We were about to write an article explaining what the upcoming changes are for stamp duty, but John McGrath did it so well that we’re quoting him!
“The third instalment of Government measures to address the affordability struggle in Sydney and Melbourne has been delivered, with the NSW Government announcing a package of reforms commencing July 1. This follows announcements by the Federal and Victorian Governments in recent months.
The primary goal of these measures is to help first home buyers. All three governments are using a variety of avenues to achieve this, including reducing stamp duty, helping young buyers save their deposit and raising housing supply across the board.
Here’s a rundown of the NSW Government’s affordability package:
- Stamp duty abolished on first home purchases up to $650,000 (new and existing property);
- Stamp duty concessions on first home purchases up to $800,000 (new and existing property);
- Stamp duty on lenders’ mortgage insurance abolished for all buyers. This is usually 9% of the premium, so it’s a pretty hefty impost. This will benefit young buyers because LMI is only charged when a client’s deposit is smaller than usual;
- First home buyers who are building their first home will receive a $10,000 grant for properties worth up to $750,000;
- First home buyers purchasing a new property, such as an apartment off the plan or newly completed, will also receive a $10,000 grant for properties worth up to $600,000;
- The 12-month deferral of stamp duty for residential off-the-plan purchases by investors will be scrapped. The $5,000 New Home Grant Scheme will cease;
- The stamp duty surcharge paid by foreigners will double from 4% to 8%. Land tax charges to foreigners will increase from 0.75% to 2%. Foreign developers will be exempt;
- Housing supply will be increased through a variety of measures, including making development approvals simpler and council re-zonings faster. Plus, $3 billion will be spent on new roads, schools and other facilities surrounding new developments; and
- The Government will focus on raising supply in key urban hubs, including Belmore/ Lakemba, Burwood/ Strathfield/ Homebush, Campsie/ Canterbury, Cherrybrook, Frenchs Forest, Glenfield, Leppington town centre, Anzac Parade corridor, Riverwood, Schofields town centre, Seven Hills/ Wentworthville, St Leonards/ Crows Nest, Telopea, Turrella/ Bardwell Park and Westmead.
The stamp duty savings are big news for young buyers. Putting the transfer duty and LMI duty savings together, on a $650,000 purchase with a $50,000 deposit, a young first home buyer stands to save $26,857. On a $700,000 purchase, the saving is $18,786. And so on.
Getting the deposit together is often the hardest step, rather than affording the repayments. So removing (or reducing) stamp duty from that equation is a big boost. CoreLogic’s recent Perceptions of Housing Affordability report found 48% of NSW respondents felt stamp duty was the most significant obstacle to affordability and 74% felt removing or reducing it would help.”