Within the past year, the dream of owning property has become attainable once again for many Australians, due to recently lowered interest rates, relaxed lending criteria and Government incentives. While some initiatives have been in place for over 20 years, Australian Federal and State Governments have recently implemented new systems to further aid those aspiring to enter the real estate market. Commissioned as a response to the threat of COVID-19, there are several new schemes in place with varying eligibility criteria, fluctuating from State-to-State. We have compiled a brief overview of the current stimulus opportunities available to eligible first home buyers.
First Home Owners’ Grant
Most Australians are familiar with the national First Home Owners’ Grant, a one-off payment towards buying or building a new (or substantially renovated) house, unit or townhouse. Originally introduced on the 1st of July 2000 to offset the effects of GST, the amount varies from State-to-State, currently offering Queenslanders a payment of $15,000 towards a property up to the value of $750,000. Conditions of the grant require you to move into the home within the first year of ownership, live there for a minimum of six months and exempts you from any stamp duty charges if the property is below $500,000.
First Home Super Saver Scheme
Introduced in 2017, The First Home Super Saver Scheme allows first-time buyers to save money within their superannuation fund by making additional contributions of up to $15,000 per year and $30,000 in total. Tax is still applicable upon withdrawing the funds, however these super contributions are taxed as low as 15%, with couples able to save individually and pool money together. To be eligible for the scheme, you must not own any other property and live in the home for at least six months within the first 12 months of ownership.
First Home Loan Deposit Scheme
Launched on the 1st of January 2021, the First Home Loan Deposit Scheme was introduced to assist first home buyers in purchasing a property with as little as 5% deposit. The remainder of the deposit required (roughly 20%) is guaranteed by the Commonwealth Government, removing the need to take out and pay for mortgage insurance. There is a limit to the number of places available in the scheme for both existing and new properties, as well as thresholds for the cost of the property dependent on your location.
First Home Builders’ Grant
The First Home Builders’ Grant is in place for those planning on building a new home or undertaking large-scale renovations on an existing home. Originally implemented to combat the downturn of the construction industry during COVID-19, the grant amount was recently scaled back from $25,000 to $15,000 for contracts signed after the 1st of January 2021. The grant can be used in conjunction with several of the other first home owner incentives, on the condition that work commences within three months of the contract date.
The Rent-to-Buy scheme (RTB) affords aspiring home owners the ability to rent a property that they wish to eventually purchase. The RBT scheme comprises a traditional lease, plus a contract between the owner and the tenant outlining the RTB conditions, including a pre-agreed sale price. The rental period can run anywhere from two to five years and during that time, participants are required to pay rent plus an ongoing scheme fee. Upon finalisation of the contract, the fees accumulated throughout the rental period are then used as a deposit to proceed with the purchase of the property. Benefits to entering into a RTB agreement for the property owner include invested tenants, reliable rental income and a guaranteed sale upon successful completion of the scheme.
In addition to the incentives to purchase, the Build-to Rent project is being rolled out across Australia in response to the under-supply of available rental accommodation within our capital cities. The concept sees residential unit developments built and retained by the developer (or corporation) and leased out as oppose to being sold off. The project aims to drive investment in the construction sector, provide long-term leases to tenants and a reliable stream of income to the company in ownership. Projects are already operational in both Sydney and Melbourne, with two developments in Brisbane (one in Brunswick Street, Fortitude Valley and another on Skyring Terrace, Newstead) underway and set for completion by late 2023.