Friends and family become eligible for government housing grants

The dream of home ownership has become more realistic for tens of thousands of first home buyers with the expansion of Federal Government housing grant schemes and changes to eligibility rules.

Young first home buyer woman with keys to house.
Since its inception in 2019, the Home Guarantee Scheme has helped more than 60,000 Australians buy a home. (Image source:

Property purchases among friends, family and other relatives will now be eligible for loan schemes whereby the federal government acts as guarantor on up to 15 per cent of a loan.

The move is one of several made in the government’s expansion of eligibility criteria for the Home Guarantee Scheme (HGS).

The HGS comprises three separate categories:

  • First Home Guarantee, which supports eligible first home buyers with a deposit as little as five per cent.
  • Family Home Guarantee, which supports eligible single parents with a deposit as low as two per cent.
  • Regional Home Buyer Guarantee, which helps regional buyers crack into the housing market.

Aside from the Family Home Guarantee, these schemes were previously limited to married (or de facto) and single people but the government is relaxing those restrictions as it tries to tackle the chronic housing supply shortage gripping most of the country.

From 1 July, friends and family will be allowed to team up to buy a first home as “couples” will now be replaced with “any two eligible individuals”.

Australian permanent residents will also be included in the expansion, instead of just citizens.

Federal Housing Minister Julie Collins said the government wants to support more Australians to get into a home.

“It’s particularly for those who have been long-term renting or those who are having difficulty overcoming the 20 per cent mortgage deposit threshold.

“We need to accept that different people, are doing different things to get into home ownership and that is what (these) changes are about,” she said.

The move comes as the federal government also halved a tax that was levied against build-to-rent developers, as it seeks to promote infill housing.

Do the HGS changes go far enough?

The move was welcomed by the Customer Owned Banking Association (COBA), with particular relief expressed that regional areas were a focus.

The Regional Home Guarantee has 10,000 places, which are available to both first home buyers and those who have previously owned a home, but do not own one now.

“Since its inception in 2019, the HGS has helped more than 60,000 Australians buy a home, and the revised scheme acknowledges affordability challenges exist outside metro areas,” COBA CEO, Michael Lawrence, said.

“COBA members have a strong presence in regional Australia, so we look forward to helping Australians access the regional guarantees.”

The Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said the expansion of the Home Guarantee Scheme from 20,000 to 50,000 places a year was a start rather than a solution.

She expressed concerns over whether the measures went far enough to have a meaningful impact.

“This Federal Budget gets a tick of approval from us for its support for single parent families and first home buyers and its objective to encourage people to move to the regions,” Ms Mercorella said.

“However, while expanding the HGS is a good start and definitely a step in the right direction, it must be acknowledged that 50,000 places is not nearly enough to meet national demand.”

“Considering there were nearly 17,000 first home buyer loans in Queensland alone in the year to January 2022, and 36,000 first home buyer loans in Queensland alone last financial year, boosted by the HomeBuilder Grant, you can see how 35,000 places nationally is not going to make much of a dent on demand.”

The REIQ also welcomed the new Regional Home Guarantee, with 10,000 places per year for migrants and anyone who has not owned a property for five years, but said it was “disappointing to see that this initiative is restricted to either building or buying a newly built home.”

“To have the desired impact, this initiative needs to be extended to established housing,” Ms Mercorella said.

Build-to-rent tax slashed

A controversial tax of 30 per cent on build-to-rent developers has been halved to fall into line with tax on developers of purpose-built student accommodation.

A recent study by EY, commissioned by the Property Council, showed levelling the withholding tax rate, in line with investment in other property asset classes, could create an extra 150,000 Australian homes over the next decade.

Property Council Chief Executive, Mike Zorbas, said the move will breathe life into this vital asset class, unlocking desperately needed supply through a new form of housing.

“Today’s announcement is a strong step toward addressing and reversing Australia’s growing housing shortage,” Mr Zorbas said.

“More supply means downward pressure on the cost of renting and buying homes and will offer more housing choices and affordable options at a time when we desperately need them.

“Build-to-rent housing, like purpose-built student accommodation and retirement living, is a positive part of the national housing equation and provides tenants with long-term security of tenure, superior amenities and professionally managed properties,” he said.

Build-to-rent housing is large-scale, purpose-built rental housing that is held in single ownership and professionally managed.

It is understood the new tax rate will apply to all new build-to-rent housing projects commenced after the date of this year’s federal budget, ensuring any project that finalises construction between 9 May 2023 and 1 July 2024 will be eligible to claim the rate from 1 July 2024 and onwards.

“The earlier these changes come into force the earlier additional investment can commence and we look forward to future consultation with the government to bring forward these arrangements with states and territories as efficiently as possible,” Mr Zorbas said.

“The next public policy improvement will be to introduce an incentivised tax rate of 10 per cent for Affordable ‘Key Worker’ Housing (rent at 20 per cent below market) to domestic and international investors that incorporate supply of affordable dwellings within their build-to-rent communities,” he said.

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