The federal government wants to help more people crack into the rural property market by guaranteeing 40 per cent of their loan deposits, as farm values soar.
- The government would act as guarantor for 40 per cent (up to $1 million) of a commercial loan
- Applicants would need to demonstrate “on-farm experience” and have a minimum deposit
- The loans would be available for a maximum of 10 years, with the maximum loan-to-value ratio capped at 70 per cent
Agriculture Minister David Littleproud says a re-elected Coalition government would act as the guarantor for 40 per cent (up to $1 million) of a commercial loan.
The $75-million Future Farmer Guarantee Scheme would be trialled over 18 months and is designed to attract more young farmers to the sector.
“Existing landholders are aging [and] the average broadacre farmer is 62 years old, with only 10 per cent aged under 47,” Mr Littleproud said.
The rural property market has been running hot with some farms doubling or even tripling in value and becoming unattainable for new buyers.
Land prices have been driven up by record-low interest rates, record-high commodity prices and exceptional seasonal conditions.
“Government sharing the risk means that the bank can offer better terms to suitable applicants, lower interest rates and lower equity requirements,” Mr Littleproud added.
But he cautioned that the scheme was “not a free-for-all” and applicants would need to demonstrate “on-farm experience”, have a minimum deposit and be an attractive lending prospect for banks.
The scheme would open from January 1, 2023, and be administered by the government’s Regional Investment Corporation.
The loans would be available for a maximum of 10 years, with the maximum loan-to-value ratio capped at 70 per cent.
Mr Littleproud planned to announce the scheme at the National Rural Press Club’s Agriculture Leaders debate in Canberra today as he goes head-to-head with Opposition agriculture spokesperson Julie Collins.
Ms Collins is yet to detail Labor’s agriculture policies but has said that Labor’s climate change, regional housing and telecommunications policies would help the rural sector.