TO HELP first time home buyers into the housing market, the Australian Government has collaborated with the NSW Govt to offer various incentives. With the turmoil in financial markets over the past few months, there has been a slowdown in the sales of existing homes and the building of new homes.The First Home Owner Boost Scheme is a new initiative to stimulate the market by assisting first time buyers to purchase or build their first home.The First Home Owner Boost Scheme is not means tested so applies to everyone.
First home buyers had already been offered a $7,000 grant as well as other exemptions. There is now an extra $7,000 to first home buyers purchasing an established home while first home buyers purchasing or building a new home receive $14,000 boost plus another $3,000 announced in the NSW mini budget recently (from 11 November to 30 June 2009).These amounts are in addition to the existing $7,000 First Home Owner Grant for a total of $14,000 for existing homes and $24,000 for new homes.
A new home is regarded as a home that has not previously been sold or occupied as a place of residence, including occupation by the builder, a tenant or other occupant. This includes substantially renovated homes provided the home has not been occupied or sold as a place of residence since being substantially renovated (substantial renovations of a building are renovations in which all, or substantially all, of a building is removed or replaced). The First Home Owner Boost Scheme applies to contracts dated between 14 October 2008 and 30 June 2009 (inclusive). For owner/builders, construction must have commenced between those dates.The $3,000 new home buyer’s supplement applies from 11 November 2008 and 10 November 2009. Applicants should note that the First Home Owner Boost Scheme will not apply to a contract which replaces a rescindedcontract made before 14 October 2008 to purchase the same home or to build the same or a substantially similar home.
To be eligible for the First Home Owner Boost Scheme, first home buyers must satisfy the requirements of the existing $7,000 First Home Owner Grant and the additional First Home Owner Boost Scheme requirements detailed in the First Home Owner Boost factsheet. Eligibility Criteria
• Be a natural person (not a trust or company), at least 18 years of age, and have an interest in the property not subject to a trust• At least one applicant must be an Australian citizen or permanent resident• At least one applicant must reside at the property as a principle place of residence for a continuous period of six months, commencing within 12 months of the completion of the transfer• Not previously received a first home owner grant anywhere in Australia and Australian territory• Not previously owned or had an interest in a property anywhere in Australia prior to 1 July 2000• Not occupied for a continuous period of 6 months a residence in which they acquired a relevant interest on or since 1 July 2000
There are a few rules for the boost benefit when it comes to new homes eligibility:
The contract must be entered into between 14 October 2008 and 30 June 2009 inclusive Construction must be commenced within 26 weeks of the contract
The contract must specify a completion date for the building work to be finished within 18 months or by 18 months, if off the plan, the contract must state a completion date on or before December 2010.
For an owner builder, the laying of foundation must commence between 14 October 2008 and 30 June 2009, and construction completed within 18 months.
The $7000 First Home Owner Grant will continue to apply after 30 June 2009.
To apply for the $7,000 First Home Owner Boost Scheme benefit for an established home, first home buyers only need to complete the First Home Owner Grant application form (OFH 001).
To apply for the $14,000 First Home Owner Boost Scheme benefit for building a new home or purchasing a newly constructed home, first home buyers need to complete the First Home Owner Grant application form (OFH 001) and the Addendum for the First Home Owner Boost Scheme (OFH 002).
This can be downloaded from the website www.osr.nsw.gov.au or their office situated in Wollongong. Phone the OSR on 1300 130 624 between the hours of 8.30am and 5pm Monday to Friday or email first.home.benefits@osr.nsw.gov.au. In addition to the grant and boost scheme, the Australian government offers other exemptions to first home buyers such as exemption from stamp duty on the property and stamp duty payable on the mortgage application. For more information, see the First Home Plus Scheme on the website.
The First Home Plus scheme provides exemptions or concessions on transfer duty for people who are buying their first home in NSW. This includes buying vacant land on which you intend to build your first home.
The First Home Plus Scheme provides eligible purchasers with exemptions on transfer duty on homes valued up to $500 000 and concessions on duty for homes valued between $500 000 and $600 000.
Eligible purchasers buying a vacant block of residential land to build their home on will pay no duty on vacant land valued up to $300 000, and will receive concessions on duty for vacant land valued between $300 000 and $450 000.
From 1 September 2007 an advance made to natural persons for the purpose of buying or building their home, or buying vacant residential land, is not liable to duty. This applies irrespective of the amount of the advance.
