First-home buyers on government's MyHome scheme struggling to get sellers on board

Despite making the highest offer in the "hot" property market, Regan Huitema was knocked back.

"I've been told that the MyHome scheme was what put them off," the 26-year-old said.

The Tasmanian scheme is similar to the federal government's co-purchasing initiative.

Under the MyHome blueprint, the Tasmanian government will contribute up to 40 per cent of the cost of a new home, or 30 per cent of an existing home.

It will have to be paid out within 30 years — through either selling the property or purchasing the government's share at the current market value.

Going in with the government is the only way the NDIS call centre employee can afford his first home.

"Me and my partner, I think if I'm being self-aware, we're a bit lower on the socio-economic scale," Mr Huitema said.

The most he can afford to pay is $540,000, which according to the Real Estate Institute of Tasmania is lower than the median house price of $602,500 in his area, Launceston.

But first, many things have to fall into place — all at once — for him to use the scheme.

It can take 90 days to reach a settlement through the scheme, so Mr Huitema will have to find a vendor willing to wait.

To purchase an existing property, a couple's annual income cannot exceed $112,468 — although this test does not apply to some first-home buyers.

Participants have to find a property that is in good enough condition for the government to want to invest in it, or build a new home.

Mr Huitema will be competing against investors who can present an unconditional offer as opposed to his many ifs and buts — pending the approval of a building inspector, government and bank.

"I feel like I have to offer quite a bit more to sweeten the pot and make it worth it," he said.

He has indicated to about 15 real estate agencies his interest to buy through the MyHome scheme.

"It's hard to say if it's the MyHome scheme or it's just the way the market is being."

One real estate agent laid it bare to a first-home buyer, who had fruitlessly been making offers through the scheme, including three that were the highest.

"MyHome is a great scheme but unfortunately when going against other offers, vendors tend to go with an offer that is less of a time frame," the agent wrote in an email seen by the ABC.

'Not many people want to give away a home'

Penny Connor from EIS Property said of the two MyHome buyers she had had, one was successful.

"They dangled a bit of carrot to the owner, I think," she said.

She said the "drawn-out process" made these offers "a little less attractive to some owners".

"We're acting for our vendors, and we want to get the best result for them," she said.

"So, of course you're going to recommend something that's far quicker."

She said most of her properties in Hobart were of the higher price mark, while the more affordable ones — especially ones in good condition — remained "very highly sought after".

"Unless you actually have a very generous owner or seller, who's pretty much willing to give their property away to help a first-home buyer, I don't think the scheme … well, that's essentially the only way that it's going to work," she said.

Recently, her agency advertised eight new homes, built by Loreto Community Housing, only to MyHome participants for a month.

"They literally pulled it out to those people to try and give them a bit of a chance, I suppose, which was lovely," she said.

The three MyHome offers EIS Property received are yet to reach settlement.

The administrator of the scheme, Homes Tasmania, said some dwellings and all land sales were offered exclusively to MyHome participants for the first 30 days, adding it as a "very successful" approach.

Another Hobart agent, Ben Ayers from LJ Hooker, said of the 20 buyers he has had on the MyHome scheme this year, about five have been successful.

He said buyers under this scheme were left searching for a "diamond in the rough".

"Pretty much you want a property that's fairly immaculate, so it doesn't need any work — and that can range from cosmetic work through to structural as well," he said.

Northern Tasmanian agent Daron Gumley said he had come across two MyHome buyers — one was successful and the other did not follow through because it was taking too long.

"I think there's a lack of awareness of the actual scheme itself," he said.

While he cannot advise buyers, he said he had told about 20 of them the scheme existed.

'A lot of negative feedback' about a 'good scheme'

Tasmanian-owned Bank of us has been given the sole right of lending through the scheme.

Homes Tasmania said the agreement came out of a national procurement process.

When Victoria and New South Wales implemented a similar scheme, customers had more than one financial provider to choose from.

The federal Help to Buy scheme also has multiple lenders.

About a week ago, it emerged Tasmania was the only state that had not signed up to the national scheme from the get-go, with a federal minister calling it a "terrible betrayal" of home buyers.

Tasmania's housing minister said the performance of the national scheme would be assessed against the state's very own MyHome.

At 6.11 per cent, the variable interest rate of MyHome is higher than for other home loans at Bank of us.

The head of lending said comparison with other products was not like for like.

He said the bank introduced a 0.35 per cent discount following customer and community feedback, "to recognise that they have demonstrated a solid repayment history".

Independent Member for Nelson Meg Webb said the idea behind the scheme was "really positive", but execution could be improved.

"If we've got a scheme that's targeted to helping people who are on lower incomes get into the home ownership market, why aren't we giving them a competitive interest rate?" she asked.

"And why aren't we offering them more than one lender in that scheme, so that there's some competition and some variety there for people to choose what's going to suit them best?"

Conveyancer Sarah Knight, who has advised about 100 clients wanting to use MyHome, is a "big advocate for the scheme".

"As long as people go in with their eyes open and they're aware of the time-frame, the requirements of Homes Tasmania and Bank of us, it is a scheme that works really well.

"Quite often it is the only way someone can go into home ownership because not everybody can rely on the Bank of Mum and Dad."

Hundreds of properties sold, government says

Homes Tasmania said by late October, 930 properties had been sold through MyHome — 615 were existing properties, and 315 new homes or house and land packages.

Homes Tasmania said it paid for a valuation, building inspection, engineering reports, and council record searches where needed.

"It takes around a month longer to settle a purchase of an existing home, but it protects new buyers, so they better understand their purchase, and reduces any unseen costs they won't be able to afford," it said.

Mr Kitto from Bank of us said: "While MyHome can be a bit more complicated, it's important to acknowledge it is making a significant contribution helping Tasmanians achieve home ownership."

But Mr Huitema is concerned "the government itself now has a financial interest in making sure house prices go up".

"It's a good scheme. It's addressing a symptom in a really good manner, but it's not addressing the root cause of housing and affordability," he said.