While the Australian government has received praise for delivering the first annual budget surplus in 15 years, the measures introduced are relatively innocuous. However, there are some positive developments for homebuyers.
The Federal Budget 2023/24 includes a number of resolutions aimed at making it easier and more affordable for people to purchase their own homes. Let's dive into the budget papers to see what's new and what's changing.
Eligibility expanded for Home Guarantee Schemes
First Home Guarantee and Regional First Home Buyer Guarantee
From July 2023, the eligibility criteria for the First Home Guarantee and Regional First Home Buyer Guarantee will be widened to include any two borrowers who can jointly apply to put a deposit down on their first home.
The schemes offer first homebuyers the ability to purchase a home with a deposit as low as 5%, without the need to pay Lenders’ Mortgage Insurance (LMI). Any guarantee is for up to a maximum of 15% of the value of the property.
Under the new rules, these two applicants will no longer need to be married or in a de facto relationship. They could be friends, siblings or colleagues, for example, giving more people the opportunity to enter the housing market.
The scheme is also being extended to include individuals who already own a home but have not purchased a second property within the last decade. This will provide more options for those looking to invest in property or upgrade.
The relaxed eligibility criteria may provide greater opportunity for those looking to take their first steps onto the property ladder, amid rising house prices and tighter lending standards.
Family Home Guarantee
The eligibility criteria for the Family Home Guarantee will be broadened from single natural or adoptive parents with dependents to include unmarried legal guardians of children, such as grandparents, uncles and aunts.
Additionally, all three home guarantee programs - previously only accessible by Australian citizens - will become available to eligible borrowers who are Australian permanent residents.
Build-to-rent tax breaks to boost housing supply
In an effort to increase the supply of new houses, the budget included tax concessions for build-to-rent projects.
From July 2024, the withholding tax rate for payments into funds from trusts involved with these projects will be reduced from 30% to 15%. Build to rent projects involve a partnership between the government and private sector to construct large scale residential housing for renters.
The tax breaks are intended to incentivise investment in these projects. Additionally, the government confirmed an increase in the capital works tax deduction depreciation rate for eligible new build-to-rent projects. From 9 May 2023, annual deductions can now be claimed at 4.5%, up from 2%.
Combating rising energy prices
The Energy Savings Package will include several initiatives to help households access savings and upgrades.
One of these initiatives is the establishment of the Household Energy Upgrades Fund, which will provide $1 billion to the Clean Energy Finance Corporation (CEFC) to enhance financing options for household energy upgrades. By partnering with banks and lenders, this initiative is expected to help 110,000 households reduce their energy bills.
Additionally, the government will allocate an extra $300m to the Household Energy Upgrades Fund to support upgrades to social housing, which will be co-designed and co-funded with the states and territories. It is projected that this investment will lower the energy consumption of over 60,000 social housing properties.
Finally, approximately $36.7 million will be assigned to expanding and upgrading the Nationwide House Energy Rating Scheme to apply to existing homes. As a result, Australians will be able to seek a home energy rating and make informed decisions about energy upgrades, as well as renting and purchasing homes that are energy-efficient.
Electricity rebate reserved for most vulnerable
From July 2023, eligible households can save up to $500 on their electricity bills as the government teams up with state and territory governments to provide up to $3 billion worth of electricity bill relief.
Eligible households in NSW, Victoria, Queensland, South Australia and Tasmania will receive the $500 discount, while residents in Western Australia, the Northern Territory and the ACT will only get $350 because, according to Treasurer Jim Chalmers, electricity prices are lower in those regions.
The relief will be restricted to pensioners, Commonwealth Seniors Health Card holders and households receiving income support including the Family Tax Benefit (FTB) A and B.
You can save money and reduce electricity waste at home by implementing a range of sensible, energy-saving measures, while still meeting your demands for convenience and comfort.
One million new homes by 2029
This was promised in the October 2022 budget, with the Commonwealth government allocating $350 million to finance the construction of 10,000 affordable dwellings, while the states and territories are responsible for delivering homes to accommodate low to moderate-income households.
Although it may seem lofty, the target of one million new homes over a five year period is actually unambitious. It’s consistent with what has been delivered historically. For example, in the five years prior to the pandemic, just over 985,000 new homes were established.
Advancing social and affordable housing
Additional funds have been allocated by the government to improve access to affordable housing.
The National Housing Finance and Investment Corporation's (NHFIC) liability cap has been raised by $2 billion, to a total $7.5 billion. This increase will allow community housing providers to access more low-cost loans.
It is estimated that this initiative will result in an additional 7,000 affordable homes being made available.
Source: RateCity