Our Plan To Help First Home Buyers
The government has changed legislation and introduced rules to make it easier for first home buyers to buy a property to live in.
Buying a home in Victoria is feeling out of reach for many first home buyers.
Median house prices in Melbourne have risen by over 40% since 2012. Metropolitan Melbourne house prices rose to $610,000 and unit prices to $490,000 for the June Quarter 2016.
In regional Victoria the median sale price of housing across regional Victoria increased 49%, from $206,000 to $307,500 from 2005 to 2015. At the same time unit prices in regional Victoria rose 32%, from $190,000 to $251,000.
Home ownership rates have dropped from 76% to 69% of Victorian households from 1994 to 2014. The Government has introduced some changes to make it easier for first home buyers to buy a home.
What Are The First Homes Criteria
The First Homes criteria are the minimum requirements a housing unit must meet in order to qualify as a First Home. Affordable Housing Update , the national standards for a First Home are that:
a)a First Home must be discounted by a minimum of 30% against the market value
b)after the discount has been applied, the first sale must be at a price no higher than £250,000 and,
c)the home is sold to a person who meets the First Homes eligibility criteria, as set out in first 2 paragraphs under First Homes eligibility criteria.
In addition, to qualify as a First Home, there should be a section 106 agreement securing the necessary restrictions on the use and sale of the property, and a legal restriction on the title of the property to ensure that these restrictions are applied to the property at each future sale, as described in What is the legal mechanism to ensure that the discount is passed on to all future purchasers?. The price cap of £250,000 , however, applies only to the first sale and not to any subsequent sales of any given First Home.
Homes meeting the above minimum criteria can be sold as First Homes and should be considered to meet the definition of affordable housing for planning purposes. A developer should be able to show that the homes they intend to sell as First Homes will meet the above criteria.
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Looking For A Financial Helping Hand In Order To Buy Your Dream Home Government Grants And Rebates Could Help
Federal grants and schemes for first home buyers
Luckily for first timers, there are several government grants and schemes available to help you get your foot on the property ladder. You may be eligible for one or more than one of these. Your financial adviser will be able to help.
Australian Government initiatives for first home buyers include:First Home Loan Deposit Scheme
- Allows first home buyers with a deposit of less that 20% to get a home loan without having to buy lenders mortgage insurance
- Applicable to a number of different home types, including house and land packages, off the plan homes and newly constructed homes
- Limited number of places made available each financial year.
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How Keystart Processes Your Fhog
For Keystart customers, we allow you to use the FHOG funds towards your deposit. To make this happen, we advance an amount equivalent to the FHOG to your settlement agent to be available at settlement. This is done before the Office of State Revenue has actually released the funds. This amount will be shown as a debit in your loan account.
Depending on your situation, these funds can also be used to cover Keystart’s fees and even your settlement agent fees. Don’t worry – your broker or Keystart Home Loan Specialist will go through the fees with you and will let you know what you may be required to cover well before settlement.
Later, when the first invoice has been paid to your builder, the Office of State Revenue will pay the FHOG grant to Keystart. If you are buying a newly built home the Office pays the grant after settlement. These funds will then be credited to your loan account.
So in effect, these funds are added to your loan balance when we advance them , and then once the FHOG has paid to Keystart, that amount is taken off your loan balance . You can see this activity in your loan statement.
What Constitutes Significant Pre
For the purposes of the First Homes policy, significant pre-application engagement means any substantive discussions between the local planning authority and the applicant relating to the proposed quantity or tenure mix of the affordable housing contribution associated with that application.
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The Home Buyers Amount
You get access to this tax credit when you purchase your first home and submit a tax return. Its an effective means of offsetting some of the upfront costs associated with buying a home. Eligible homebuyers may receive a tax credit of up to $750.
Are You Eligible For The New Home Guarantee
For the New Home Guarantee eligibility requirements, you can check your potential eligibility on the NHFIC website. In addition to the First Home Loan Deposit Scheme eligibility requirements listed above, the following conditions will generally apply:
- Applicants must build or purchase a new home including:
- newly constructed dwellings
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What Is The Legal Mechanism To Ensure That The Discount Is Passed On To All Future Purchasers
The landowner should enter into a planning obligation under section 106 of the Town and Country Planning Act 1990 enforceable by the local planning authority that:
secures the delivery of the First Homes and,
ensures that a legal restriction is registered onto a First Homes title on its first sale.
In most cases, these planning obligations should be entered into in the usual way prior to the grant of planning permission. The government will publish template planning obligations for this purpose, which the local planning authority can use as a basis for agreements prepared locally.
