Homebuyer scheme on shaky ground as calls for help echo - triSearch

Homebuyer scheme on shaky ground as calls for help echo

By Dominic Giannini, Kat Wong and Poppy Johnston, AAP

Opponents of a homebuyer scheme that would split upfront costs with the government are being urged to back the plan to help more people buy their first house.

A new plan to help aspiring homeowners crack into the housing market with as little as a two per cent deposit is on shaky ground with opponents being urged to back a new scheme.

The Greens have come out against the Help to Buy shared equity scheme where the government would contribute up to 40 percent of the value of a home for a new property or 30 percent for an existing one.

Home buyers would then be able to contribute as little as two percent for a deposit.

The Greens will vote against the bill in the lower house, where Labor has the numbers to pass the legislation, and have reserved their position in the Senate where they hold the balance of power. 

The party’s housing spokesman Max Chandler-Mather argued the scheme would push up property prices and has called for changes to tax breaks such as negative gearing, a rent freeze and more investment in social housing.

Labor has indicated the first two are non-starters but the Greens are still pushing the changes.

“It shouldn’t be the case that a first-time buyer at an auction loses to a property investor who gets massive tax handouts,” Mr Chandler-Mather told reporters in Canberra on Monday (February 26).

Grandfathering changes to negative gearing so current investors don’t lose out was one option in phasing out the tax break but the party was open to discussions about the path forward, leader Adam Bandt said. 

Key crossbencher David Pocock has backed the scheme as a way to help struggling Australians crack into the housing market and has urged the Greens and opposition to support the legislation.

But he also called for the government to expand the scheme beyond the 10,000 applicants, boost social housing investment and look at capping the number of investment properties that can access negative gearing breaks.

“It shouldn’t be easier to buy your second or third house than your first,” he said.

Crossbench colleague Jacqui Lambie supported the principle of helping young people get into the housing market but wanted to ensure the scheme didn’t accidentally drive up prices.

But an increase in taxes on houses and the cost of selling had put a handbrake on supply, with stamp duty stopping people from downsizing and relocating for better jobs.

This was evident in the sharp hike in Queensland’s stamp duty more than 12 years ago, new research showed.

The 2011 case study shows how stamp duty, a one-off levy paid by the buyer to state governments when purchasing a property, restricts job and housing mobility, economic think tank e61 Institute and real estate data firm Proptrack said.

The Queensland government announced it would remove a stamp duty concession in a budget speech in August 2011, effectively doubling the tax hit.

Although there was a burst of home buying activity initially, it then dropped sharply and stayed low for a year, institute research manager Nick Garvin said.

The volume of home purchases in Queensland sunk 7.2 percent after the state’s stamp duty was increased, the researchers found.

Mobility was also affected, with roughly 20,000 fewer people moving house than in the year before, a fall of nine percent.

In July 2012, the concession was reinstated with a change of government, taking the rates back to similar levels as before August 2011.

The tax was up to six times more expensive than it was a generation ago, the research duo also found.

In Melbourne, stamp duty on a median-priced home is about $44,500, or six months of post-tax income for average full-time workers, which constituted a more than six-fold increase compared with four decades ago and the biggest leap of any capital city.

Bracket creep, where increasing incomes are captured by higher tax thresholds, had an impact, with increased home prices being captured at higher tax rates, PropTrack senior economist Angus Moore said.

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