First home buyers can choose between an upfront stamp duty payment or a smaller annual property tax under reforms that will help make home ownership achievable for more NSW residents.
The First Home Buyer Choice is part of an integrated multi-billion-dollar housing package announced in this week’s 2022-23 NSW Budget to deliver quality, accessible, affordable housing across NSW.
Under the new initiative, first home buyers who opt into the property tax will pay an annual property tax of $400 plus 0.3 per cent of the property’s land value.
The property tax option will be available for properties priced up to $1.5 million.
NSW Premier Dominic Perrottet said one of the Government’s priorities is to make homeownership a reality for more NSW families. “We want to lower the barriers to owning a home for first home buyers seeking a place of their own.”
The Premier added that the share of first home buyers under 35 years of age had dropped from 67 per cent to 61 per cent over the last 20 years.
“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers.”
NSW Treasurer Matt Kean said the NSW Government had allocated $728.6 million over the next four years to help first-home buyers get a foot on the property ladder at an earlier age.
“We know that first home buyers are being forced to enter the property market later in life, and this reform will make the property market more accessible for them.”
For an NSW household with a median income that saves 15 per cent of their income, stamp duty adds about two years to the time required to save the up-front costs of the median NSW dwelling.
Together with existing first home buyer initiatives, the Government will support about 97 per cent of all first home buyers or about 55,000 people per year.
The legislative diary for change
Legislation to establish the property tax will be introduced in the second half of 2022, with eligible first home buyers able to apply to opt into the property tax from 16 January 2023.
For contracts exchanged in the period between enactment of the legislation and 15 January 2023, eligible first home buyers will be able to opt-in from 16 January 2023 and receive a refund of stamp duty already paid.
From 16 January 2023, eligible first home buyers who opt into the First Home Buyer Choice will not pay stamp duty on their purchase. The property will not be locked into the scheme if it is sold. First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain for properties between $650,000 and $800,000.
Minister for Planning and Minister for Homes Anthony Roberts said the NSW Government is also looking at initiatives to help boost housing supply by cutting planning assessment timeframes, co-funding enabling infrastructure and investing in new and improved social housing.