When a First Home is sold by the developer to the first owner, a restriction is to be entered onto the title register identifying the unit as a First Home. This restriction should ensure that the title cannot be transferred to another owner unless the relevant local authority certifies to HM Land Registry that the First Homes criteria and eligibility criteria have been met, including the discounted sale price.
To ensure consistency, and clarity regarding the status of First Homes, it is strongly recommended that the following model title restriction is used, which is a variation on a standard Form L restriction which has been prepared with HM Land Registry for this purpose. This model title restriction is part of the governments published template planning obligations:
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Goods And Services Tax Credit
If you meet income thresholds, you can receive a rebate for up to 5% of the federal sales tax you pay on retail purchases and real estate sales through the GST/HST credit, which potentially gives first-time home buyers a break on the financial burden of renovating or buying a home. You dont have to apply for this credit, but you must be at least 19 years old, you must be married or have a common-law partner, and you need to be living with at least one child.
You then must have filed a federal tax return in the prior year . Your income level based on the tax return will determine whether you qualify for the credit.British Columbia offers an additional credit related to this, called the BC Climate Action Tax Credit . Low income B.C. taxpayers could receive up to $135 per year per individual.
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New Laws About Underquoting In The Real Estate Industry
When properties are advertised for auction at a lower price than the real estate agent knows they will fetch on the day, it is called underquoting.
New legislation means that real estate agents need to follow strict rules about how to estimate property prices. Consumer Affairs Victoria may ask real estate agents to prove how they arrived at the estimated price.
These reforms are backed by the Real Estate Institute of Victoria.
Victorian Homebuyer Fund Shared Equity Scheme
If you’re struggling to save for a home deposit, the Victorian Homebuyer Fund could be the key to owning your home sooner.
If you have a 5% deposit, the Victorian Government will contribute up to 25% of the purchase price, in exchange for an equivalent share in the property, which can reduce your mortgage. Plus, no Lenders Mortgage Insurance.
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Think About Your Finances
Saving towards a deposit and sorting out your mortgage are important first steps on your property journey. Things can move quickly when buying a house, so its a good idea to have a pre-approved home loan before you start looking. Knowing how much you can borrow will help you search for properties in your price range. Try our mortgage calculator to see what you could afford.
Saving towards a deposit and sorting out your mortgage are important first steps on your property journey. Things can move quickly when buying a house, so its a good idea to have a pre-approved home loan before you start looking. Knowing how much you can borrow will help you search for properties in your price range. Try our mortgage calculator to see what you could afford.
What you need to sort
Find out what government support you might be eligible for, like the KiwiSaver First Home Grant or the First Home Loan. Many first home buyers can withdraw their KiwiSaver funds towards their deposit.
Resources
First Home Owner Grant
The First Home Owner Grant WA is a one-off payment funded by the Government of Western Australia and administered by the Department of Finance, Office of State Revenue. The grant is available to assist first home buyers to get started with their first home. The FHOG in WA only applies to first home buyers who are building or purchasing a newly built home.
At Keystart, we allow you to use the FHOG funds towards your home loan deposit, to help you get started on your home ownership journey sooner. So, the FHOG is not paid directly to you. If you wanted to receive the FHOG grant directly, then you would need to save your deposit yourself.
FHOG is no longer available if you choose to buy an established home, however you may be eligible for the Home Buyers Assistance Grant towards minor expenses.
There are benefits to buying an established home too – you may find it useful to read our guide to building or buying an existing home.
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Can Authorities Apply Their Own Eligibility Criteria
As part of the section 106 agreements, local authorities or neighbourhood planning groups can apply eligibility criteria in addition to the national criteria described above. This may involve lower income caps , a local connection test, or criteria based on employment status. First Homes are designed to allow people to get on the housing ladder in their local area, and in particular to ensure that key workers providing essential services are able to buy homes in the areas where they work. Authorities can therefore prioritise key workers for First Homes, and are encouraged to do so, especially if they have an identified local need for certain professions. The definition of a key worker should be determined locally and could be any person who works in any profession that is considered essential for the functioning of a local area.
Local connections may include current residency, employment requirements, family connections or special circumstances, such as caring responsibilities. Authorities should consider the application of these discretions carefully and ensure they do not limit the eligible consumer base to the point that homes become difficult to sell.
Any local eligibility criteria will apply for a maximum of 3 months from when a home is first marketed. If a suitable buyer has not reserved a home after 3 months, the eligibility criteria will revert to the national criteria set out above, to widen the consumer base.
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The Home Purchase Program
In early 2018, the provincial government in Newfoundland and Labrador announced some changes to their home-buying incentive programs. The Home Purchase Program is a new initiative to make it easier for the average first-time buyer to save up a down payment for a newly built home. The program is expected to help hundreds of residents over the next year, while stimulating economic growth in the province.
