How is the NSW government helping out first home buyers?
Wed August 02, 2017
As of July 1 2017, a package of measures have been introduced in NSW to help first home buyers enter the property market. We talked about what some of these could be back in March, in the wake of similar policies that were implemented by the Victorian state government. With the delivery of the 2017-2018 budget, the NSW government's housing affordability package is now in effect.
We'll take a look at what the housing affordability package looks like and how it will help first home buyers in NSW get their first foot on the property ladder.
The NSW government's housing affordability measures are now in effect.
1. Abolition of stamp duty and stamp duty reductions
One measure that is sure to make first home buyers across the state very happy is the elimination of stamp duty fees for properties valued up to $650,000. This is great news for residential property seekers who may have been put off by the hefty stamp duty costs that come with purchasing property in NSW. We're not just talking savings of a few thousand dollars - stamp duty on a property worth $650,000 was formerly a whopping $24,740.
For first home buyers of properties valued a little higher - between $650,000 and $800,000 - there will also be stamp duty reductions, so if your property's value is a little above the threshold for stamp duty fees to be completely eliminated, you'll still see some savings.
2. Insurance duty on mortgage lenders' insurance abolished
Something else that's being scrapped is insurance duty on lenders' mortgage insurance (LMI). LMI is a fee charged by home loan lenders if you borrow more than 80 per cent of the value of your property - a form of security should you default on your loan.
LMI isn't as large a cost as stamp duty, but with the removal of insurance duty you could still save around $2,900 on a property valued at $800,000 if you have a deposit of $50,000. This essentially means that first home buyers can borrow more without being penalised as much financially for it.
3. Tax hikes for foreign investors
In an effort to curb the competition and give first home buyers more of a fighting chance, the NSW government has doubled the surcharge on stamp duty for foreign investors. Prior to July 1 the surcharge was 4 per cent, but it's now been bumped up to 8 per cent.
So, not only will foreign investors be required to pay stamp duty, they will be paying a lot extra on top of it, giving more power to first home buyers.
A grant of $10,000 is available to eligible first home buyers building a property worth up to $750,000.
4. No more stamp duty deferral for off-the-plan property purchases by foreign investors
Foreign investors will no longer be able to defer the payment of stamp duty for off-the-plan purchases for a 12-month period, as they previously had been able to.
However, if you're a first home buyer purchasing an off-the-plan property, you'll still be entitled to the 12-month deferral.
5. First home owners grants
In addition to all the savings that the housing affordability package is bringing in, first home buyers can also receive grants to give them an extra financial boost. A grant of $10,000 is available to eligible first home buyers building a property worth up to $750,000, and for those buying a new property worth up to $600,000.
All of these measures are fantastic news for those wanting to buy a house in NSW. The grants and concessions now in place will make it a lot easier for those buying their very first home to do so.
To find out more about purchasing real estate in Sydney, talk to the Laing+Simmons team.