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If you’re a first home buyer at the moment, then you will have noticed the Governments, Federal and State, seem to just want to <a href="https://www.urban.com.au/news/home-building-grant-to-benefit-affordable-areas-and-first-timers">throw money at you </a>to try and help you get into that first home.  You’ve got to love that.  Let’s have a brief look at what the offerings are and how they can assist.

There are essentially four different offers available:

<ol>
<li>First Home Buyer Duty Exemption or Concession</li>
	<li>First Home Owner Grant (FHOG)</li>
	<li>First Home Loan Deposit Scheme</li>
	<li>Homebuilder </li>
</ol>
Please note that I’m looking at this from a Victorian perspective, so things may be different in other states.

The first three apply only to first home buyers, while the fourth is applicable to anyone that meets the criteria.

The <a href="https://www.sro.vic.gov.au/fhbduty">First Home Buyer Duty Exemption or Concession</a> relates to the purchase of either a new or existing property as a first home to owner occupy and live in.  If you qualify for this and the property you purchase has a value of $600,000 or less (technically the ‘<a href="https://www.sro.vic.gov.au/dutiable-value#:~:text=Dutiable%20value%20is%20the%20price,market%20value%20of%20the%20property.">Dutiable Value</a>’ to be $600,000 or less) then you will receive the first home buyer duty exemption, or if the value is between $600,001 to $750,000 you will receive the first home buyer duty concession.  This relates to the stamp duty normally charged on the purchase transaction.  In the case of the exemption, you don’t pay any stamp duty, while in the case of the concession, you pay a reduced rate of the stamp duty.  

The <a href="http://www.firsthome.gov.au/">First Home Buyer Grant </a>is applicable only to new homes.  That is if you are building your own home, or are purchasing a home that is being offered for sale for the first time, as well as <a href="https://www.urban.com.au/new-apartments">off the plan </a>purchases.  In this instance, in Victoria, you can receive $10,000 or, if the property is in regional Victoria, $20,000.  The property involved, however, has to be valued at $750,000 or less.

The <a href="https://www.nhfic.gov.au/what-we-do/fhlds/">First Home Loan Deposit Scheme</a> is a little different in that its aimed to reduce the amount of funds contribution required by home loan applicants in order to pass the Bank's credit criteria to obtain the loan. How this works is that the Government pays the Lenders Mortgage Insurance (LMI) premium normally associated with borrowing over 80% of the properties value.  There are still certain criteria applicants must meet, property value again being one of them, but this time it is based on postcode, and the criteria now include your level of income as well.  Not all lenders are participating in this scheme either but if it works for you then you can save several thousand dollars on the LMI premium.  

<a href="https://treasury.gov.au/coronavirus/homebuilder">Homebuilder</a> is the latest offering from the Federal Government to help the construction industry during the current COVID-19 situation.  This sees a grant of $25,000 available to any eligible applicants ( not restricted to first home buyers ) to go towards either construction of a new home, including off the plan purchasers, or for a significant renovation of an existing home.  Again there are certain criteria applicants must meet, and for now, at least it appears to only be a short term offer.  Any build contract must be signed before the end of the year and construction must commence within three months of the date of the contract. 

In the case of the first three, all the eligibility criteria are determined prior to <a href="https://www.urban.com.au/guides">settlement</a> and so the applicable grant amounts can be factored into the equation so that the loan amount applied for is for the correct amount, however, the Homebuilder scheme is proving a bit more problematic in its current form for the Banks.  Only because final eligibility is determined based on if the construction starts within three months of the contract being signed.  Which means that at the time of loan application, we can’t be certain that the $25,000 will actually be received.  This requires that the initial loan applications will need to be assessed for the full amount. 

In addition, you may still be eligible for the FHOG if you or your spouse/partner purchased a property on or after the 1st of July 2000 and have not lived there as your home.