To qualify for First Home Plus you must meet the criteria listed below:
Tthe contract and the transfer must be for the purchase of the whole of the property all purchasers must be ‘eligible purchasers' at least one eligible purchaser must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of completion of the agreement an ‘eligible purchaser' is a natural person (ie not a company or trust) at least 18 years of age who has not, and whose spouse/ de facto has not: at any time owned (either solely or with some one else) residential property in Australia other than property owned solely as trustee or executor previously received an exemption or concession under First Home Plus.
Note: If all purchasers are not ‘eligible purchasers' you may still qualify for a concession under First Home Plus One.
More information available at: www.osr.nsw.gov.au
You can apply for the First Home Owner Grant through your approved agent or Office of State Revenue. Applications lodged with approved agents will have the grant available for settlement or for the first draw down on contracts to build.
Applications can only be lodged with OSR after completion and you are registered on title (if you are purchasing under a ‘Terms Contract' please contact OSR for lodgement requirements).
Applications must be lodged within 12 months of completion or settlement of your home.
Applying for First Home Plus
Submit your First Home Plus application together with your mortgage document at the same time you lodge your Agreement for Sale/Transfer for stamping by OSR.
Your agent (solicitor, conveyancer, etc) can help you to lodge your application and documents with OSR for stamping or they can lodge your application and apply for stamping electronically through a Client Service Provider.
You must have already exchanged contracts to purchase your first home or vacant land.
If you do not submit your mortgage document at the time of lodgement you can still apply for the mortgage duty exemption or concession at a later stage. You will need to consult yourlender about this.
If you are applying for a concession under First Home Plus, you should apply within three months from the date of the sale agreement, otherwise you may be subject to interest charges.
(Note: this does not apply to ‘off the-plan' purchases.)
More information can be obtained from the office of State Revenue website : www.osr.nsw. gov.au
The impact of successive reductions in interest rates and the boost to the First Home Owners Grant is becoming more apparent in the latest Housing Finance figures released by the Australian Bureau of Statistics.
The data shows that housing loans for new dwellings grew by 2.9 per cent in November (seasonally adjusted) over the previous month.
For the month of November first home buyer loans (new and established houses) increased by 17.8 per cent to 11,665 comprising 23.6 per cent of all home loans for the period.
Loans for investment purposes on new homes dropped 7.4 per cent for the month, down 33 per cent over the last 12 months.
HIA Chief Executive Chris Lamont said that the fall in investment loans for new housing provides some concern for the state of the private rental market.
"Australia's population is growing and unless we boost the supply of new homes we can expect even lower vacancy rates and further price pressures," said Chris Lamont.
The number of loans for existing and new dwellings varied greatly from state to state. New South Wales increased by 5.8 per cent, while Victoria dropped by 1.7 per cent. Queensland grew by 0.9 per cent, South Australia by 4.7 per cent and Tasmania by 6.6 per cent.
Falls were recorded in Western Australia (by 5.8 per cent), the Northern Territory (9.6 per cent), while the ACT dropped by 13.8 per cent.
Buying a home can be daunting, particularly at auction.
First home buyers can arm themselves with vital information thanks to two information nights run by MMJ.
Independent legal and financial advice will be provided, as well as information from sales experts on buyers' rights and obligations. The first evening will focus on auctions while the second will provide general information, with some information about buying at auction.
The auction night will focus on the more affordable end of the market - the market that generally attracts first home buyers.
MMJ director Daniel Hastings said that with the first home owners grants due to finish at the end of June, now was the time for buyers to get the information they needed to make wise choices.
"This is a great opportunity for people to adequately prepare themselves. "Often people turn up at auctions and they're not as prepared as they thought they might be. He said some buyers might have deliberately avoided looking at homes for auction, as they were intimidated by the process.
"Auctions can be daunting even for experienced buyers. Hopefully the information provided will give buyers the knowledge and confidence to open up new opportunities.
"You'd hate to miss out on your dream home just because it was listed for auction, simply because you didn't know enough about the auction process."According to an ABC News media report last week, figures on housing sales throughout Australia showed a large number of people were taking up the first home owner's grant, which is currently $14,000 for established homes, and $21,000 for new homes.
Housing Minister Tanya Plibersek said 42,000 first home buyers had applied for the increased grants since last October.
