The Government has been looking at ways to improve housing affordability in key markets such as Melbourne and Sydney. This budget certainly goes some way in doing that. Property Council of Australia chief Ken Morrison said it “is a serious attempt at tackling Australia’s housing affordability problems”. So, what is the government doing? First Home buyers are in for a boost and will be buzzing around their morning latte and smashed avocado, with today’s new headlines about helping first home buyers save (for the all-important deposit!). What is it? The scheme gives young people the opportunity to make additional contributions to super which can later be withdrawn (plus interest earned) as a housing deposit.
While the Treasurer has called it the First Home Buyer Super Saver Scheme, we prefer “Supercashafrugalistic-expialidocious Piggy Bank”.
And if you’re over 65, have lived in your home for 10 years or more, are sick of the maintenance or just want a scenic change? Then there’s an offer on the table for you. The Government is now being so kind as to let you keep more of your own money! Expected to benefit 10,000 Aussies, each individual has a $300,000 incentive to sell their big home – and be a good Samaritan – by providing young families the chance to upsize into existing housing stock.
Keeping in theme with the Budget, the PM & ScoMo are seeking to ‘level the playing field’ and assist first home buyers into the market by bringing in some changes around foreign investment and ownership. Some of these changes are specifically targeted to the rental market, where the government will levy foreign owners $5000 if they leave an investment property empty for over 6 months. Considering in Sydney and Melbourne rents have been rising rapidly (properties sitting vacant off-market attributing to the lack of supply while demand rises), Big Brother is trying to ensure housing stock isn’t being wasted. We would expect this change to have a limited impact on the Brisbane market. New housing stock is usually purchased locally or where it is foreign owned, comes to the rental market. This change just means developers will work more with local buyers.
Property investors that preference real estate in luxury locations have just lost a nice little perk. The budget saw changes to rules around claiming travel expenses for AGMs, inspections and other neat 'excuses' to visit their investment on Hamilton Island or Thredbo. Now with that no longer tax deductible, they may be investing a little closer to home.
In a nutshell, here are the key points that may impact on you:
- A range of measures to increase supply of new homes.
- A National housing Finance and Investment Corporation to provide low-cost finance for affordable rental housing.
- First home buyers will be able to salary sacrifice into their superannuation for a housing deposit.
- Australians over 65 who downsize will be allowed to put up to $300,000 of the proceeds of the sale into superannuation.
- Foreign investors who leave properties empty will face a $5,000 levy.
- The 50 percent cap on foreign investment in new developments to be reintroduced.
- The Capital Gains Tax withholding tax rate for foreign tax residents is being lifted from 10 per cent to 12.5 per cent and the CGT withholding threshold for foreign tax residents is dropping from $2 million to $750,000.