Additionally, to receive the FHOG at least one applicant must:

<ul>
<li>Must occupy the home as their principal place of residence (PPR) for at least 12 months, commencing within 12 months of settlement or completion of construction.</li>
	<li>Be aged 18 or over (discretionary).</li>
	<li>Be an Australian citizen or permanent resident.</li>
	<li>In the case of the purchase of a new home - as at the date on which the applicant/s become entitled to possession of the home under the contract, which generally occurs on the date of settlement.</li>
	<li>And finally, in the case of entering into a comprehensive building contract - as at the date on which the building is ready for occupation as a place of residence, which generally occurs when construction of the home is finished.</li>
</ul>
On a final note, trying to make sense of it all can be a little daunting so it is always a good idea to have an in-depth discussion with your lender or broker to make sure you fit the <a href="https://www.urban.com.au/expert-insights/buying/the-time-has-come-for-first-home-owners-to-join-the-property-ladder">eligibility criteria for some, or all of these offers </a>so you can take advantage of them while they are still available.
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vivian_48447

How New Government Measures Might Help First Home Buyers Secure a Loan?

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With the <a href="https://www.urban.com.au/news/everything-you-need-to-know-about-australias-25000-homebuilder-grant">HomeBuilder grant</a> offering eligible Australians $25,000 towards building or renovating their home, many Australians will be engaging with builders - some for the very first time. 

To ensure your project goes as planned, it is critical you work with a <a href="https://www.urban.com.au/builders">trustworthy and reputable builder</a>. However, many Australians struggle to know how to separate the good from the bad. 

A history of unscrupulous behaviour 

We’ve all heard of someone who has had a bad experience with a builder or perhaps even had a bad experience with a builder ourselves. The prevalence of dodgy projects and dodgy behaviour by builders is obvious when you examine the statistics. Over the last ten years, new homeowners across the nation have encountered a $10.5 billion bill to fix defects such as leaks, cracks, issues with plumbing, guttering problems and more.

Another serious issue in the building sector is "phoenixing" where a new company is created to continue the operations of a former company which was liquidated to avoid paying debts. In 2017-2018 in NSW, 561 construction businesses were found to have been involved in phoenixing behaviour. Unfortunately, not all phoenixing activity is illegal and until this is stamped out it will continue to leave consumers vulnerable. 

Why the HomeBuilder scheme could make dodgy behaviour worse

The danger is that schemes like HomeBuilder which promise quick cash may incentivise those builders with a history of wrongdoing to continue to perpetuate the same behaviour. Although builders on HomeBuilder projects are required to be licensed or registered prior to the announcement of the scheme this will not fully protect new homeowners against <a href="https://www.urban.com.au/news/how-a-proposed-ratings-system-for-builders-could-protect-investors-from-dodgy-developments">dishonest behaviour</a>. 

Another major issue is the length of the scheme. Between the 4th of June and 31st of December 2020, the scheme covers any building contracts entered during that time frame, with construction required to begin within 3 months of the initial contract date. The issue with this is that builders will be incentivised to enter into as many contracts as possible, with chances of taking on an unachievable workload and cutting corners to finish projects. Unfortunately, there are many builders with a great reputation and who consistently deliver high quality builds who will end up being crowded out by those unscrupulous builders. 

How to select a reputable and quality builder 

The good news is that there are countless builders doing the right thing, delivering high-quality projects to budget and to time. Instead of feeling the need and pressure to choose a builder quickly to meet the limited timeframes of the HomeBuilder initiative, consumers should attempt to take the time to do their due diligence to secure a great and trustworthy builder. 

Here are some ways to vet potential builders for your project: 

<ol>
<li>Check the builder is licensed</li>
</ol>
First things first, you should always check that the builder is licensed. In NSW, this is a simple search on the <a href="https://www.service.nsw.gov.au/">Service NSW website</a>. This will weed out any unscrupulous and unlicensed operators. 

Licensed builders are also covered by insurance. In NSW, licensed builders are required to have home building compensation cover for each project over $20,000. This is to protect consumers in the case that the builder can’t finish building work or to fix defects that may arise.

<ol>
<li value="2">Seek out testimonials</li>
</ol>
Ask the builder for testimonials from former clients. If possible, see if you can speak with former clients to get a true picture of what the experience with the builder was like. 

