For struggling first home buyers, a change to stamp duties could be just the boost they need. And Victoria’s new housing affordability solution – HomesVic – could see first home buyers co-purchasing property with the Victorian State Government to reduce the housing affordability crisis in Victoria. Read on to find out more.
Get a foot in the door
From July 2017, first-home buyers in Victoria will no longer be required to pay stamp duty on properties that cost less than $600,000. Currently, Victorians buying a first home under $600,000 get a 50 per cent stamp duty concession.
Aimed at helping first home buyers who have until now been locked out of the housing market, the change could make the dream of owning a home more realistic for many.
Premier Daniel Andrews said, “This will help them get their foot in the door.”
“It means they can put extra money towards what matters most — buying their first home.”
With about 25,000 people a year expected to benefit from the new tax break, first home buyers should save an extra $8000 on average.
For properties worth between $600,000 and $750,000 some discounts will apply, while those buying for about $650,000 save the most, as stamp duties reduce from the current $34,000 to about $11,000.
With a boom in the Victoria property market, stamp duty rates have surged to a whopping $5.7 billion, earning itself the label “rotten tax”.
The revised tax break comes shortly after the Victorian State Government’s announcement that the First Home Owners Grant will be doubled to $20,000 for regional Victorians from 1 July 2017.
Treasurer Tim Pallas said the reforms were “important steps towards ensuring today’s families and future generations will be able to afford somewhere to live”.
A housing affordability solution
HomesVic is the $50 million pilot program aimed at giving about 400 people the opportunity to co-purchase a home with the Victorian State Government, which will offer to take an equity share of up to 25 per cent for each property. This will reduce the deposit that first home buyers would usually need to pay.
Starting in January 2018, the program will target couples earning up to $95,000 and singles earning up to $75,000. To be eligible, buyers will need a 5 per cent deposit. When the property is sold, the Victorian State Government will recover its share of the equity.
"First home buyers are facing more hurdles than ever," said Premier Daniel Andrews. "They're battling rising prices, they're competing against investors and they're up against federal government policies that advantage existing owners. These changes will help level the playing field."
A welcome change
While the changes to the First Home Owners Grant and Stamp Duties are likely to provide welcome relief for many first home buyers, with Melbourne’s median house price now at a record $795,447, many are left wondering whether home ownership is still out of reach.
If you’re a first home buyer keen to get a foot in the door, get in touch with a Mortgage Express broker to find out what your options are.
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