The Budget Won’t help Reduce The Cost Of A First Home – But Grants Do
Last year, Treasurer of Victoria Tim Pallas said “Home ownership is slipping beyond the reach of our young families.”
His statement also quoted federal Treasurer Scott Morrison saying he was “alarmed at the inability of young people to be able to access the housing market in a way they previously have been.”
While this year’s federal Budget has again been criticised as unhelpful to first home buyers, there are other options for getting the cost of a first home reduced.
The Budget says the Commonwealth and states have pledged they will commit to planning reforms to help first home buyers, following the First Home Owners Boost which was cancelled in 2009 and reemerged in 2015-16.
However, the Budget has new policies aimed at helping those who will never own homes at the expense of people with lifestyles in which they have a good chance of owning a home. This means those wanting to get property before it’s out of their reach should look not at the Budget, but at how advice from state government and the Australian Securities and Investments Commission (ASIC) can help them.
Grants from Victoria and other state governments
Victoria offers the following help to home buyers
• The First Home Owner Grant (FHOG) is a $10,000 payment available for those buying their first townhouse, unit or apartment valued at $750,000 or less. One condition for the FHOG is that this is the first time the dwelling has been sold as residential premises. It cannot be a holiday house or investment property.
• Reduction in the duty payable on a first home. In Victoria this means when buyers purchase a new or established property valued from $130,000 up to $600,000, a 50 per cent reduction of duty is available if they meet FHOG criteria
• Some eligible pensioners can receive a one-off duty exemption or concession when buying a new or established home under $750,000 in value.
• A type of exemption from duty known as an off-the-plan concession is available to eligible buyers of a land and building package. This means the buyer pays duty only on the improved value of the land, non-deductible costs, and completed refurbishment (including GST)
Tips and hints from the ASIC
ASIC offers ideas for getting a home more along the lines of savings advice.
ASIC urges first home buyers to ensure they have
• A history of regular savings in their bank account
• Pre-approval for a loan
• Key facts sheets which help to compare what different loans will ultimately cost them.
• Money, of course! Additional savings “will act as a buffer if interest rates rise and your repayments increase.” ASIC also suggests choosing a home loan which allows for extra repayments to act as a buffer if interest rates rise
So, while the federal Budget won’t help reduce the cost of a first home, first home buyers should find the range of grants available very fulfilling.