Great News for First Home Buyers
In the State Budget earlier this month, the NSW Government announced a comprehensive package to improve housing affordability focused on First Home Buyers, who often face stiff competition from investors.
This means from 1 July 2017 for First Home Buyers:
- No stamp duty on all homes (new and existing) up to $650,000
- Stamp duty discounts for homes (new and existing) up to $800,000
This is great news for First Home Buyers providing potential savings of up to $24,740 stamp duty.
Click here for the Office of State Revenue website providing full details.
- The 1 July 2017 date refers to the date contracts are exchanged.
- “First home purchase” refers to the first home you purchase which you must occupy for a continuous period of 6 months, commencing within 12 months of settlement.
- First Home Owner Grant (New Homes) of $10,000 still applies if you purchase or build a new home or home unit up to the value of $750,000.
With the recent announcement, some vendors (with properties worth up to $750,000) have instructed their real estate agents to defer auctions or exchange contracts until after 1 July 2017.
This is an attempt to increase the vendors potential buying pool by capturing those First Home Buyers who will be eligible for nil or reduced stamp duty.
The table below indicates the potential savings up to an $800,000 purchase price:
In addition, the government has abolished stamp duty on Lenders Mortgage Insurance (LMI) premiums as of 1 July 2017. This is another good government initiative, although not everyone requires LMI.
This is because many First Home Buyers who don’t have the usual 20% deposit are accessing Family Pledge/Guarantor loans. With these loans, parents or other close relatives allow the bank to take a limited mortgage over their home or investment property, which then allows First Home Buyers to borrow greater than 80% of the purchase price.
If you have any queries or would like to discuss how these government initiatives may benefit you or your children please let me know.