Housing Affordability is a hot political topic and so it is not surprising that late last week the NSW Premier announced new housing affordability measures in advance of her NSW State budget, which is released on 20 June, 2017. First-home buyers are the clear winners, whilst increased taxes are imposed on foreign investors. Local investors lose the ability to defer stamp duty for off-the-plan purchases and have to pay this now within three months of purchase.
First-home buyers stamp duty changes
From 1 July 2017, first-home buyers will pay no stamp duty on new and existing properties worth up to $650,000. This will reflect a saving of up to $24,740. First-home buyers will receive stamp duty discounts for properties valued between $650,000 – $800,000.
Prior to these changes coming into effect, first-home buyers were exempt from paying stamp duty on only new (not existing) properties up to $550,000, and then received discounted stamp duty for new properties between $550,000 and $650,000.
Stamp duty charged on lenders’ mortgage insurance will also be abolished. This insurance is often a requirement of banks lending to first-home buyers with limited deposits.
First-home buyers grant – new homes
First home buyers will be entitled to a $10,000 grant if they build a new home valued up to $750,000. They will be entitled to a $10,000 grant if they purchase a new property up to $600,000.
The $5,000 New Home Grant Scheme will be closed on 30 June 2017. This was available to anyone purchasing a new home in NSW.
The Foreign Investor Surcharge Duty will be doubled from 4 per cent to 8 per cent, while the annual land tax surcharge for foreign buyers will rise from 0.75 per cent to 2 per cent a year.
Stamp duty deferral concessions will be abolished for all investors purchasing off-the-plan. Currently, investors are entitled to defer the payment of stamp duty by 12 months if they buy an off-the-plan property. This means they don’t have to pay stamp duty until 15 months after settlement. This is being removed, and will only be available to buyers of off-the-plan property who live in that property (whether they are a first-home buyer or not.)
Therefore, stamp duty for investors will have to be paid within three months of exchange of off-the-plan purchases.
“The new stamp duty relief for first home-buyers is expected to have a significant impact on the affordable end of the NSW property market. As new buyers enter the market, existing owners will, in turn, upgrade, with a broad flow-on effect,” said Ironfish National Apartments Manager, William Mitchell.
The Premier said it was hoped the housing affordability package would bring thousands more new first-home buyers into the market over the next four years.
“This will provide a once-in-a-generation opportunity for first home-buyers to get their foot in the market,” said NSW Premier, Gladys Berejiklian.
Boosting housing supply
The government has also committed to boost housing supply in Sydney by accelerating rezoning and building infrastructure such as roads, schools and utilities that can enable development. The NSW Government plans to work with councils to provide the “right conditions for developers to supply enough new housing in the right places.”
The Premier’s announcement comes ahead of the NSW State Budget, which will be delivered on 20 June.