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Premier Gladys Berejiklian announces housing affordability reforms

First home buyers will be helped into the property market with more than $1 billion of stamp duty concessions and measures to level the playing field with investors under reforms unveiled by Premier Gladys Berejiklian to tackle housing affordability.

But the NSW government is being criticised for an absence of measures to boost the construction of affordable housing for low and medium-income key workers such as nurses, teachers and police.1496987636604

Under the package announced on Thursday, first home buyers of existing and new properties costing up to $650,000 will be exempt from paying stamp duty from July 1.

This lifts the value of eligible properties from the existing $550,000 and reintroduces existing homes to the scheme.

Buyers of first homes worth between $650,000 and $800,000 will receive stamp duty discounts.

This lifts the current price range for eligibility from between $550,000 and $650,000 and again reintroduces existing homes to the scheme.

The changes to stamp duty concessions are estimated to deliver savings of up to $24,740 for a first home buyer in NSW.

As well, the 9 per cent stamp duty charged on lenders’ mortgage insurance – often required by banks lending to first home buyers with small deposits – will be abolished.

To help first home buyers compete with investors, stamp duty concessions for properties bought off the plan will be removed, the $5000 new home grant scheme abolished and the ability for investors to defer payment of stamp duty for 12 months axed.

However, Ms Berejiklian also announced tighter eligibility criteria for the existing $10,000 first home owner grant.

While the grant will remain available to first home owners building a house worth up to $750,000, the eligibility cap for those buying a new home drops from $750,000 to $600,000.

The package is the government’s first response to the issue of housing affordability after Ms Berejiklian declared she would make it a priority on becoming Premier in January.

She said it was hoped the package, expected to cost about $1.2 billion, would bring “thousands more” new first home buyers into the market over the next four years.

“We know there isn’t a single solution; we know this is a complex challenge,” she said. “We know how hard it is to save up for your first home, especially in greater Sydney and some regional areas.”

But Opposition Leader Luke Foley said the plan was “a missed opportunity, especially in the area of refusing to support affordable housing targets for Australia’s least affordable city”.

The opposition last week announced it would require 25 per cent of properties on rezoned government land be designated as affordable housing.

The government announced no such targets, but said the increased supply of new housing could also help renters.

“Today our response is about first home buyers,” Ms Berejiklian said. “It is about getting people into the market. That is what we are solving for today.”

Treasurer Dominic Perrottet defended setting the upper limit of stamp duty concessions for first home buyers at $800,000, describing that as a “fair price” when the median apartment price in Sydney is $700,000.

To help fund the package, the stamp duty surcharge for foreign investors will be doubled to 8 per cent and the land tax surcharge lifted from 0.75 per cent to 2 per cent.

On the supply side, the government will halve the cost of borrowing by local councils for eligible projects via interest rate subsidies.

There are also proposed changes to the planning system. Councils will be given two years from the end of the year to finalise local environment plans consistent with housing targets set by the Greater Sydney Commission.

Councillors from individual wards will also be given more powers to determine their local environment plans, and character statements about their community.

Additionally, $3 billion will be spent on infrastructure to boost housing supply.

This includes $600 million in new money from the government’s infrastructure fund, Restart NSW, reallocation of $1 billion from existing programs and more than $800 million in existing measures.

The decision to provide stamp duty concessions to first home buyers represents an about-turn by Ms Berejiklian, who had previously said she did not want to add more heat to the property market.

But she said she had changed her mind because of low wages growth and the declining proportion of first home buyers in the market.

“I’ve accepted I can’t be so pure as to go by what works on paper,” the Premier said.

The decision also contradicts advice offered by the former Reserve Bank governor Glenn Stevens, who, in a piece written for Ms Berejiklian, said he did “not favour” measures to assist first home buyers.

But Mr Stevens said he was not convinced extra support for first home buyers would do much to push up prices, and Ms Berejiklian said he had told her the government’s range of policies was “well-balanced”.

SOURCE http://www.smh.com.au/nsw/premier-gladys-berejiklian-announces-housing-affordability-reforms-20170601-gwi0jn.html

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Federal budget 2017: Five housing changes to know about

Housing was a hot button topic for the 2017/2018 federal budget, so it’s no surprise there were a raft of changes for real estate.

The new measures have impacted on a variety of housing rules from first-home buyers’ savings strategies to what investors can claim at tax-time.

Here are the five big announcements to know about.

More supply is just one part of the housing push with a raft of initiatives rolled out in the 2017/2018 federal budget.More supply is just one part of the housing push with a raft of initiatives rolled out in the 2017/2018 federal budget. Photo: Pat Scala

1) Foreigners can only buy up to 50 per cent of a development

Under the new budget rules, developers will no longer be able to sell every property in their new development to overseas buyers.

Instead, a maximum of half the development can be sold to foreign buyers with the rest to be sold locally. The budget documents note this is to provide a “clear message” that new housing stock is expected to increase supply for Australian buyers.

Before this change developers required pre-approval to sell properties to foreign buyers but there was no limit on the proportion of sales.

Effect on revenue: No impact

In place from: May 9, 2017

2) First Home Super Saver Scheme

First-home buyers weren’t ignored by the budget with a new First Home Super Saver Scheme announced. The new super saver scheme will allow first-time buyers to put up to $15,000 a year, to a maximum of $30,000 under the scheme, into their superannuation.

These funds can later be withdrawn for a home deposit, including any earnings the deposits made.

This means they will have a tax incentive to save more, and it can be taken advantage of as a couple with each claiming $30,000.

Effect on revenue: Cost of $250 million ($9.4 million funding given to ATO)

In place from: July 1, 2017 (contributions), July 1, 2018 (withdrawals)

3) An ’empty home’ tax on foreign investors

Foreign investors who keep properties vacant for more than six months will be faced with a vacancy tax. This is described as a charge on “underutilised residential property”.

The cost of this tax will be the equivalent of their foreign investment application fee – some several thousand dollars – and will be charged annually.

This change is intended to get more vacant homes onto the rental market.

Effect on revenue: Gain of $16.3 million ($3.7 million funding given to ATO)

In place from: May 9, 2017

4) Stopping investors from claiming travel deductions

Investors who previously had tax deductions for travel expenses related to their investment property will no longer be able to make these claims.

The government has ruled them out, even for those travelling to collect rent, maintain or inspect a premises, saying many have been incorrectly obtaining this deduction. This has included situations for “private travel purposes”.

Effect on revenue: Gain of $540 million

In place from: July 1, 2017

5) Retirees given incentives to downsize

Australians aged over 65 who sell their home of a decade or more will soon be able to put up to $300,000 in sale proceeds into their superannuation.

This incentive to downsize is expected to help free up larger homes for families to move into.

Effect on revenue: Cost of $30 million

In place from: July 1, 2018

 

SOURCE: https://www.domain.com.au/news/federal-budget-2017-five-housing-changes-to-know-about-20170509-1nxvdt/