Head Start Homes welcomes First Home Loan Deposit Scheme policy announcement

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Head Start Homes welcomes the First Home Loan Deposit Scheme announced by both the Liberal and Labor parties on 12 May 2019. This new policy will undoubtedly result in many more first home buyers achieving their home ownership dreams faster, giving access to the positive, intergenerational ripple effects that home ownership brings.

As a community of people who believe that every Australian deserves access to a safe and secure home, we take this to be a positive development. Our commitment to this cause is why we have been working passionately with both the charitable and private sectors over the years to develop our Head Start Guarantee, which provides equal access to home ownership specifically for lower income Australians who are the most disadvantaged by the deposit barrier. With confirmed partnership from Community Housing providers and financial institutions, the first Head Start Homes pilot program will be commencing in 2019.

While we welcome this policy announcement, we note that there are key differences between our model and the proposed scheme. The most noticeable differences are who we help and our 0% deposit.

In contrast to the deposit scheme, by limiting our Head Start Guarantee to community housing tenants we deliver a multiplier effect for ending poverty. Under our model, for each home ownership dream achieved, we also make a community housing home available for someone who is likely to be homeless.  An increase in social housing availability is critical to reduce the current number of Australian households experiencing homelessness; presently almost 200,000 households (more than 60% homeless) are currently having to spend up to 10 years or more on social housing wait-lists to be allocated into a stable home.

The most cost effective way to do this is to ensure there are viable exit pathways for social housing tenants who are back on their feet, in secure employment, and who have a strong savings history. It is estimated that 5% of all social housing tenants are in this position, most of whom have a desire for home ownership[1]. As such, Head Start Homes offers a Guarantee to empower only community housing tenants (including social and affordable housing tenants) to access a pathway into home ownership that is fairer and more equitable than any other option through market-rate loans and lenders.

For social housing tenants who have overcome an array of difficulties and structural disadvantage, it is essential that there be an option to do this with 0% deposit[2]. It is much harder to save in the social housing system where improved income or employment results in financial penalties by way of rent increases. Under the announced policy, a community housing tenant would still be required to save an extra $25,000 for a home valued at $500,000 compared to financing options through the Head Start Guarantee. Further, the announced policy would exclude many Australians who have overcome times of crisis, such as instances of domestic violence or sickness that resulted in them losing their family home. 

The social benefits under our Head Start Guarantee are remarkable. We estimate that with no defaults an investment of just $72,000 could be enough to help 12 households into safe and stable homes over 30 years, delivering incredible public benefit of reducing homelessness and intergenerational poverty in our communities.  

Head Start Homes charitable purpose is and always will be to increase the availability of social housing for those experiencing or at risk of homelessness. The Head Start Guarantee remains a critical tool to empower those who have endured structural disadvantage, and who would continue to be disadvantaged under the new policies proposed.

 “As a grass roots community organisation, Head Start Homes is led by people who have experienced homelessness as well as life in social housing, with a genuine desire to empower those who have endured years of structural disadvantage to gain a head start into home ownership,” shares Stephen Woodlands, Head Start Homes Managing Director.

It is our view that this policy will be complementary to our Head Start Guarantee and we welcome the opportunity to consult with the government to learn more and help to ensure that community housing tenants and lower income tenants are not further locked out by any inflationary impact. As always, we are committed to work with all sectors to help ensure that we achieve our vision of a safe and stable home for every Australian with fair and practical pathways into home ownership.

[1] Under the proposed policy we understand that about 10,000 applicants per year could be assisted which represents less than 10% of the first home owner market, 2.5% of social housing households and less than 0.28 % of Australian’s who are currently renting.

[2] The Head Start Guarantee requires 0% deposit for those with a strong savings history (with a 3% savings requirement which can be used for home purchase costs such as stamp duty, conveyancing fees and moving costs). This is in comparison to the announced policy which requires a minimum 5% deposit in addition to home purchase costs.


About Head Start Homes
Head Start Homes exists to increase access to social housing for people in need who are typically homeless, with the added benefit of supporting community housing tenants overcome structural barriers to achieve home ownership. We do this via our Head Start Guarantee; an innovative solution that provides a pathway into home ownership for community housing tenants who can afford  home loan repayments but who are locked out due to the need for a large deposit and mortgage insurance. By acting as guarantor, Head Start Homes effectively acts as ‘bank of mum and dad’ for those who can’t rely on their parent’s wealth, equalising access to home finance. With confirmed partnership from Community Housing providers and financial institutions, the first Head Start Homes pilot program will be commencing in 2019.

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