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Stamp Duty Alternative Introduced For First Home Buyer Under NSW Budget

22 Jun, 2022

Stamp Duty Alternative Introduced For First Home Buyer Under NSW Budget

From January 2023, First home buyers in NSW will have the option of paying a lower annual property tax instead of stamp duty, as part of the government’s reforms to make homeownership more affordable.

No more stamp duty under the new First Home Buyer Choice package

This will be known as The First Home Buyer Choice scheme, launched by NSW Premier Domenic Perrottet as part of a multi-billion dollar housing package for the 2022-23 budget.

Under the new scheme, those buying their first home will now have the option of either paying an annual property tax of $400 plus 0.3% of the property’s land value or paying the stamp duty upfront.

This property tax option will be available for both off the plan and established properties, with purchase prices of up to $1.5 million.

For example, a property for $1.12 million (the median property price in Sydney) may have a land value of $750,000, requiring the property owner to pay $2650 every year rather than $49,934 upfront.

NSW Premier Dominic Perrottet. Source: NCA NewsWire

“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” Mr Perrottet said.

“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.”

The NSW Government has set aside $728.6 million over the next four years to assist first-time homebuyers, according to Treasury Secretary Matt Kean.

The government predicted that the new First Home Buyer Choice scheme, combined with other first home buyer programmes, would help around 55,000 people buy their first home each year.

“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,” Mr Kean said.

“It will mean more NSW residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership.”

Switching to property tax might be a better option

Stamp duty extends the time needed to save the upfront costs of the typical NSW property by around two years for a household earning the median salary and setting aside 15% of their income.

The new Domain modelling also shows that switching could leave some better off for first home buyers, as it will reduce upfront costs while gradually billing the household budget.

Source: Domain

Dr. Nicola Powell, Domain’s chief of research and economics, said it would take years for buyers to pay a property tax similar to stamp duty, making the tax a preferable alternative for people buying a home for the short to medium term.

According to this new research, it could take 18 years for first home buyers who are owner occupiers of a $1.5 million property to accumulate the stamp duty equivalent in property tax.

For property investors, the proposed annual rate of property tax is $1500 plus 1.1% of the land value. So to buy a $1.5 million property, it would take around 6 years for the investors to accrue the same amount of stamp duty.

Source: Domain 

Although it may seem like property investors are better off paying stamp duty upfront, this property tax will be tax deductible against their property income.

Property experts are welcoming the new plan

Archer Mortgage Group head of mortgages, Jasjeet Makkar, said stamp duty was one of the largest barriers to entry for potential home buyers, adding that saving for a deposit may take years.

“There are a lot of buyers in that boat who do not look at homes above $650,000, so they can get into the market with a small deposit,” Makkar said.

“They’re going with a 5 per cent deposit. If they had to pay stamp duty on top of that, they won’t be able to complete the purchase.”

The new scheme, according to Brendan Coates of the Grattan Institute’s economic policy programme, is a great start towards effective economic reform, benefiting both homeowners and the state government.

Additionally, phasing out stamp duty would also reduce the deposit problem for property buyers, Mr Coates said.

“When people are having to save for a 20 per cent deposit, they’re really saving a 25 per cent deposit,” Coates said.

What are the limitations of the First Home Buyer Choice Scheme?

PropTrack director of economics research Cameron Kusher said the new scheme, however, will have some limitations.

“Property prices in NSW have already slowed, with the highest-priced properties seeing the biggest drops. A scheme such as this will likely provide more support for cheaper properties.” said Cameron Kusher

“However, the impact is likely to be fairly minimal given the stronger market forces at play and expected further increases in interest rates. Hopefully, this is the first step to broader stamp duty reform in NSW.”

AMP Capital chief economist Dr Shane Oliver said while it was a “fantastic reform” of a heavily distortionary tax that was long overdue, it could have a short-term impact of pushing up prices.

Options for first home buyers

As first home buyers, you will have several options to choose from:

  • For properties up to $650,000, you will continue to be eligible for a full stamp duty exemption.
  • For properties valued between $650,000 and $800,000, stamp duty exemptions are still available.
  • Starting from January 16, 2023, for properties up to $1.5 million, if you opt-in to the First Home Buyer Choice programme, you will not have to pay stamp duty on your purchase. Instead, property tax options will be available.
Looking to buy your first home?

Call us on (02) 9099 3412 or enquire below, so our team can help you navigate your first home buying journey.

AUSTRALIA PRIVACY STATEMENT

Last updated: August 2020

INTRODUCTION

St Trinity Property Group and its affiliated entities, representatives, agents and related companies (collectively referred to as ST TRINITY PROPERTY GROUP) respect the privacy and security of your Personal Information, as defined below, and comply with the requirements of the Australian Privacy Principles under the Privacy Act 1988 (Cth).

