Why 2022 could be the year of the first home buyer as states cut stamp duty and spending billions on schemes to help YOU into the great Australian Dream: Here’s what you need to know
- Dominic Perrottet will help first home buyers to get on the property ladder
- NSW will allow first-time buyers to pay an annual land tax instead of stamp duty
- Will also trial a shared equity scheme for teachers, nurses, police, single parents
Dominic Perrottet will help first home buyers get on the property ladder with two new schemes announced in his state Budget today including stamp duty changes that could save young people $50,000 at the time of purchase.
The NSW premier will allow first-time buyers to pay an annual land tax consisting of a $400 fee, plus 0.3 per cent of the land value, instead of charging them a crippling up-front sum.
The state government will also trial a shared equity scheme for teachers, nurses, police, single parents and older singles.
Despite a small drop in recent months, Sydney house prices are still 22.7 per cent above pre-2020 levels, making home ownership an impossible dream for many low and average income earners.
Mr Perrottet, who faces an election in March, wants to help renters get into the property market to give them a stake in society and the chance to ‘grow wealth’.
Here Daily Mail Australia takes a look at how these ambitious housing policies will work.
Stamp duty overhaul
First home buyers will no longer have to pay thousands of dollars in stamp duty and will instead be able to pay an annual land tax.
The hated tax – which is about $50,000 on average, is paid to the state government by a buyer purchasing a home.
But first time buyers of properties worth up to $1.5 million will be able to opt for an annual land duty instead worth $400 plus 0.3 per cent of the land value.
First home buyers will no longer have to pay thousands of dollars in stamp duty and will instead be able to pay an annual land tax
Dominic Perrottet (pictured) will help first home buyers to get on the property ladder with two new schemes announced in his state Budget today
A property in Rosehill costing about $1million would attract stamp duty of $42,000 or an annual tax of $1,900 a year.
However, that $1,900 figure would increase as the value of the land goes up.
If the buyers hold the house for several years they could be paying more over time than if they had simply paid the $42,000 up front.
But the Government believes it’s good to offer the choice so first home buyers can get into a property sooner.
Treasurer Matt Kean said: ‘We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them.
‘It will mean more NSW residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership.’
The scheme is due to be available from January 16, 2023 and is estimated to help 55,000 households a year.
First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000.
Stamp duty concessions remain in place for properties between $650,000 and $800,000.
Instead of paying the stamp duty fee up front buyers could chose to pay an annual land tax to the state government instead. Pictured: A home auction in Sydney
Stamp duty explained
Stamp duty is a tax paid to the state government by the buyer when purchasing a home
The figure depends on the value of the home but the median average stamp duty in Sydney is $49,934
First home buyers can qualify for a stamp duty exemption for homes they buy for less than $650,000 while a concessional rate is available for properties worth up to $800,000
The rule applies whether the home is brand new or existing
The median average stamp duty in Sydney is $49,934.
Ken Morrison, chief executive of The Property Council of Australia, described stamp duty tax as ‘the worst thing in Australia’ because it ‘distorts behaviour, cripples job creation, lowers growth, and locks people into housing that might not be appropriate for their needs’.
Premier Perrottet, who has called stamp duty an ‘inherently terrible tax’, floated axing it completely when he was treasurer.
He wanted 80 per cent of buyers across the state to have the option of paying an annual land tax regardless of whether they were purchasing their first home.
However, he conceded such large-scale reform couldn’t be achieved without the help of the Commonwealth which was not forthcoming.
The NSW government rakes in 32 per cent of its revenue from stamp duty which was worth $12.2 billion in the 10 months to April 2022, according to Revenue NSW.
This has soared from 18.3 per cent 10 years ago as house prices skyrocketed.
NSW Treasury predicted switching to a land tax would collect about 20 per cent less revenue than the current system.
In the 2020-2021 financial year, $9.6 billion of stamp duty was collected.
Labor opposes the move to a land tax model.
Shared equity scheme
On Sunday the premier announced that frontline workers and singles over 50 will receive ‘a leg up’ into the NSW property market, with the state government to introduce a shared equity housing scheme in the budget.
The $780.4 million trial scheme will be open to 3,000 frontline workers and single parents or singles over 50.
It will be open to singles earning up to $90,000 a year, or couples earning up to $120,000.
Key worker first home buyers who are nurses, teachers or police – as well as older singles over 50 and single parents with a child or children under 18 years old can apply for shared equity
The government will contribute up to 40 per cent of the equity of a new home and up to 30 per cent on an existing home, and will require a two per cent deposit.
The scheme will mirror the new Labor federal government’s shared equity scheme which was opposed by Scott Morrison.
Mr Kean said the policy was about helping people reach their goals and live their dreams.
‘One of the particular cohorts that we’re focused on is that cohort that is too often fallen through the cracks and that’s older singles, particularly women who are divorced,’ Mr Kean said.
‘What we want to do is make it as easy as possible for that cohort to get back on their feet safely.’
Eligible properties will be capped at $950,000 in metropolitan Sydney and $600,000 in other parts of the state.
Who is eligible for the shared equity scheme?
Under the NSW Government’s shared equity trial:
· Up to 3,000 spots will be available each year for two financial years;
· Key worker first home buyers who are nurses, teachers or police – as well as older singles over 50 and single parents with a child or children under 18 years old can apply;
· Participants must have a maximum gross income of $90,000 for singles and $120,000 for couples;
· Participants must have a minimum deposit of 2 per cent of the purchase price;
· The Government will take a maximum equity contribution of 40 per cent for a new home and 30 per cent for an established home, and
· The maximum value of the property that can be purchased under the scheme is $950,000 in Sydney and regional centres including the Central Coast, Illawarra, Lake Macquarie, Newcastle and the North Coast of NSW, and $600,000 in other parts of NSW.