Melanie Hearse - 11 May, 2021

Single parents set to receive assistance buying a home

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Single parents will be given federal government assistance to purchase property, under measures included in the 2021-22 Federal budget.

The Morrison Government announced it would provide a guarantee of 18% of the purchase price for single parents with dependent children.

The Single Parent Family Home Guarantee (SPFHG) was designed to address the challenges experienced by single parents trying to enter the housing market.

SPFHG is an extension of the First Home Loan Deposit Scheme and has 10,000 spaces available over four years.

Single parent households traditionally have lower home ownership rates than other household types, with News.com.au reporting almost half of all single-parent families rent from a private landlord and do not own property.

Data from the Melbourne Institute shows the median income for a single parent with one child is $54,106 after tax.

“The Morrison Government understands the importance of owning your own home and the significant economic and social benefits home ownership provides,” Treasurer Josh Frydenberg said.

“The Family Home Guarantee recognises that the challenge of saving a deposit is even harder when you’re on a single income while raising children.”

Single parents with two children, who have a median income of $56,795 after tax, could borrow a maximum of $350,00 to $375,000.

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Who will be eligible?

The current criteria indicates single parents with a minimum 2% deposit of the price of the property price, can apply.

The government will guarantee up to 18% of the property purchase price, allowing successful applicants to get a loan without paying LMI, potentially saving them thousands of dollars.

Additional criteria include:

  • A maximum annual income of $125,000 in the preceding financial year, excluding child support payments.
  • You cannot currently own property, but previously property ownership is acceptable.
  • You must be an Australian citizen and must be 18 years or older.
  • Only the single parent is listed on the title and the loan and the borrower must intend to live in the home.
  • Applicants will be subject to lender assessments to ensure they can make repayments on the home loan.
  • You can purchase a new or existing dwelling worth up to the price caps.
  • Dependant children must be under 16 where the adult is legally responsible for the child’s day-to-day care, welfare and development, or aged 16-21 and wholly or substantially dependent and does not earn more than $6,403 in income in a financial year.

Capital cities may be priced out of the scheme

CoreLogic’s latest property price data shows the median house price in every major capital city is more than $100,000 above the house price cap under the scheme.

Core Logic has data for about 1,000 NSW suburbs, and the median price for a home is under $375,000 in 127 of them.

But there is only one metropolitan suburb, Carramar in Sydney’s west, where the median price is under that maximum — and that’s for a unit, at $345,150.

Caps differ between the various states and territories, and are set at:

  • NSW: capped at $700,000 for any home in a capital city or regional centre and $450,000 for the rest of the state.
  • Victoria: capped at $600,000 in Melbourne and regional centres and $375,000 elsewhere across the state.
  • Queensland: capped at $475,000 in Brisbane and $400,000 in smaller towns in the state.
  • Perth, Adelaide and Hobart: capped at $400,000.
  • ACT: capped at $500,000.

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Not everyone thinks the scheme will work

Labor’s spokesperson for Women Tanya Plibersek has essentially branded the scheme a marketing exercise, saying the scheme will provide “no help at all” with a million single parent families in Australia and only 2500 single parents year over the next four years able to access the funding.

RateCity research director Sally Tindall said the proposed scheme was not the “white knight” for single parents to gain access to stable housing.

“This scheme has good intentions, however it does little to address the overarching issue of housing affordability in property hot spots around the country,” Ms Tindall said.

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Words by Melanie Hearse

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