FIRST home buyers in New South Wales government will have the option to pay an annual land tax in place of stamp duty, under legislation to be introduced later this year.
Treasurer Matt Kean confirmed the First Home Buyer Choice in yesterday’s budget as part of a $2.8 billion housing package that will also see the government contribute up to 40% in a shared equity scheme to help eligible first home buyers enter the property market.
Some $728.6 million will be put towards the annual land tax scheme over four years, which will allow first home buyers to choose between the heftier upfront stamp duty payment or a smaller annual property tax when buying a home up to the value of $1.5 million.
Under the initiative, first home buyers who opt into the property tax will pay an annual $400 property tax plus 0.3% of the land value of the property. The type of tax being paid on the property will reset when it is sold.
The government is planning to have the legislation introduced and passed through parliament in time for a January 16 introduction.
The NSW government will retain the stamp duty exemption for properties purchased by first home buyers for less than $650,000, as well as the stamp duty concessions for first home buyers purchasing properties between $650,000 and $800,000.
It says 55,000 people each year would be able to tap into its first home buyers schemes.
“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” NSW Premier Dominic Perrottet said.
“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers.” the premier said.
In the past two decades, the share of first home buyers under 35 years of age has declined from 67% to 61%.
“We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them,” Kean said.
The NSW government said stamp duty adds about two years for the time required to save the up-front costs of the median NSW dwelling for a household on the median income saving 15% of its income.
Shadow Treasurer Daniel Mookhey said the Premier “has no mandate to charge families an annual land tax on their family home that will last forever”.
The Property Council of Australia welcomed the housing-led budget.
“It’s great to see the NSW government’s commitment to help Australians achieve home ownership and put housing front and centre,” Property Council NSW executive director Luke Achterstraat said.
“There is no doubt we are experiencing a housing supply crisis in NSW which is putting a strain on affordability, both in terms of ownership and rentals,” he said.
$2.8b housing package
The NSW government’s $2.8 billion housing package also includes $300 million to upgrade more than 15,800 social homes to improve the quality and of properties and make them suitable for ageing and less-mobile residents, $37 million to provide 120 new social homes for rough sleepers, and $327.8 million for improve regional housing supply.
The regional and key worker housing package includes $174 million for more than 270 new homes for teachers, nurses and police, and $174 million to build infrastructure that will enable the construction of homes.
Nearly $34 million will go to implementing recommendations of the Regional Housing Taskforce that include planning grants and the expansion of the urban development program.
Almost $150 million will be used for delivering 200 new and 260 upgraded homes for First Nations families, and install 4,440 climate-resilience and energy-saving upgrades.
In a bid to add to housing supply, $89 million will go to unlocking more homes through faster planning assessments, and $73.5 million to accelerate rezoning of key housing precincts in Sydney and regional areas.
“Improving the planning system and delivering more housing supply are the biggest levers the state government has to address affordability,” Achterstraat said.