You will no doubt remember the stress and anxiety that can come with purchasing your first home, and it seems things are even tougher for young adults these days as housing prices rise and adult children remain under their parents’ roofs for longer.
If your children are currently attempting to navigate this minefield, it can be hard to know how best to help them, without parting with your own hard-earned cash in a bid to supply them with the deposit they need. Thankfully though, they may be able to access the First Home Owner Grant, which could help ease some of the stress the situation brings.
The grant was initially introduced in Australia on July 1, 2000 as a way of helping more young people enter the property market. While it is classed as a national scheme, each state and territory has their own legislation, defining who is and isn’t eligible for the cash bonus. Here is a rundown of the valuable information your kids need to know, so you can help them through this exciting but scary stage of life.
Unfortunately not everyone can access the First Home Owner Grant. As the name suggests, your child – and their partner, if they have one – must not have purchased a property before. In the case of couples, it makes no difference if one has purchased a home and the other hasn’t, they can not apply jointly. This also means neither can have received the grant previously, as it is a one-time thing.
As it’s an Australian grant, at least one applicant must be either a permanent resident or an Australian citizen, and both (if applicable) must be at least 18 years of age. Your kids will not be able to build and then sell their property immediately either, as the owner is required to live in the home as their principal place of residence for at least 12 consecutive months after it has been purchased or built.
New South Wales: For those in NSW, a $10,000 First Home Owner Grant is available for the purchase or construction of a new home. There are, of course, some limitations, but unless your child is a multi-millionaire, they should be fine. Firstly, the property they are buying must sit at a value of under $600,000, whereas if they are planning to build, the combined land and dwelling has to be less than $750,000.
Victoria: In Victoria there are different amounts available to first-time buyers, depending where in the state they are planning to buy or build. A sum of $10,000 grant is up for grabs to eligible people who are planning to buy or build a home, worth up to $750,000, in Melbourne. Meanwhile, $20,000 can be handed out to those buying or building properties worth $750,000 or less in regional areas of the state.
Queensland: The Sunshine State is a little more generous, offering $15,000 to eligible people who buy or build homes that are worth less than $750,000. Unlike Victoria, applicants are able to build or buy anywhere in Queensland without it impacting the amount they receive.
Australian Capital Territory: The ACT only takes up a small part of the country and with less space available , the amount people can receive through the grant is less than other states or territories. Eligible people can get $7,000 to purchase a new or substantially renovated home valued at $750,000 or less.
Western Australia: The grant amount up for grabs totals $10,000 in WA, however the value of the home they can build or purchase varies depending on the location. For houses located in southern parts of the state the value can be up to $750,000, whereas in the north, away from the bigger cities, they can total a whopping $1 million.
South Australia: Eligible South Australians can receive up to $15,000 from the government to help purchase or construct a new home. However, the amount the property can be worth is far less than other states and territories, with a limit of $575,000.
Tasmania: Eligible Tasmanian’s can currently access a $20,000 grant to buy or build a home. But this amount is set to change on July 1, 2020 when it will be halved to $10,000.
Northern Territory: Eligible people in the Top End can receive a $10,000 grant, which comes with no limits as to how much the home can be worth.
Saving for a property takes a lot of sacrifices, not to mention the ability to manage your money well, and while using a budget calculator such as MoneySmart’s tool can be helpful, there is another way to boost savings. Back in 2017, the Australian Government introduced the First Home Super Saver scheme to further assist those wishing to get on the property ladder.
The scheme allows first home buyers to save money inside their superannuation fund by making voluntary contributions up to $30,000. These can be made before-tax, such as salary sacrifice, or after-tax. Then, when they are ready to buy, they can lodge a request to release the money.
However it’s important to note that the funds can only be released once, so make sure your kids are sure they are ready for the commitment. Potential home owners will also need sign a contract to purchase or construct a home within a 12-month period, from the date they request to have the money released.
Although the First Home Owner Grant can give your kids’ finances a much needed boost, the other costs involved in buying a home cannot be forgotten. Stamp duty can be a big one to save for, with amounts determined by how much your child pays for the house or land and if they are eligible for the grant.
States and territories offer duty concessions to those using the grant, making it a little easier to afford. And in some cases, they may not have to pay anything at all. This depends on where in the country they live and how much the property is costing them. Finder gives a good breakdown of what your kids can expect to pay.
New home owners will also have to consider the price of legal and conveyancing fees. Let your children know to ask for an estimate of these costs from the conveyancer to begin with so they can budget ahead of time and have an idea of where the money is going.
While it isn’t a requirement, your child may wish to hire a building inspector to check the property over before they sign on the dotted line, along with pest inspectors to ensure there are no infestation problems. Then there are the usual costs with moving in to a new home such as removalists and cleaning. If your son or daughter has been renting in the past they may need to hire a professional to give their old place a thorough clean before handing back the keys.