The auction information evening will be held 14 May, while the general information event will be held 20 May. Both are at Wollongong Golf Club from 6pm.
Picture: MMJ Director, Daniel Hastings
Much of the property focus in recent times has been first home buyers and the increased first home buyers grant. Concrete figures are not in as yet but it is certainly evident that the increased grant along with lower interest rates and stable house prices has had the desired effect and stimulated the lower section of the market significantly. First home buyer finance commitments have increased to their highest ever levels.
The government has only ever stated that the extra grant would be available until 30th June 2009 and recent comments are indicating that it will not be extended. This means that first home buyers must have entered into a contract to purchase a property before 30th June 2009 to be sure of receiving the extra $7,000 in the case of an existing home or $17,000 in the case of a new dwelling.
With much of the existing property in this lower price range already having been sold and any new stock getting snapped up quickly, some people are almost certainly going to miss the deadline. There are a number of things that potential first home buyers need to do at this time to try and make sure that they are not one of the ones to miss out.
If you have not already done so, speak to your finance broker or financial institution immediately. Be sure of your borrowing capacity and the time it will take to get formal approval. Once a property has been found it can be up to 3 weeks to get formal approval with some of the major banks and so this means you really only have 2 months to find your new home.
Be open minded on what you want. If you are too restrictive on the suburb or features you are after, then your choices are decreased. Nearly all home purchases, no matter what price range, involve a degree of compromise. Check the internet regularly. E-mail alerts and open home alerts on www.realestateworld.com.au are an excellent source of the most up to date information and property listings available. Check out the ‘Suburb Profiles' and get to know your market and values intimately. Talk to your local agent. They are there to help and if you can show that you have done your homework and are ready.
First home buyers can get the low-down on the tips and traps of buying a home at a seminar organised by MMJ.
Independent legal and financial advice will be provided by Kells The Lawyers and IPS Home Loans, as well as information from sales experts on buyers' rights and obligations.
The seminar will focus on auctions and provide general information for first home buyers.
MMJ director Daniel Hastings said that with the first home owners grants due to finish at the end of June, now was the time for buyers to get valuable information.
"Auctions can be daunting even for experienced buyers. Hopefully the information provided will give buyers the knowledge and confidence to open up new opportunities."
The seminar will be held at Wollongong Golf Club on 13 May at 6pm.
AUCTIONS:
The commercial properties are 22 Veronica Street, Warilla, and 1 Luso Drive in Unanderra, while the residential property is 53 First Ave, Warrawong.
To be held at Wollongong Golf Club, registration starts at 5.30pm, with the auction to start at 6pm.
First Home Buyers Urged to act, Despite Grant Extension
"Look now - don't wait". That's the advice from the Illawarra real estate community after news that the First Home Owner's Boost (FHOB) would be extended.
The consensus was that the extension - and stepped reduction - would reduce buyer "panic" and continue to stabilise the market.
While buyers were encouraged to use the extra time to research the market and organise their finances, they were urged not to wait until later in the year to start their property search. One reason was that many lenders have tightened their loan application criteria, meaning applicants often have to wait much longer for applications to be processed.
The FHOB was extended an extra six months, after widely being tipped to end on 30 June.
Until 30 September the grant for existing houses will remain at $14,000 and $21,000 for new homes.
Grants will then be phased back to a total of $10,500 for existing homes and $14,000 for new homes until the end of the year. Local experts agreed that low interest rates and fair prices meant now was the best time ever for people to get into the market or improve their current situation.
They said the prospect of rising unemployment was a factor in the market but insisted that those who did have job security largely offset negative effects on the industry.
Here's what they had to say....
Rick Taylor - Ray White Woonona, Chairman of EAC Zone 3C Board, Illawarra
This is the best time in history for people to improve their situation. Whether it is first home buyers getting into the market or people who want to improve their lifestyle, such as moving closer to the beach or closer to Sydney.
My advice to first home buyers would be, don't wait to look at the end of the year - look now. The extension of the grant has removed some of the panic. However, we know the grant will eventually end. Look around, be well informed and jump on the property that is best for you.
Simon Pomfrett - Executive director, IRIS (Illawarra Regional Information Service)
The extension of the grant is very important for this region. Overall, I believe the grant has helped hold up the real estate industry.