Availability: Newfoundland and LabradorValue: $3,000
Eligibility:
- Grants of $3,000 will be provided to qualifying individuals and families toward the down payment on a new home valued up to $400,000 including HST.
- The grant applies to homes that are to be newly constructed or existing new homes that have never been sold or previously occupied.
- For recently constructed homes, never occupied, NLHC will require a copy of the Purchase and Sale Agreement.
- For homes not yet constructed, NLHC will require an affidavit to be co-signed by the builder and new homeowner, confirming the date construction is completed and the final sale price including HST.
Things to note:
- The program begins April 1, 2018.
- Program grants will be available for the first 330 home buyers who apply and qualify.
How to apply: NLHC will accept applications beginning April 1, 2018.
Resource: The Home Purchase Program. For further details on the program, please contact NLHCs Manager of Affordable Housing at 709-724-3059 or 709-724-3130.
First-Time Homebuyers Program
Eligibility:
Things to note:
Eligibility:
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What Is The Mortgagee Exclusion Clause
Mortgagee Exclusion Clause should be present in all planning obligations which secure the delivery of First Homes, to ensure appropriate protection for lenders and encourage competitive lending rates. In its template planning obligations , the government will set out an exemplar Mortgagee Exclusion Clause and, in the interest of consistency, it is strongly recommended that local authorities use this example.
The Mortgagee Exclusion Clause ensures that a regulated financial institution which has provided the finance necessary to support the purchase of a First Home is not bound by the requirement to sell the home under the First Homes criteria to a person meeting the First Homes eligibility criteria in the event that they are enforcing their security against the property. The Mortgagee Exclusion Clause should provide that, in the event of the Mortgagee enforcing their security against the property, the property can be sold to anyone on the open market at open market value and the property will cease to be a First Home.
Once the Mortgagee has recovered their investment and the local authority has received the full amount owned to them as a percentage of the sale value of the home, any remaining profits from the sale should be returned to the home owner from whom the Mortgagee took possession.
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Warning New Measures Could Affect Economy
Retail banks have warned the government’s measures to cool the housing market and deter property investors may not just chill the housing market, but also the broader economy.
Westpac senior economist Satish Ranchhod said cutting the incentives to invest in the sector, such as removing the tax deductability of mortgage interest, might flow through to broader spending.
He said a slowdown in house prices would slow economic recovery and make the Reserve Bank even more reluctant to raise its official cash rate.
ANZ economists say the measures would increase the risk that house prices actually fall.
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Newly Built Home Exemption
Similar to B.C.s First Time Home Buyers Program, the Newly Built Home Exemption helps to lower or eliminate the property transfer tax youre required to pay on a new house. The difference is that this exemption applies to newly built homes, whether or not youre a first-time buyer.
Availability: British ColumbiaType: Property Transfer Tax ReliefValue: Up to $13,000 in tax exemptions.
Eligibility:
- Youre a Canadian citizen or permanent resident.
- The property is located in B.C. and is used as your principal residence.
- The property has a fair market value of $750,000 or less. If the value is between $750,000 and $800,000, you may be eligible for a partial exemption.
- The total property size is 1.24 acres or less. A partial exemption may apply if this size is exceeded or if the property has a second building.
- The property transfer was registered with the Land Title Office after February 16, 2016.
Things to note:
How to apply: You can apply for the Newly Built Home Exemption by entering exemption code 49 on your Property Transfer Tax Return.
Bc Home Partnership Program
NOTE: Applications are no longer being accepted for the BC Home Owner Mortgage and Equity Partnership, as of April 1, 2018.
Home Owner Grant
B.C. is home to some of the most high-priced real estate markets in Canada, as well as some of the steepest property taxes. Under the Home Owner Grant, you may be eligible to lower the property taxes youre required to pay on an annual basis for your principal residence.
The amount of tax relief youre eligible for depends on where you live. For instance, those residing in the Capital Regional District, Greater Vancouver Regional District, and the Fraser Valley Regional District may be eligible for a grant of $570. Home owners residing in other parts of the province may be eligible for a grant of $770.
Availability: British ColumbiaValue: Between $570 and $770
Eligibility:
- Youre the registered owner of the home and you use it as your primary residence.
- Youre under 65 years old.
- You live in B.C. and are a Canadian citizen or permanent resident.
- You currently pay at least $350 annually in property taxes.
- The value of your home does not exceed the grant threshold. In 2018, this threshold is $1.65mil, but this number is reviewed and adjusted each year.
Things to note:
How to apply: You must apply for the Home Owner Grant each year in order to receive it. You can apply online by downloading and completing the Home Owner Grant application form. You can also apply by mail or in person.
Resource: Home Owner Grant
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