Important Changes to NSW Housing Policies for Foreign Investors and First-Home Buyers
Prior to delivering the NSW state budget, Premier Gladys Berejiklian has announced a housing affordability package, which focuses on implementing measures to help first-home buyers and increasing tax charges for foreign investors. This change has been introduced following a surge of political anger caused by the doubling of Sydney housing prices over the past five years.
WHAT IS CHANGING?
NSW government will double the stamp duty surcharge from 4 to 8 percent on foreign investors, which will now exceed Victoria’s surcharge of 7 percent. The annual land lax on foreign home owners will also rise to 2 percent, from 0.75 percent.
The new package is designed to improve housing affordability by cutting some taxes on first-home buyers, including changes to stamp duty concessions and grants.
The government will also no longer issue stamp duty charges on lenders’ mortgage insurance. This will save on average $2,900 on an $800,000 property.
Additionally, the new package involves a $3 billion government spend on infrastructure funding aimed to accelerate delivery of housing and revealed proposals to streamline planning.
WHAT DOES THIS MEAN FOR FIRST-HOME BUYERS?
From July 1, first time buyers of existing homes worth up to $650,000 will no longer need to pay stamp duty, and the existing duty-free threshold for first-home buyers of new homes will be raised to the same level from $550,000.
Australians will now be able to save up to an estimated amount of $34,360 when buying their first home as a result of the above changes.
The abolition of stamp-duty on lenders’ mortgage insurance will help first home buyers with limited deposits whom banks force to take out insurance.
VALUE OF THE NEW REFORMS
The government announced these measures aim to help first home buyers gain an advantage over investors, who currently account for around 48 percent of buyers in the Sydney market.
The value in which the new housing package will offer to first-home buyers, however, is hotly contested, as it may easily be negated due to the consistent rise of dwelling prices.
Nonetheless, the above reforms are signals the government is taking further steps to address the issue of housing affordability in NSW and to assist first-home buyers, considered a vulnerable group in the housing market.
Should you have any questions in relation to the changes above or housing tax charges in general, please contact us or speak to your ESV engagement partner on +61 2 9283 1666.