First Home Buyer Law passes in NSW Parliament - triSearch

First Home Buyer Law passes in NSW Parliament

First Home Buyer law passed.

First home buyers are now eligible to opt in to pay an annual property tax instead the one-off stamp duty fee, after the First Home Buyer Law was successful passaged in NSW Parliament on 10 November, 2022.

The NSW Government released a statement explaining that for the first time in Australia, first home buyers will be given the choice between paying an annual property fee or the standard upfront stamp duty on their first property.

What’s new for Conveyancers?

For conveyancers acting for clients looking to participate in the First Home Buyer scheme, a few updates have been made to key documents, including:

  • Unpaid property tax is a first charge on the land (section 38(1)).
  • Special provisions governing consolidation and subdivision of land (sections 47 and 48).
  • A “property tax status certificate” will be available (section 49) – either as a distinct inquiry or as part of another certificate, and we assume for an additional fee.
  • The 2022 contract references property tax, and explicitly states that the tax is not adjustable between the parties.

Eligibility for first home buyers

Eligible first home buyers can access the scheme from Saturday 12 November.

These buyers will be required to pay stamp duty on purchases made until 15 January 2023, but then will be able to apply for a refund of their stamp duty if they choose to opt into the annual fee.

From 16 January 2023 purchasers can opt in to the annual fee directly and will not be required to pay stamp duty.

First Home Buyer Choice will be available for dwellings costing up to $1.5 million. For the purchase of vacant land intended for the construction of a first home, the price cap will be up to $800,000.

The program is uncapped and will be available for every eligible first home buyer who wants to access it. 

Treasurer Matt Kean commenting on First Home Buyer Law passing.

Treasurer Matt Kean said the new law would help first homebuyers pay less tax overall.

“First Home Buyer Choice will significantly reduce upfront costs, reduce the time needed to save for a deposit and will see the majority of eligible first home buyers paying less tax overall,” Kean said.

“We are giving people the opportunity to decide for themselves what best suits their financial situation. Those buying a home to live in for life can still choose stamp duty, but for many, paying an annual tax for the limited time they actually live in the property will make more sense.”

What is the ‘Breakeven’ point?

NSW Treasury data shows the breakeven period between upfront stamp duty and an annual property fee would be 36 years for an $800,000 apartment, 28 years for a $1 million townhouse, and 26 years for a $1.25 million house.

The same data shows that if a first home buyer purchased a $1 million house and sold it 10 years later, which is around the median holding period, the annual property payments over the 10 years would total $19,881 in present value terms compared with $40,090 in upfront stamp duty – a saving of $20,209.

The NSW Government has allocated $728.6 million to First Home Buyer Choice over the next four years.

The First Home Buyer Choice is a key component of the Government’s $2.8 billion Housing Package announced at the 2022-23 NSW Budget that aligns with the Housing 2041 vision.

For more information visit the First Home Buyer Choice webpage. Stay up-to date with the latest in property market news and conveyancing industry updates by subscribing to The Conveyancer Digest newsletter today.

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