For many Australians, home ownership is a personal goal. Yet, for many first-time buyers, purchasing a home seems out of reach, especially as the housing market continues to rise. Fortunately, in Victoria, various support mechanisms exist to ease the journey for first home buyers. Most importantly, relief in relation to stamp duty and the First Home Owner Grant (FHOG) can provide substantial assistance to eligible first home buyers. This article will delve into these assistance schemes.
FHOG
The FHOG is a grant of $10,000 made available to eligible first-time buyers who purchase or build a new home. A ‘new’ home is one that has not been sold previously as a place of residence or occupied as a home, including short-term accommodation (such as Airbnb). A new home also includes one that has been substantially renovated or built to replace demolished premises. The home can be a house, townhouse, apartment, or unit.
To qualify for this grant, you must live in the home as your primary place of residence for at least a year. That is, the home cannot be an investment property or a holiday house. The contract price for the home must be $750,000 or less. For an off-the-plan purchase, it is the contract price (not the dutiable value) that must be $750,000 or less. When you sign a contract to build a home, it is the contract to build price that must be $750,000 or less.
You must also meet personal eligibility requirements for the FHOG. Most importantly, you (and any spouse/partner) must not have previously received a FHOG. You also must not have previously owned a home in Australia, with some limited exceptions. Finally, you must be aged 18 or over and be an Australian citizen or permanent resident either by the time you settle or when the home is ready to be occupied.
How to Apply for the FHOG
In the majority of cases, the bank or credit union that is providing your finance will lodge the FHOG application form on your behalf. If you require the grant for settlement or the first drawdown/progress payment, you must lodge your application with an approved agent.
Only apply directly to the State Revenue Office (SRO) if an approved agent is not lodging the FHOG application form on your behalf. Applications cannot be lodged with the SRO until after the completion of the eligible transaction.
Stamp Duty
One of the largest hurdles for buying property in Australia is the significant upfront costs, such as the duty that must be paid to the government in each state. The good news is that stamp duty savings are available to first home owners in Victoria, even when buying an existing home rather than a newly built home.
Victorian first home owners are not required to pay stamp duty at all on their first home as long as the property is valued below $600,000. First homes valued between $600,000 and $750,000 attract a significantly reduced rate of stamp duty. Vacant land can also attract the exemption or concession if you are buying it to build your home.
If you satisfy the eligibility requirements for FHOG discussed above, you are automatically entitled to these duty benefits. Your conveyancer or solicitor will usually apply for the exemption, concession, or reduction if you are eligible when they complete the Digital Duties Form as part of the electronic conveyancing process.
Pilot Shared Equity Scheme
Under the terms of a Pilot Shared Equity Scheme, eligible first home buyers in Victoria will only need to have a 5% deposit to buy a home. The Victorian State Government takes a proportional interest of up to 25% in the property.
First home buyers are thus required to secure and repay a loan that represents just 70% of the home’s value. Of course, when the property is ultimately sold, the seller has to repay the government’s proportional interest.
To be eligible for the government support, singles must have an annual income of $75,000 or less, and couples must have a combined household income of $95,000 or less.
Additional Grants and Schemes
First home buyers in Victoria can benefit from additional grants and schemes based on their individual circumstances. Buyers should investigate fully to identify any further financial incentives, making homeownership even more accessible.
It is important to note that policies and government schemes are subject to change – this is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on 03 5747 8251 or email [email protected].