1500 5pc deposit homes used as investments

Almost 1500 homes purchased with the federal government’s 5 per cent deposit scheme have been turned into investment properties.

The revelation comes from a Housing Australia response to a question on notice during Senate estimates hearings in June.

The response also revealed a couple taking home $674,000 hold the mantle of highest income applicant to use the 5 per cent deposit scheme.

Under the first-home buyer 5 per cent scheme, the government guarantees an amount up to 15 per cent of the mortgage so the owner can avoid costly lenders mortgage insurance.

But from 2020 up to May 31 this year, 1485 homes have been flipped into an “an investment property”, Housing Australia data shows, and 109 homes purchased under the scheme were no longer the mortgagor’s personal place of residence.

Prominent housing affordability campaigner Jordan van den Lamb said the 5 per cent deposit scheme was a “shameful” addition to inadequate housing policies.

“Labor loves to make things more expensive in the name of ‘affordability’, then have a few people stand in the corner of some room with their fingers crossed hoping some of that wealth will trickle down,” he said.

“When this scheme was announced, we said it would increase house prices and at best would make it easier for those who were likely to buy a home to do so a bit sooner.”

Mr van den Lamb unsuccessfully ran for a Victorian Senate seat last year and will run against the Greens leader at the state election in November, again for the Victorian Socialists.

He and the Socialists are calling for a 25 per cent rent cut and five-year freeze while a “massive expansion” of public housing can be built. The party also wants empty homes to be seized by the government if they have been vacant for more than two years without extenuating circumstances.

“This would actually make housing affordable in this country and it’s shameful they won’t do any of this,” he said.

Greens housing spokeswoman Barbara Pocock said the scheme should only be for first-home buyers on lower incomes.

“It shouldn’t benefit the wealthy and property investors,” she said.

If a first-home buyer decides to use their 5 per cent deposit home as a rental, they do not have to sell it or refinance.

“Borrowers who choose to change the purpose of their loan are not required to sell or refinance their loan,” a Housing Australia spokeswoman said.

“Instead, they can discuss their options directly with their lender. Housing Australia does not monitor loans once the guarantee has ceased.”

In total, 267,098 Australian citizens have used the scheme, as have 54,043 permanent residents, up to May 31 this year.

Only 13 homeowners have defaulted, 1392 loans have gone into 90-day arrears, and 436 loans are in 90-plus day arrears.

In October 2025, the federal government removed income caps on the scheme; the bulk of single people using the deposit scheme report incomes between $60,000 and $169,000.

About 7 per cent of single applicants (1162 in total) are on incomes of more than $200,000, including 38 people reporting incomes of more than $400,000 who have used the scheme.

Looking at joint applicants, 9.8 per cent of couples who have used the scheme take home more than $250,000 jointly – 2538 joint applicants out of 25,903 since income caps were removed.

Ninety-two couples taking home more than $400,000 have used the scheme.

At the June estimates hearing, senator Ralph Babet specifically asked what was the highest household taxable income for an applicant who had successfully used the 5 per cent scheme.

“The maximum household income recorded for a successful 5 per cent deposit scheme application is $674,040,” Housing Australia says in the written response.

“This household income was for a joint application … based on the serviceability

income assessed by the lender. This figure excludes company, business, and self-employed income that is not taxable to the household.”