Addressing Housing Affordability: Changes in Support for First Home Buyers

From 1 July 2023, there are changes in support for first home buyers in Australia. To turn the housing affordability crisis around in Australia, the Federal Government will make changes in its eligibility criteria. This will affect the Family Home Guarantee, the First Home Buyers Guarantee, and the Regional First Home Buyer Guarantee and will also mean permanent residents can take part in the plans.

Changes to the First Home Guarantee and the Regional Home Guarantee

The First Home Guarantee and the Regional First Home Guarantee allows those who are eligible to be able to buy a home with a minimum of 5% deposit, and still avoid lenders mortgage insurance. The federal government behaves as a guarantor for up to 15% of a loan such as this.

The First Home Guarantee and Regional First Home Guarantee used to be only directed to single people, married people, and those in a defacto relationship, the government is now opening this up to allow friends and family members to join up and apply for these guarantees. This scheme is also open to permanent residents in addition to Australian citizens at 1 July this year (2023).

The First Home Guarantee and Regional First Home Guarantee will also be available to those that are not first home buyers but have not owned a property in 10 years. The government explains that letting non-first home owners who have not owned a property for 10 years to be able to use the schemes will help those who have lost home ownership due to financial issues or relationship breakdowns.

What has changed for the Family Home Guarantee

The Family Home Guarantee allows eligible home buyers to buy a home with a minimum of 2% deposit, and still not be required to pay mortgage insurance. The federal government will be the guarantor for up to 18% of a loan under the Family Home Guarantee Scheme.

The eligibility requirements for this scheme have been expanded beyond just single natural or adoptive parents with dependents. It will now be available to those who are single legal guardians with children, such as grandparents, aunts and uncles. The scheme also includes permanent residents in addition to Australian citizens.

Housing Minister Julie Collins says the government has made these eligibility changes to reflect the changing make-up of Australian households.

Am I Eligible For One of These Schemes?

The NHFIC (federal government’s National Housing Finance and Investment Corporation) provides a brief questionnaire to allow you to see if you are eligible for one of the Home Guarantee schemes.

Changes and Expansions to the First Home Buyer Assistance Scheme

The Government is finishing access to the First Home Buyer Choice (FHBC) in 2023. From 1 July, the transfer duty exemption threshold will increase from $650,000 to $800,000, and the concessional rate will increase from $800,000 to $1 million. This is for new and existing home purchases by eligible first home buyers.

Home buyers who exchange contracts before 30 June 2023 can potentially take advantage of the FHBC up until the date of their settlement. From 1 July 2023, the choice between property tax and transfer duty on new home purchases will not be offered. Home buyers who have used the FHBC will go on to pay their property tax for the duration of their property ownership and will be exempt from transfer duty on the property that they had purchased. If a home is purchased for $1 million or over after July 1, the home owners will need to pay transfer duty.

There will also be a residence requirement for the following schemes, exemptions and grants:

• First Home Owners grant
• First Home Buyers Assistance scheme
• Exemption for tenants of the Department of Housing and Aboriginal Housing Office
• Deferral of transfer duty payment for off plan purchases.

For purchases and contracts beginning on or after 1 July 2023, individuals under the above schemes, exemptions and grants need to move into their homes within 12 months of settlement and live in the property for a continuous 12-month period.

Stamp Duty Exemptions

Stamp duty concessions and exemptions will be increased for first home buyers in New South Wales from the beginning of July 2023. The First Home Buyers Assistance scheme has raised the stamp duty exemption threshold from $650,000 to $800,000 and concessions for stamp duty from $800,000 to $1 million. Under this new legislation, the NSW Treasury estimates that 8600 buyers will be allowed total stamp duty exemption, while about 4400 will pay a concessional rate.

Need assistance?

Talk to our mortgage brokers to find out how to make the most of these changes in legislation and find out what personal loan or mortgage options are more suited to you. Contact us on 02 4018 7505 for more information or book an appointment with our Newcastle mortgage brokers today.

^{Disclaimer: The information provided in this fact sheet is not legal, taxation or financial planning advice. It has been prepared without considering your specific needs, objectives and personal financial situation. Before acting on this information, we recommend that you consider carefully if it is appropriate for your needs, objectives and personal financial situation. All loan products are subject to lender criteria and approval. Fees, terms and conditions apply. Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Licensing Statement: Watson Mortgages Pty Ltd Credit Representative 525053 is authorised under Australian Credit Licence 389328.}