NSW Government Raising the Stamp Duty Threshold: 3 Questions from Your First-Home Buyer Clients

stamp duty threshold increased for first home buyers

With the recent budget release and the expansion of the First Home Guarantee Scheme, a major focus from the Government has been placed on our first-home buyers, to address the significant challenges that individuals face within the Australian property market. Now, the New South Wales Government has recently vowed to make changes to stamp duty thresholds to allow more first home buyers to access concessions.

This newly introduced legislation increases the threshold for stamp duty concessions so that first home buyers now will be able to pay a reduced rate, or no stamp duty at all. This will mean that properties worth up to $800,000 will be exempt from stamp duty, rather than the original property value of $650,000.

With all of these changes, it is more important now than ever before to provide the right information to your first-home buyer clients. These new legislations mean that brokers should improve the outcomes their clients receive. Additionally, brokers must continue to uphold their commitment to acting in the best interests of their clients. Below is a list of information that you should accurately provide to your clients to guide them in making the right financial decisions.

1) What is stamp duty?

It is important to explain to your first-home buyer clients what stamp duty is, and how it could affect them when purchasing property. You could use the following information when discussing this concept.

When buying property, you are essentially transferring the ownership of that property, and you generally must pay stamp duty. Also known as transfer duty, stamp duty is a tax levied by state or territory government when buying a home. The exact amount depends on the state or territory that you live in, the price of the property, and other determining factors.

Stamp duty can have a major affect on first-home buyers affordability to purchase a house, as stamp duty increases the expenses that are involved. However, stamp duty exemptions are applicable for certain first home buyers, which improves their ability and affordability of housing, making it easier to get into the property market.

2) What first-home buyer grants are available to your client?

There are a range of first-home buyer grants that are currently available, and may be applicable to your clients. It is important to understand each in depth, so that you can make an informed decision for your client’s financial future. Here is a brief outline of each grant that is currently available to first-home buyers.

First Home Buyer Assistance Scheme

This scheme allows eligible buyers to apply for an exemption or reduction of transfer duty charges, if the buyer is a first-home buyer. This scheme applies to first home buyers who are purchasing an existing home, a new home, or vacant land on which they intend to build a home. You can read more about this scheme here.

First Home Owner’s Grant (New Homes)

This scheme is eligible for property buyers who are buying or building a first home, and grants them with a $10,000 grant. This first home can be a house, townhouse, apartment, unit, or similar, that is newly build, purchased off the plan, or substantially renovated. The purchase must not exceed $600,000 if purchasing a newly built house, townhouse, apartment or unit, and must not exceed $750,000 if purchasing vacant land and signing a building contract with a builder. You can read more about this scheme here.

Shared Equity Home Buyer Helper

This scheme assists eligible home buyers to purchase their own home with a deposit as little as 2%. The NSW Government will contribute a proportion of the property price, in exchange for an equivalent interest in the property. This scheme is open to and assists single parents of a dependent or child, single people 50 years of age or older, or key workers who are first home buyers, including nurses, midwives, paramedics, teachers, early childhood educators and police officers. You can read more about this scheme here.

First Home Buyer Choice

This scheme gives eligible borrowers the option to either pay stamp duty or pay an annual property tax. What this means is that eligible first home buyers can either pay a lump-sum stamp duty payment at the beginning of their loan or pay an annual property tax of their property’s land value. Property tax, as opposed to stamp duty, is a smaller amount as it is based off the value of the land. However, assuming that the first-home buyer is purchasing their home on a 30-year loan term, the property tax could end up being more expensive over the life of the loan.

It is to be noted that existing stamp duty exemptions still exist for first home buyers, and will continue to apply for eligible purchases of up to $800,000.

You can read more about this scheme here.

First Home Super Saver Scheme

This scheme, if you are eligible, allows first home buyers to save money for their first home inside their super fund. It works by having the individual make voluntary contributions into the super fund to save for a first home. Then, the first home buyer applies to release their voluntary contributions, to help purchasing their first home. You can read more about this scheme here.

The Home Guarantee Scheme

This scheme supports eligible home buyers to purchase a home sooner and includes:

  1. First Home Guarantee: this scheme allows eligible first home buyers to buy their first home sooner, with a deposit of as little as 5%. 35,000 spots are available each financial year.
  2. Regional First Home Buyer Guarantee: this scheme supports eligible regional first home buyers to buy a home in a regional area. 10,000 spots are available each financial year, to the 30th of June 2025.
  3. Family Home Guarantee: this scheme supports eligible single parents with at least one dependent child to buy a home, with a deposit of as little as 2%. 5000 spots are available each financial year to the 30th of June 2025.

You can read more about this scheme here.

What are the extra hidden costs associated with buying a home?

Apart from stamp duty, there are other hidden costs that your clients may not have considered before. This includes conveyancing or legal fees, building and pest inspections, bank fees, registration fees, Lenders Mortgage Insurance, home and contents insurance and more. Breaking down each fee with your client is essential so that you can assist them in making the right financial decisions.

Vision can assist you in ensuring your clients are making informed decisions.

At Vision, we are a leading aggregator with a wealth of tools and resources to assist our brokers in guiding their clients and helping them to make informed decisions with property. If you are looking for a broker that cares about you, your clients, and your business, then contact us today. We are committed to always providing a superior level of care to our broker group.