Data reveals Australians are shunning the First Home Super Saver Scheme

IT’S been touted as the answer to our housing affordability crisis — so why hasn’t there been a “tsunami” of Aussies taking it up?

Picture: iStock

FOR more than two months now, Aussie first home buyers have been able to dip into their super to pay for a house deposit.

But Australian Taxation Office figures reveal we’ve been slow to embrace the new First Home Super Saver Scheme (FHSSS), which was touted by then-Treasurer Scott Morrison as a way of giving first home buyers a “significant leg-up”.

From July 1, first home buyers have been able to withdraw voluntary superannuation contributions they’ve made since last July, along with a deemed rate of earnings, to help buy their home.

• Parents’ fury over Coles Little Shop scandal

• Tattoo that brought down a killer

• ‘Crazy’ way 20yo Aussie is making $1.6m

But according to the ATO, in the first month the scheme was fully up and running, just 592 people requested a release of their FHSS amount.

In that same period, the ATO gave the green light to super funds to release 498 FHSSS sums, worth a combined total of $5,341,856.18 — or an average of $10,727 per account.

And so far, the ATO has processed 185 releases from funds, worth $2,074,533.15.

Those numbers seem low given the hysteria about the country’s well-publicised “housing affordability crisis”.

The Association of Superannuation Funds of Australia’s (ASFA) chief executive officer, Dr Martin Fahy, said it was curious there “hasn’t been a tsunami” of Aussies taking up the scheme.

However, he said he knew of one fund, which he declined to name, which had 10 clients sign up, proving there was “definitely demand out there” for it.

“The decision of whether to use it is obviously up to the individual but what we do know is that everyone is acutely aware that having a roof over your head means you’re less likely to have financial difficulty in retirement,” he said.

“For instance, a couple wanting a comfortable retirement would need a lump sum of $640,000 at retirement if they have already paid off their house, but if they have to rent, that amount goes up to $1.1 million — so it’s quite a big burden during the duration of retirement.”

Dr Fahy said ASFA was originally concerned about the scheme potentially being “unduly burdensome from an administration point of view” — but that it was an “attractive” and “quite effective” measure for many first home buyers.

But it seems he may have been right to be worried about the scheme’s red tape.

Last month, a Hack listener identified only as Talis claimed it took so long to access his FHSSS money he ended up missing out on his “dream home”.

“My money has essentially been stuck with the super fund and the (ATO) seems to be unable to come to a resolution for how to process this money,” Talis told the program.

“Even though the realtor and the seller was very accommodating along the way, they pushed the timelines out a lot longer than you would expect from a traditional sale, still I could not execute it in the time.”

Aussie couple Patrick and Alison, who were recently interviewed by non-profit consumer advocacy organisation Choice, also had a similar story.

“It can take up to 25 business days from the time you request a release to receiving it, and you are not allowed to sign a contract in that time or you will be taxed on the benefit you received in the next financial year,” Patrick told Choice.

“We’ve been through all this and we likely won’t even receive any benefit. If we could go back in time, we wouldn’t have done it.”

And last year, Superfund Partners director Mark Beveridge said the average person would only save about $2500 extra a year under the scheme.

Nevertheless, Mortgage Choice CEO Susan Mitchell told news.com.au it had potential.

“The First Home Super Saver Scheme has not been broadly publicised and is still quite new so my hope is that more prospective home buyers take advantage of it,” she said.

“Encouragingly, individuals can enjoy tax benefits as an individual’s contributions are taxed at a rate of 15 per cent instead of the higher income tax bracket. This means that people can save more because they are being taxed less.

“The main consideration for individuals choosing to save via the First Home Super Saver Scheme is that timing is key because individuals can only apply to have the funds released once.”

Ms Mitchell said Aussies can’t sign their contract of sale or begin construction on their home until their funds are released — or they may have to pay a penalty tax.

WHAT IS THE FIRST HOME SAVER SUPER SCHEME?

• The FHSSS has been in place since July 1, 2017 to help first home buyers save for their home loan deposit.

• Eligible Aussies have been able to make contributions since July 1, 2017 and were able to access those funds from July 1, 2018.

• Savers can make a voluntary super contribution of up to $15,000 a year and $30,000 in total towards their home deposit, which can be arranged through your employer.

• Funds are released around 25 business days after being approved and any remaining funds will be locked away in your superannuation account.

[e-mail]