WTF is going on with the Help to Buy scheme in parliament right now?

The legislation to help first home buyers is caught up in some parliamentary drama that could see a forced election.

You might have seen in the news over recent weeks that the government is having some trouble in parliament right now. In particular, there's a bill to help low-to-middle income earners get on the property ladder which is caught up in the drama.

As I partly explained last week off the back of the RBA decision, the Greens party is refusing to back legislation until the government commits further support to struggling homeowners.

That includes wanting the treasurer to step in and lower the cash rate to provide mortgage relief. The party also wants further support in housing policy such as helping the states implement rent caps and revisiting changes to negative gearing and capital gains tax concessions.

The government has labelled the Greens' protest as "crazy behaviour".

But without the Greens' support, the bill has no hope of getting through. The government is planning to reintroduce the bill next month and if it's rejected again, could lead to an even stickier situation (as I will explain below).

First though, what's this bill that's caught up in the mess?

The government wants to combat falling home ownership rates for younger and low income Australians by introducing a shared equity scheme. It was proposed as part of Labor's federal election campaign in 2022.

Between 1981 and 2021, the rate of home ownership for 25-34 year olds in the lowest 2 income brackets fell from 57% to 28%. In the same time, the same earners among 45-54 year olds saw a decline of home ownership from 71% to 53%. That's all from a report by the Grattan Institute aptly titled 'The Great Australian Nightmare'.

Recognising the biggest barriers as saving the deposit and actually servicing the loan, the government wants to introduce the Help to Buy Scheme to tackle both.

How would the scheme work?

The scheme would see the federal government cover up to 30% of a property price for an existing property or 40% for a new property for eligible first home buyers on low to middle incomes.

Under the scheme the borrower would potentially only need a 2% deposit. But it also means they would only own 60-70% of the home.

The homeowners would have the option of repaying the government over time (and eventually owning the home outright) or they would need to hand over the government's portion when the house is sold.

What next?

Well, until the proposal is passed as legislation, not much.

The Coalition is opposed because it doesn't think the government should involve itself in owning peoples' homes. And we already know why the Greens isn't playing ball.

The bill not being passed has larger repercussions though. Once a bill has been rejected a second time the government can force a double-dissolution election. Without getting too much into the weeds for the explanation of *that* scenario, the government is possibly hoping it's a threat to force the bill through.

So for now, we wait and see. It looks like the bill is expected to be discussed again on 26 November.