NSW real estate: Foreign home buyers to bear cost of first-home buyer bonus
UPDATE: Premier Gladys Berejiklian today announced first home buyers in NSW will no longer have to pay stamp duty on homes worth up to $650,000 as part of a major housing affordability package.
FIRST home buyers in NSW will no longer have to pay stamp duty on both new and existing homes worth up to $650,000.
Stamp duty discounts will also apply to properties worth up to $800,000 as part of a major housing affordability package announced by Premier Gladys Berejiklian that will be introduced on July 1.
Ms Berejiklian — who vowed to tackle housing affordability as her number one priority when she came into office — estimated the concessions, which also include the abolishment of stamp duty on lenders’ mortgage insurance would cost the state about $1.2 billion.
Ms Berejiklian said she wants first home buyers to remember that their first property “won’t necessarily be your best home”.
“I have to say that your first home won’t necessarily be your best home,” she said.
“It won’t necessarily be your first choice. But what is really important is getting people to get their foot in the market, to be able to say that they own their first place.”
Currently, first home buyers are only exempt from stamp duty on new homes up to $550,000.
“Today’s a huge boost for first home buyers,” she said.
The changes mean first home buyers can potentially save more than $34,000, depending on the property.
As revealed by The Daily Telegraph, the foreign investor surcharge on stamp duty will also be doubled from 4 per cent to 8 per cent, while land tax will be raised from 0.75 per cent to 2 per cent.
Approvals for “well-designed terraces, townhouses, manor homes and dual occupancy” will be fast-tracked.
Treasurer Dominic Perrottet described stamp duty on lenders’ mortgage insurance as a “bad tax”.
The government is also scrapping the $5000 new home grant scheme for investors.
The Premier said boosting supply remained a key priority.
The government will also spend $369 million over three years to “ensure contributions for new housing precincts are used for important infrastructure”.
Opposition treasury spokesman Ryan Park hinted Labor is considering even higher thresholds for stamp duty relief, saying the party was “not arguing about the need for stamp duty reform”.
“There’s always scope for higher thresholds,” he said.
But Mr Park said the stamp duty concessions would have been more helpful a year ago.
Opposition Leader Luke Foley said: “When it comes to stamp duty relief, this is the least they can do.”
The ALP reiterated its call for negative gearing reform at a federal level and mandatory affordable housing targets at a state level, saying the lack of the latter was a particularly “big weakness in this package”.
The ALP reiterated its call for negative gearing reform at a federal level and mandatory affordable housing targets at a state level, saying the lack of the latter was a particularly “big weakness in this package”.
It is understood the government has also been considering whether to lift the threshold at which that exemption for newly constructed homes comes in.
Under the changes, the Foreign Investor Surcharge Duty (stamp duty surcharge) will be doubled from 4 per cent to 8 per cent from July 1, 2017.
Overall, the 8 per cent stamp duty surcharge and the 2 per cent land tax surcharge on foreign investors are expected to raise $1.9 billion over four years.
Since its introduction in the 2016-17 Budget the 4 per cent Foreign Investor Surcharge has collected $150 million from 3000 buyers.
Housing advocacy group Shelter NSW executive officer, Mary Perkins, welcomed the Premier’s announcement.
“However, on the down side, once again the Government has turned to trying to super charge supply to fix unaffordable house prices in NSW. It’s increasingly clear that supply alone is not the solution to affordability,” Ms Perkins said.
“Despite recent strong supply growth, prices have not come down.”
The Daily Telegraph revealed earlier this year that one in 10 buyers in NSW was a foreigner.
After those revelations, Mr Perrottet foreshadowed a possible move on the foreign buyer surcharge, saying: “The great Australian dream is to own your own home.
“While foreign investment brings an important flow of capital into NSW, my priority is to ensure Australians have that opportunity first.”
The measures to be introduced today are tougher than any other state on foreign buyers. Victoria has a 7 per cent residential stamp duty surcharge and a 1.5 per cent land tax surcharge for foreign investors.
The new 8 per cent stamp duty surcharge is in addition to the normal transfer duty of up to 7 per cent. Foreign investors would therefore be liable for 14.5 per cent of the total purchase price of the most expensive properties.
This compares favourably with Hong Kong and Singapore, where governments currently charge 15 per cent in stamp duties on foreign investors in residential real estate.
Canadian provinces British Columbia and Ontario have also introduced 15 per cent foreign buyer transfer taxes.
Originally published as NSW real estate: Foreign home buyers to bear cost of first-home buyer bonus
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