VIC State Budget confirms housing affordability package
Earlier this week (on 02 May 2017), Victorian Premier Daniel Andrews announced plans to keep the Victorian budget in surplus in 2017/18. The 2017-18 surplus is estimated to be $1.2 billion, growing to $2.7 billion by 2020-21, forecast to average $2.4 billion in the following years. Whilst housing affordability wasn’t the centerpiece of the State Budget, the Andrews Government has recognised that housing affordability is a major issue in Victoria and therefore has delivered a budget that aims to shift some of the balance back to first home buyers. Whilst most of the measures were announced earlier this year, Victorian first home buyers will be relieved to see the confirmation.
The VIC Government has something for most aspiring first home buyers in Victoria We take a look at how their policy announcements will help metropolitan first home buyers, regional first home buyers & the lower income earners across the state.
Whilst the Victorian First Home Owners Grant (FHOG) will remain at $10,000 for those looking to buy a brand new home/townhouse/apartment in the Melbourne metropolitan area, the Andrews Government has announced that it will forgo $851 million in revenue to abolish stamp duty for first home buyers of homes valued up to $600,000 and cuts to stamp duty on homes valued up to $750,000, from 01 July 2017. This exemption will apply to first home buyers purchasing established homes as well as those purchasing new homes and will apply for all residential property types, including houses, townhouses and apartments.
This policy announcement is set to help aspiring first home buyers who have been struggling to save a deposit + the associated costs of purchasing their first home.
Aspiring first home buyers in Melbourne are set to benefit from the changes to stamp duty
The VIC Government will spend up to $50 million to double the First Home Owner Grant to $20,000 in regional Victoria to support up to 6,000 first home buyers, making it easier for young people to build and stay in their community, as well as boosting regional construction jobs and development. The increased grant will be available to first home buyers building new homes valued up to $750,000 between 1 July 2017 to 30 June 2020. Regional first home buyers will also be eligible for the stamp duty exemptions and concessions mentioned above.
The government will also invest more funds in public services and infrastructure assets for regional areas, including transport, roads, schools and hospitals.
LOWER INCOME EARNERS
In the 2017/18 Budget, the VIC Government has acknowledged how hard it can be hard for many renters to save enough for a house deposit. Instead of saving, they’re putting everything they have towards meeting rising rental costs.
A Government new program, HomesVic, will offer to co-purchase properties with 400 first home buyers who meet the criteria for a bank loan, but lack a big enough deposit. By taking part ownership in the fhb’s first home, the Government will help give these first home buyers the start they need. The pilot scheme will be introduced from 1 January 2018 with an initial allocation of $50 million over 2 years. Purchases of both existing and brand new homes will be eligible.
HomesVic will take an equity share of up to 25% and eligibility will target applicants with incomes of up to $75,000 for singles, or up to $95,000 for couples or families. Eligible first home buyers will need to have a minimum of 5% saved for the deposit.
OTHER HOUSING POLICY ANNOUNCEMENTS
The VIC Government has also announced policies designed to reduce investor demand. In summary, these include the following:
- Vacant Residential Property Tax of 1% on the value of properties left unoccupied for 6 months or more
- Stamp duty concessions will be scrapped for investors who buy properties off-the-plan
- Abolishing a stamp duty loophole for spouses who transfer investment properties to each other
- Land tax to be calculated annually rather than bi-annually from 2019
- Fast track the release of land through the creation of new suburbs for housing
Are you looking to find out more about the budget announcements in relation to first home buyers or are you looking to take advantage of these first home owner incentives? Then please click for a complimentary consultation with an FHBA Coach.
First Home Buyers Australia