This Privacy Policy explains in general terms how St Trinity Property Group handles your Personal Information. However, it does not apply to St Trinity Property Group’s employee records to the extent they are handled by any of our companies that is or was the employer of that employee in relation to the employee’s current or former employment. Such employee records are generally exempt from the Act and will be dealt with as permitted by law.

You may be able to deal with us without identifying yourself (i.e. anonymously or by using a pseudonym) in certain circumstances. If you wish to do so, please contact us to find out if this is practicable in your circumstances. However, if you do not provide us with the Personal Information we have requested, we may not be able to complete or fulfil the purpose for which we collect the information, including providing our services. By visiting our websites, using any of our services or otherwise providing us with your Personal Information (or authorising it to be provided to us by someone else), you agree to your Personal Information being collected and handled as set out in this Privacy Policy.

WHAT PERSONAL INFORMATION DO WE COLLECT AND HOLD?

Under the Act Personal Information is defined as information or an opinion about an identified individual, or an individual that is reasonably identifiable, in whatever form and regardless of whether it is true or not (Personal Information). The Act also defines a subset of Personal Information as sensitive information (for example health records, racial or ethnic origin, religious beliefs, criminal records).

The types of Personal Information we collect and hold will depend on the circumstances of collection and on the type of service we are providing. For example, when we are engaged to sell a property, we may collect and hold Personal Information from both the seller and potential buyers such as name, address, email address, telephone numbers, employment details and details about their business.

We may also collect and hold certain sensitive information that is reasonably necessary for the provision of our services, including health and criminal records. If you provide us with any sensitive information, you consent to us collecting that information and handling it in accordance with this Privacy Policy.

HOW WE COLLECT PERSONAL INFORMATION

We may collect Personal Information about you directly when you deal with us over the telephone, send us correspondence (whether by letter, fax or email), have contact with us in person, visit our websites or complete hard copy or online forms.

There are also circumstances where we may collect Personal Information about you from someone else. For example, from:
• Market research companies contracted by us to obtain information so that we may improve and market our services;
• Your employer;
• Other agents and valuers who may be involved in the services we provide;
• Property developers who contract us to market properties;
• Publicly available information and databases;
• Any of the companies within the St Trinity Property Group (both local and overseas);
• and Anyone you have authorised to deal with us on your behalf.

We also automatically collect certain information when you visit our websites or our subscribers receive promotional emails from us via cookies and other tracking technology (such as web beacons), some of which may be capable of personally identifying you. Such information includes the type of browser and operating system you are using, your IP address and how you use our websites.
Depending on the type of service you or our customers have requested, we may also seek to collect information about someone else from you (for example, contact details of your solicitor, emergency contact person or tenant). However, you must not provide us with Personal Information about another person unless you have clear consent from that person to do so, told them that their Personal Information will be handled in accordance with this Privacy Policy and directed them to where they can find it.
Regardless of how it is collected, we handle Personal Information in accordance with this Privacy Policy.

WHY WE COLLECT, HOLD AND USE PERSONAL INFORMATION

We generally collect, hold and use your Personal Information for the purposes for which it is provided to us (which will usually be obvious at the time of collection), related purposes or as permitted or required by law. Such purposes may include:
• Acting as agent for vendors or purchasers in relation to the sale of a property;
• Acting as agent for owners or tenants in relation to the leasing and or valuation of a property;
• Project management services;
• Structured advisory services;
• Town planning services;
• Capital allowances services and other consulting services in relation to the property market;
• Administration of our business, such as collection of overdue commissions or outstanding fees;
• Responding to client enquiries and communicating with you from time to time to maintain contact and keep you updated on the services you have requested;
• Forecasting future needs of our services and general quality assurance and training purposes;
• Engaging in legal proceedings and/or enforcing judgments and/or orders;
• Complying with the applicable legal or regulatory requirements and/or orders of competent authorities;
• Providing you with promotional and marketing information, including market research reports, newsletters, event invitations and/or property market information relating to our products and services which we think may be of interest to you; and Any other purpose identified at the time of collecting your Personal Information.

We generally use information automatically collected by cookies and other tracking technology to identify you as a valid user, ensure that no one else can sign on simultaneously with your account from another computer and help us serve you better based on your registration preferences. We may also use cookies to help us facilitate any promotions or surveys that we provide. Third parties whose products or services are accessible on our websites may also use cookies, and we advise you to check their privacy policies for information about their cookies and other privacy practices.

DISCLOSURE OF PERSONAL INFORMATION

We may disclose your Personal Information to third parties as may be necessary for any of the purposes stated in the above section. Such third parties generally include:
Our third party providers, contractors, consultants, agents and/or representatives (such as law firms, banks, financial institutions, insurers, IT providers, mortgage referral services providers and/or wealth management services providers) who provide services to us or on our behalf, including to:
• Conduct valuations;
• Assist with obtaining payment from creditors;
• Operate data centres;
• Conduct market research;
• Provide advice;
• Potential buyers, tenants, conjunctional real estate agents and brokers for the purpose for which the information was collected or for related purposes (for example to complete a transaction on your behalf or provide you with a service that you requested); Anyone you have authorised to deal with us on your behalf;
• Any of the companies within the St Trinity Property Group and their related companies; Government authorities, regulatory bodies, law enforcement agencies, courts, tribunals and/or parties to the legal proceedings where you have consented to this or we are required or authorised to do so by law;
• Debt collection agencies; and/or Any other third parties identified at the time of collection of your Personal Information.

