The federal government released its budget for the 2020-21 financial year on Tuesday, in what has been described by Treasurer Josh Frydenberg as “the most significant budget to date”.
That’s because the latest budget has the massive task of digging the Australian economy out of recession and helping it recover in the wake of COVID-19, with a focus on creating jobs and getting people out and spending again.
While not everything on the property industry’s wish list made it into the budget, namely an extension of the popular HomeBuilder scheme, there are still a number of new policies that will undoubtedly have a positive impact on the market.
A boost for first-home buyers
First-home buyers were the big property winners in this year’s budget. The First Home Loan Deposit Scheme is being expanded with an extra 10,000 places on offer this financial year to those building a new home.
The value of properties eligible for the scheme has also increased to $950,000 in Sydney, $850,000 in Melbourne and $650,000 in Brisbane.
The scheme allows first-home buyers to get into the market with a deposit of as little as 5% and no need to pay lenders’ mortgage insurance, with the government guaranteeing up to 15% of the loan.
More affordable housing
An additional $1 billion is being provided to the National Housing Finance and Investment Corporation (bringing the total to $3 billion) to support the construction of affordable housing for those at risk of risk of homelessness.
Assistance for Indigenous home buyers
The federal government is investing $150 million in the Indigenous Home Ownership Program.
The funding will help deliver upwards of 360 constructions loans for new housing in regional Australia and assist Indigenous Australians into home ownership.
Tax exemption for granny flats from 2021
While not included in the current budget, the government did reveal that a Granny Flat Tax Exemption would be implemented from July 1, 2021.
This will mean that capital gains tax will not apply to formal granny flat arrangements providing accommodation for older Australians, or people with disabilities.
It will only apply to arrangements between family members, or people with other personal ties.
The move is set to help stimulate the construction industry, as well as support older and disabled Australians and their families.