to Buy will be available to Australians with a taxable income of up to $90,000 for individuals and up to $120,000 for couples.
Homebuyers must be Australian citizens and not currently own or have an interest in a residential dwelling. They do not need to be first home buyers.
Eligible homebuyers will get 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.
The homebuyer will need to have a deposit of 2 per cent and qualify for a standard home loan with a participating lender to finance the remainder of the purchase.
During the loan period the homebuyer can buy out part of all of the government’s stake in the home when they are able to do so.
The homebuyer will not be required to pay rent on the stake of the home owned by the Federal Government.
Labor believe the scheme will cost $329million but will make money for the government by recovering its equity stake when homes are sold, plus its share of any profits made on the increased vale of the home when it’s sold.
The value of eligible homes would differ by region shown on the table, with the government proposing to assistance in varying degrees between states and regional and metropolitan areas
Labor says a cap of 10,000 places per year will prevent the scheme from pushing up prices.
Mr Morrison said that last year 164,000 Australians got into their first home – 70,000 more than when Labor left office.
His government introduced the Home Guarantee Scheme which allows Aussies to purchase first homes with a deposit of just five per cent, with the Government guaranteeing the other 15 per cent.
Single parents only need a two per cent deposit.
Last month the PM announced an increase in the price cap to a maximum of $900,000.
Worsening housing affordability has seen home ownership for low and moderate income earners decline from 60 per cent to 28 per cent over the last 40 years.
The Australian Bureau of Statistics reported a 23.7 per cent increase in residential property prices in the last 12 months alone.