The 2023-24 financial year has seen a major shift for many first-home buyers as the new state government scrapped the land tax option and implemented its own suite of schemes to make it easier for people to own their first home.
Here, we get you up to date on the different guarantee schemes, concessions and grants the state and federal governments have on offer for eligible first-time home buyers in NSW.
State government-funded schemes
The NSW government has three key programs to help first-home buyers in our state: the First Home Buyers Assistance Scheme, the First Home Owner (New Home) Grant, and the Shared Equity Home Buyer Helper.
First Home Buyers Assistance Scheme (FHBAS)
This scheme was introduced at the beginning of the current financial year. It is designed to relieve eligible first-home buyers of the burden of paying transfer duty, or what was previously known as stamp duty.
A full exemption is available for whole properties with a purchase price of up to $800,000 ($350,000 for vacant land). Buyers may also be eligible for a reduced transfer duty rate on properties up to $1 million ($450,000 for vacant land).
To qualify for the exemption, you must move into the property within 12 months of settlement (or completion in the case of a new build) and remain in continuous residence there for at least 12 months.
Applicants must be Australian citizens or permanent residents over 18 years of age who have never owned or co-owned residential property in this country. If you are purchasing property with your partner or spouse, neither of you can have owned or co-owned residential property in Australia to qualify for the scheme.
For those considering buying with friends or different family members, this rule is slightly different. The eligible first-home applicant (or applicants) must be buying at least half of the property. Ineligible buyers will be required to pay transfer duty proportional to their share of the property.
Applications for this scheme are usually made through your conveyancer or solicitor.
First Home Owner (New Home) Grant
This is a one-off payment of $10,000 offered to eligible first-home owners who are buying a newly built or substantially renovated property priced at up to $600,000. This figure goes up to $750,000 for a vacant land and home-build package. The grant is not means tested or taxable.
As with the FHBAS, applicants must be Australian citizens or permanent residents over 18 years of age who have not have owned or co-owned residential property in this country before 1 July 2000. If you owned a residential property after that date but did not live in it for more than 6 continuous months, you may still be eligible for the grant.
Also in line with the FHBAS, to qualify for this grant, you must move into the property within 12 months of completion and remain in continuous residence there for at least 12 months.
Applications for the grant can be made through your bank or financial institution while you are arranging a home loan.
Shared Equity Home Buyer Help
The NSW government has committed to helping certain buyers purchase their first home by contributing up to 40% of the purchase price for a newly-built home or 30% of an existing property.
Under this shared equity scheme, buyers may be able to secure finance with a deposit as low as just 2% and can avoid having to pay costly lender’s insurance.
The scheme is open to single parents with dependent children, single people over the age of 50 and key workers, defined as: nurses, midwives, paramedics, teachers, early childhood educators or police officers. Applicants must prove that they can adequately service a mortgage.
Properties bought under this scheme are capped at $950,000 in Sydney and major regional centres. In other regional areas in NSW the cap is $600,000. There are income and asset limits in place for this scheme and applicants are expected to pay all the associated costs, such as legal fees, transfer duty and inspection fees.
Furthermore, this scheme is only available (at the time of writing) through two lending partners: Bendigo Bank and Unity Bank. Any application for this scheme should be made through one of these institutions.
You can find out more about these schemes on the NSW government’s Home Buyer Grants and Assistance Schemes website.
Federal government-funded schemes
NSW residents could also be eligible for first-home buyer schemes financed by the federal government. Collectively housed under the Home Guarantee Scheme (HGS) initiative and administered by the National Housing Finance and Investment Corporation, the federal schemes include the First Home Guarantee, the Family Home Guarantee, and the Regional First Home Buyer Guarantee.
First Home Guarantee Scheme (FHBG)
Under this scheme, the government guarantees up to 15% of a property’s value to help buyers obtain financing for the home they intend to live in with a deposit of just 5% and no requirement to pay lender’s mortgage insurance.
There are 35,000 places available on the scheme this financial year. Applicants must be Australian citizens or permanent residents over 18 years of age and cannot have owned property in Australia in the past 10 years.
There is also an income cap of $125,000 for individuals and $200,000 for joint applicants. Property price caps differ from state to state and within each state. Currently for NSW, the caps are $900,000 for Sydney and major regional centres and $750,000 for the rest of the state.
Family Home Guarantee Scheme (FHG)
Similar to the FHBG, but designed specifically to help single parents or guardians buy their first home, this schemes guarantees up to 18% of the purchase price of a home, reducing the required deposit to as little as 2% and, again, removing the requirement for the borrower to pay lender’s mortgage insurance.
Besides meeting the above eligibility criteria, applicants must be either a single parent or a single legal guardian of at least one dependent.
Income and property price caps are the same as for the FHBG. For the 2023-24 financial year there are 10,000 paces available on the scheme.
Regional First Home Buyer Guarantee (RFHBG)
This scheme is the same as the FHBG but applies to applicants purchasing property in regional areas of Australia.
You can find out more about the how the federal government is helping first-home buyers on the NHFIC HGS website.
First home super save scheme
There is another government incentive that’s been designed to help people save money for their first home inside their superannuation fund.
Under this scheme, you can make voluntary concessional or non-concessional contributions to your super, then withdraw them at a rate of 85% when the time comes to pay the deposit on your home. This withdrawal is called an FHSS release and can be up to $15,000 in a single financial year, or $50,000 over several years. Because this money is considered as “genuine savings,” it can make home loan approvals easier. It’s also a tax-effective option for most people and a great way to ensure your savings will grow because you can’t access the money until you are ready to buy your home.
To be eligible for an FHSS release, you must never have owned property of any kind in Australia or made a previous FHSS request at any point. Couples, family members or friends can all access their own contributions to purchase a single property.
You can find out more about this scheme on the ATO website.
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For further guidance, check with your financial advisor or accountant, who will be able to assess your specific situation and provide personalised advice.
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