The gradual stepping-down of the boost will help prevent overheating of the market at the lower end. It is also politically more palatable to stop it gradually.
Those with job security have been jumping on this grant. About 90 per cent of the labour market is employed and many people have job security. Also, interest rates are historically low.
Our consumer surveys indicate that the perception is that now is a great time to buy property.
Ian Fitzgibbon - MMJ Dapto
The prospect of the grant ending in June did create a sense of urgency. The extension might relax first home buyers as it gives them time to look around. It's important to point out that now is an excellent time for anyone to buy, including investors and those looking to upgrade or change locations. Affordability is something we enjoy in the Dapto area, so we attract a large number of first home buyers. The grant has generated increased activity over the past three or four months. Also, properties are generally listed at fair market price, which helps with stability and sustainability of the market. My advice would be to get your finances in order - have a deposit and ensure as much as possible that your financial situation is sustainable. Obtaining finance can be more difficult now than it once was, as banks are scrutinising loan application criteria more stringently as a result of the financial crisis. This has also resulted in loan approvals sometimes taking longer to process.
Dale Whittaker -
I was a little surprised that the grant will stay high for existing homes. I was expecting it to stay high for new homes only. The extension is a positive thing for both the industry and first home buyers. It eases buyer panic and gives them more time to do their research. The stepped reduction in the grant will also help stabilise the industry.
We were starting to see price rises in the bottom end of the market but it's only been marginal. In terms of unemployment being a factor on prices and demand, those who are at risk tend to know who they are. If unemployment does rise dramatically it might put a dampener on the market and bring it back down. On the flipside, it is a good time for those with job security to buy, thanks to low interest rates.
Michael Garside - Dougmal/Harcourts Dapto
I think the extension of the grant - and the fact that it will be dropped gradually - will help ease panic. Unemployment is a factor in demand but you have to remember that while unemployment might be rising, employment is still at roughly 90 per cent. There are still lots of people who do feel confident about their job security. The grant and low interest rates are a powerful punch for the industry. There is nervousness in the job sector, but those who have job security are keeping the market stable.
Daniel Hastings -
Based on what has already happened with the grant, I think the extension will improve and sustain demand. The grant makes buying a home possible for those who would otherwise not be in a position to do so. In terms of the unemployment situation, the grant helps balance the uncertainty. The prospect of unemployment is a factor - we'd be absolutely rushed off our feet if unemployment wasn't an issue.
This is the first of a series on important information in relation to buying property.
Each week we will cover the aspects in the list below, starting this week with Assessing your borrowing capacity Buying property, particularly your first home can be an exciting yet emotionally demanding experience.
Following a few simple steps can take away much of the stress experienced by many and make the whole process a rewarding one.
Property ownership has been described by many as the "great Australian dream" and we pursue this dream for a number of good reasons. Whilst buying our own property involves for most, the biggest single investment we will make, it gives us security both of tenure and financial. In purchasing your own property you are investing not only in your future but that of your family, because history dictates that property investment is one of the best long term investments that people can make in wealth creation.
Investment in your family home is free from capital gains tax and accordingly any reasonable improvements made on the property will add value but not incur any tax liability.
The following are suggested steps that should be taken when purchasing a home:
Assess your borrowing capacity Research your loan options
Set your requirements Research the market, choose your location, look at houses/attend auctions, select a house, contact your solicitor or conveyancer, make an offer, lodge your loan application, exchange contracts, insure the property, settlement
What can I afford?
It is essential to know how much you are able to borrow to purchase a property. This will require you to seek out a loan through a financial institution (bank, building society etc) and it is important to "shop around" to obtain a loan that best suits your requirements. Before you can secure a loan you will need a deposit, usually 10 percent of the purchase price, although some institutions will lend up to 95 percent of the purchase price if mortgage insurance is taken out. Banks generally allow for one third of your uncommitted income as repayment. However, always remember that the repayment of a mortgage is not the only expense that you need to consider when purchasing a property.
When considering your budget and loan options remember you'll need money to cover more than just the purchase price. You need to make allowance for such things as:
Loan application fees
Legal fees of your solicitor or conveyancer
Stamp duty
Valuation Fee
Mortgage insurance
Inspections - building, pest etc
Removal costs
Any repairs or immediate improvements that may be
required to the property,
Utilities & Rates.
Insurance of home.
Land Transfer Registration.
Next week we will go into detail on financing options.