Albo's expansion of five per cent deposit scheme to help more first home buyers backfires as investors take advantage

By ASHLEY NICKEL, NEWS REPORTER, AUSTRALIA Published: 11:44, 6 August 2026 | Updated: 11:46, 6 August 2026 Hundreds of homes bought under the federal government's five per cent deposit scheme have been flipped into investment properties, sparking anger from affordable housing advocates. Housing Australia admitted at a recent Senate estimates hearing that 1,485 homes purchased under the first-home buyer program in the last six years are now investment properties. Another 109 homes bought under the scheme were no longer the mortgage holder's primary residence.  The hearing also heard that the highest income applicant to take advantage of the initiative was a couple who earned a joint $674,000 per year. The former Coalition government introduced the scheme in 2020 to allow first-home buyers to use the government as a guarantor for up to 15 per cent of their mortgage, helping them save on lenders mortgage insurance. Prime Minister Anthony Albanese expanded the program last October by removing the income cap to make it accessible for all first home buyers. Outspoken affordable housing advocate Jordan van den Lamb branded the five per cent deposit scheme as a 'shameful' attempt to address the national crisis. '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 told Newswire. Almost 1,500 houses bought under the five per cent deposit scheme have bene converted to investment properties. Pictured are potential homebuyers at an auction Almost 1,500 houses bought under the five per cent deposit scheme have been converted to investment properties. Pictured are potential home buyers at an auction Prime Minister Anthony Albanese expanded the program last October by removing the income cap to make it accessible for all first home buyers. '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.' Van den Lamb is running as a Victorian Socialists candidate for the upcoming state election. The party is calling for empty homes to be seized by the government if they have been vacant for more than two years without a valid reason. 'This would actually make housing affordable in this country and it's shameful they won't do any of this,' van den Lamb added. More than 267,000 Australians used the scheme between 2020 and May 31 this year, according to Housing Australia data. An additional 54,043 permanent residents took advantage of the program. Only 13 participants defaulted on their loans, 1,392 entered 90-day arrears and 436 loans were in 90-plus day arrears. Most single applicants earned between $60,000 and $169,000, while seven per cent earned more than $200,000. More than 267,000 Australians used the scheme between 2020 and May 31 this year to but their first home Jordan van den Lamb said the 'shameful' scheme hadn't made homeownership more achievable, it only made 'it easier for those who were likely to buy a home to do so a bit sooner'  There were 38 participants who earned more than $400,000 a year. Of joint applicants, 9.8 per cent earned more than $250,000 jointly, while 92 couples earned more than $400,000.  Greens housing spokeswoman Barbara Pocock urged the Albanese government to restrict the scheme to low-income applicants. 'It shouldn't benefit the wealthy and property investors,' she said. Scheme participants currently do not need to refinance their loan if they switch their house to an investment property.  If a first-home buyer decides to use their five per cent deposit home as a rental, they do not have to sell it or refinance. 'Instead, they can discuss their options directly with their lender. Housing Australia does not monitor loans once the guarantee has ceased,' a spokesperson said.