DISCLOSURE OF PERSONAL INFORMATION OVERSEAS

Some of the third parties listed above to whom we may disclose your Personal Information are located overseas. For example:
Our information technology and business process service providers that are located in countries including (but not limited to) the Indonesia, India and Philippines; and Our overseas clients that are located in the same countries as the companies within the St Trinity Property Group.
Our contracts with these parties generally include an obligation for them to comply with Australian privacy law and this Privacy Policy.
However you acknowledge that, by agreeing to the disclosure of your Personal Information to these entities outside of Australia, we will no longer be required to take reasonable steps to ensure the overseas recipient’s compliance with the Australian privacy law in relation to your Personal Information and we will not be liable to you for any breach of the Australian privacy law by these overseas recipients. On this basis, you consent to such disclosure.

ACCESS, UPDATE AND CORRECTION OF PERSONAL INFORMATION

We take reasonable steps to ensure that the Personal Information we hold about you is accurate, complete and up-to-date. However, we also rely on you to advise us of any changes to your Personal Information. If you are able to access your Personal Information by logging on to an account you have with us, it is your responsibility to ensure your information is accurate, complete, relevant and up-to-date.
On request we will provide you with access to the Personal Information we hold about you, including for the purpose of correcting or updating that information, unless otherwise required or permitted by law.
There is no charge for making the request or giving the access to your Personal Information. We will deal with your request within a reasonable period after the request is made.
If we refuse to provide you with access we will provide you with a written notice that, at a minimum, outlines reasons for the refusal and the complaints mechanisms available to you.
If you wish to access the Personal Information we hold about you or to update or correct it, you can either do so by logging on to your account (if you have one) or contact us using the contact details provided below. We will require you to verify your identity and specify what information you require.

SECURITY OF PERSONAL INFORMATION

We take reasonable steps to protect any Personal Information that we hold from misuse, interference and loss and from unauthorised access, alteration and disclosure. For example, we implement IT security procedures including password protection, firewalls and site monitoring and we store your Personal Information on a secure server.we store your Personal Information on a secure server.
However, data protection measures are never completely secure and, despite the measures we have put in place, we cannot guarantee the security of your Personal Information. You must take care to protect your Personal Information (for example, by protecting any usernames and passwords). You should notify us as soon as possible if you become aware of any security breaches.

DIRECT MARKETING

When you register as a member on our websites, you will be given a choice as to whether you want to receive e-mail messages from us, including newsletters, announcements and e-mail communications about our latest news, products or services. To the extent the relevant local law requires us to seek your consent, we will only send such messages to you if you opt-in. If you do not wish to receive direct marketing calls or materials, you may use the unsubscribe facility in the marketing communication or contact our Chief Privacy Officer using the channels prescribed below. Further, as a registered member with us, you can modify your choice at any time by accessing your registered account with us. We will stop using your Personal Information for direct marketing if you so request.

PRIVACY ON OUR WEBSITES

Our websites may contain links to the websites of other entities. If you click on such links, you will be transferred to the websites of these entities. We have no control over, and are not responsible for, the privacy practices of these entities. You should read the privacy policy of these entities to find out how they handle your Personal Information when you visit their websites.

WHAT IF YOU HAVE A COMPLAINT?

If you wish to make a complaint about a breach of this Privacy Policy or the Australian Privacy Principles of the Act you can contact us using the contact details below. You will need to provide us with sufficient details regarding your complaint together with any supporting evidence. Our Chief Privacy Officer will investigate the issue and determine the steps that we will undertake to resolve your complaint. We will contact you if we require any additional information from you and will notify you in writing of the outcome of the investigation. If you are not satisfied with our determination, you can contact us to discuss your concerns or contact the Australian Privacy Commissioner via www.oaic.gov.au.

PRIVACY & SITE CHANGES

St Trinity Property Group may update this Privacy Policy from time to time so please review it periodically for changes. If the changes are significant or substantive, they will either be advised to you in writing or posted on our websites at www.sttrinity.com.au. Your continued use of our websites or services, requesting our assistance or the provision of further Personal Information to us (directly or via an authorised person) after this Privacy Policy has been revised, indicates your acceptance of the revised Privacy Policy.

OUR CONTACT DETAILS

If you have a query relating to this Privacy Policy or wish to make a complaint, please contact us using the following contact details:
• St Trinity Property Group
• Chief Privacy Officer

• PO Box 1235
• Menai NSW 2234
[email protected]

MORE INFORMATION

For more information about the Privacy Act in Australia and protecting your privacy, visit the (external link) website below:
oaic.gov.au