In the last 12 months, residential house and unit prices rose by more than 24% in Newcastle and 13% in Lake Macquarie. It’s no secret that the increase in house prices has made it even harder for first home buyers to get their foot in the door of their own home. Thankfully, there are a number of government schemes available to first home buyers to assist with taking this big step. If you are a first home buyer, we encourage you to investigate which schemes you are eligible for and to make the most of the government incentives available. These include:
1. First Home Buyer Assistance Scheme
This scheme was first implemented in 2017 and helps first home buyers get into the market by entitling them to a concessional rate (or total waiver) of stamp duty. First home buyers are eligible for this scheme regardless of whether they buy an existing home, a new home, or buy vacant land with the intention to build. The concessions available depend on the value of the home purchased. For example, if you buy an existing or new home for less than $650,000 there will be no stamp duty payable. For homes between $650,000 and $800,000 a concessional rate of stamp duty will be payable. To be eligible, you must move into your new home within 12 months of buying and remain living there for a least 6 continuous months.
2. First Home Buyer Choice
If the First Home Buyer Assistance Scheme won’t provide you with much stamp duty relief, the First Home Buyer Choice incentive might be the ticket. This initiative will be available to eligible first home buyers who sign contracts to purchase a property after 16 January 2023, and enables them to choose whether to pay the normal amount of stamp duty payable on the property at the time of purchase, or to pay an annual property tax based on the unimproved value of the land. The property tax rates for 2022-2023 will be $400 plus 0-3% of the land value for owner occupiers, and $1,500 plus 1.1% of the land value for investment properties. Any first home buyers who sign contracts to purchase a property before 16 January 2023 can also opt into the property tax and apply to have their up-front stamp duty refunded once the initiative commences.
3. Shared Equity Scheme
Scheduled to start in January 2023, if a first home buyer is a ‘key worker’, such as a nurse, teacher or police officer, they may be eligible for the Shared Equity Scheme. Under the Scheme, the purchaser must have a minimum deposit of 2% of the purchase price of the property they wish to purchase. The government then assists them to purchase the property by paying a proportion of the purchase price, capped at 40% for new dwellings and 30% for existing dwellings. In return for this, the government will be registered on title as owning an equivalent share of the property. The purchaser also won’t have to take out lenders mortgage insurance, which is normally charged by a bank when a purchaser has a deposit of less than 20% of the purchase price.
Check out our recent blog all about this scheme for more information.
4. First Home Owner (New Homes) Grant
If a first home buyer is planning to buy/build a brand new first home, they may be eligible for the First Home Owner (New Homes) Grant. Whether they are purchasing a brand new house, townhouse, apartment or unit, if the purchase price does not exceed $600,000 then they may be eligible to receive a $10,000 grant from the government. They may also be eligible for the $10,000 grant if they purchase land and plan to build, as long as the entire cost of the land and building contract does not exceed $750,000.
5. First Home Super Saver Scheme
The First Home Super Saver Scheme allows prospective first home buyers to save money for their first home within their superannuation fund. They can make both voluntary concessional (before tax) or voluntary non-concessional (after tax) contributions into their superannuation fund and then apply to have the voluntary contributions (along with any associated earnings on the contributions) released to help with their deposit. It’s important to note that a first home buyer can only apply to have up to $15,000 released in any one financial year, and that this saver scheme is only eligible to purchasers who will occupy their property as soon as practicable after purchase and remain there for at least 6 months in the first 12 months that it is owned.