Last month the Federal Government detailed its budget for the year ahead. The focus of the budget was obviously helping to navigate Australia out of the economic downturn that was experienced due to the COVID-19 Pandemic in 2020. In this budget, the government has committed to ‘supporting construction jobs and home ownership’ and there are many schemes set out to support that. Let’s take a closer look.
First Home Super Saver Scheme
The First Home Super Saver Scheme has been around for a few years now. Previously, this scheme had allowed First Home Buyers to save up to $30,000 inside of their super fund through voluntary contributions, meaning they were not taxed on that part of their income and were therefore able to save for their first home sooner. In this year’s budget it was announced that this $30,000 amount would be increasing to $50,000. With housing prices continuing to increase across the country, this extra $20,000 of tax free savings will be of great assistance to first home buyers.
Family Home Guarantee
In an effort to support single parent families in an increasingly competitive property market, the Government has announced a new initiative known as the Family Home Guarantee. From July this year, there will be 10,000 places available to eligible single parents with dependants to build a new home or purchase an existing home with as little as a 2% deposit saved. Understanding that it can be difficult for single parents with dependents to save up for their own home, this Guarantee has the potential to be a big help. Importantly, it is also great to see that this Guarantee can be used regardless of whether they have owned a home in the past. With this in mind though, it is vital for applicants to remember that having a higher level of debt will mean they’re paying more interest on their loan in the long-term, so it is really important for them to take a look at their circumstance and decide whether this is something that is actually going to be a benefit to them in the long run.
New Home Guarantee
The New Home Guarantee is similar to the Family Home Guarantee as it allows eligible individuals to build or purchase a new home with a deposit as low as 5%. However, the key differences are that this scheme can only be used by first home buyers, and it can only be used for new homes – unfortunately established properties are ineligible. In this year’s budget an extra 10,000 places have been added to the scheme, with the hope of stimulating more construction (particularly in regional areas) and making it easier for first home buyers to get into the market.
The HomeBuilder Grant was announced last year as a way of supporting the construction industry through the turmoil of COVID-19, and encouraging owner-occupiers to build or renovate their homes. The program has been highly successful from the outset, and the Government has therefore extended the six month construction commencement period to 18 months for all existing applicants. Over the course of this scheme, over 120,000 applications have been received and it is expected to support over $30 billion in residential construction activity.