Angus Raine, Executive Chairman of Raine & Horne has applauded Prime Minister Scott Morrison’s announcement that a future Liberal Government will extend support to first home buyers through a First Home Loan Deposit Scheme.
“There are better ways of encouraging first-timers into real estate than taking a wrecking ball to negative gearing and slashing the capital gains tax discount, which in combination will prove catastrophic for the Australian property market and the broader economy,” said Angus. “Better still, the ALP has seen sense in the new scheme and have since committed to matching it if they are elected this Saturday.
“Therefore, regardless of whether blue or red wins at this week’s polls, the First Home Loan Deposit Scheme will clear several major speedbumps for first time buyers.”
Under the new scheme, first home buyers can purchase a property with a deposit of just 5%, where many now need 20%. “A smaller deposit will enable first time buyers to get a mortgage and into the market faster,” Angus said. Nor will eligible first-timers have to pay lenders mortgage insurance (LMI), which the government estimates will save first timers around $10,000 from the cost of buying a first home.
The program is available for single applicants earning up to $125,000, or couples with combined incomes of $200,000.
The new scheme will complement the First Home Super Saver Scheme, that allows first-timers to voluntarily contribute up to $30,000 to their super and withdraw this amount (plus earnings, less tax) to buy a first home. Voluntary contributions include before-tax contributions, such as salary sacrifice, and after-tax contributions
PM Morrison said, “While our First Home Super Saver Scheme has been about helping boost the savings of first home buyers and making buying a house more affordable, the new First Home Loan Deposit Scheme will help people achieve their goals years earlier.”
REIA President Adrian Kelly said that with first home buyers currently representing just 17.9% of total housing loan approvals at the beginning of this year, the new measure would be a timely boost not just for first home buyers but for the building sector and the economy in general. “It is direct assistance like this rather than changes to negative gearing and capital gains tax which provide better outcomes for all,” he said.