<ol>
<li value="3">Review past projects</li>
</ol>
Have a look at other projects they have completed. Are they high quality? Have there been any defect issues? 

<ol>
<li value="4">Check credit reports and ASIC listings</li>
</ol>
By checking credit reports and <a href="https://asic.gov.au/">ASIC</a> listings, you will be alerted to any debt issues and will uncover any phoenixing behaviour. 

<ol>
<li value="5">Work with a building broker</li>
</ol>
A building broker will undergo a more extensive due diligence process to help you select the right builder. They will have a panel of vetted and accredited builders to choose from and can match you with the right builder for your project. They can also help you avoid any hidden fees or costs and ensure the contract is sound. The service is free for the consumer. 

The last thing consumers need is <a href="https://www.urban.com.au/guides/how-to-buy-a-house-in-2020-a-guide-for-first-time-home-buyers">selecting</a> the wrong builder and seeing money and time go down the drain. This can potentially cancel out the financial value of the HomeBuilder grant completely. By doing your due diligence you can make sure you have a trustworthy and quality builder working on your HomeBuilder project and achieve a much better outcome for your building project.
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How to Select a Quality Builder for Your HomeBuilder Project

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It is now almost 15 years since the post-GST first home buyers grant came into existence.
Records show some $8.8 billion has been effectively injected into the market through grant or stamp duty exemption. 
The New South Wales First Home Benefits Top 20 Postcodes by Value report includes <a href="https://www.osr.nsw.gov.au/sites/default/files/file_manager/dsg003.pdf" target="_blank" style="line-height: 1.3em;">all First Home Owner Grant payments</a> made between 1 July 2000 and 30 April 2015. 
No change to <a href="/expert-insights/43641-no-nsw-state-budget-first-home-grant-changes-so-5000-reduction-january-2016-deadline-looms" target="_blank">NSW first home buyer grants in the state budget</a> could intensify activity before the grant's 1 January 2016 reduction.
The grant for buyers of new homes is scheduled to be reduced from $15,000 to $10,000. 
Grants for established home purchases ceased two years ago. 
The recent strength in the Sydney property boom was being especially driven by properties <a href="/expert-insights/43632-nsw-state-budget-s-7-29-billion-stamp-duty-revenue-record" target="_blank" style="line-height: 1.3em;">valued over $1.2 million, the NSW State Budget revealed</a>, but the housing boom longevity is not being assumed by the NSW Treasury.
<a href="/images/2015/06/23/700_abs.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/06/23/700_abs.jpg" alt="">
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jchancellor-FAypfDUnLy

Liverpool tops the $8.8 billion first time buyer injection

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The Real Estate Institute of Western Australia has criticised the decision by the State Government to axe the First Home Owners Grant (FHOG) for established homes in this week's state budget, but welcomed the retention of the stamp duty exemption.  
REIWA president David Airey said being exempt from stamp duty for homes under $430,000 was a huge benefit to all first time buyers. 
However first time homebuyers wanting to buy an established property have lost the $3000 First Home Owners Grant.
It comes after the FHOG was reduced for established buyers from<a href="/news/26482-friday-sept-27-news-" target="_blank"> $7000 to $3000 in 2013</a>.
The FHOG remains unchanged at $10,000 for those wanting to build their first home.
And stamp duty concessions for first home buyers of both new and established homes remain unchanged in this year’s budget.
Treasure Mike Nahan said the change was in line with the State Government’s policy objective of focusing financial support on residential construction.
But cutting the grant for first time buyers purchasing established homes will be a saving of about $109 million for the State Government over four years.
Mr Airey said the government’s argument that the FHOG policy was geared towards providing more housing was flawed, because Perth was currently oversupplied with dwellings.
“Supply is not the issue in WA, affordability is the issue and making it harder for first home buyers attracted to existing stock makes no sense,” he said.
Western Australia’s 2015-16 budget showed a significant write down in expected revenues again, largely due to the greater than expected fall in iron ore and oil prices.
With the state’s spending outlook little changed from the December MYEFO, larger deficits are now expected in the 2015-16 and 2016-17 years.
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