The new first home loan deposit scheme (FHLDS) aims to give first home buyers a leg up in the property market by reducing the deposit amount required to purchase a property.
First homebuyers were previously slugged with lenders mortgage insurance (LMI) if they did not come up with at least 20% deposit.
The First home loan deposit scheme works by providing a guarantee to first home buyers to purchase a property with as little as 5% deposit opposed to the onerous 20% required by most lenders. On a $500,000.00 property, that’s a whopping $75,000.00 difference!
The catch
Places are limited! The Australian Government has reported nearly 3,000 potential first homebuyers have registered with the banks since the 1st of January for the scheme. The remaining 7,000 places will open from the 1st February 2020. It is important that you have your finances in order, have spoken to a financier (i.e bank) and have started looking at potential properties.
Can you apply?
If you are a first time homebuyer then you are most likely eligible for the scheme. The Australian Government website has a handy eligibility tool to see if buyers qualify for the scheme. In a nutshell, you will need to be a first home buyer and:
· Pass the income test;
· A prior property ownership test;
· A deposit requirement; and
· Pass the owner occupier requirement.
Next steps
Before you sign a contract of make an offer on a property, make sure you get legal advice to protect your interests. At McLaughlin & Associates Lawyers we have a team dedicated to residential conveyancing. We can assist you with pre-purchase contract conditions and also make sure the contract you sign protects your interests. See our page on Conveyancing for more info and guides for buyers and sellers.
Written by Dominic Doan, Commercial and Property Solicitor
For further information or to book in a consultation please contact us at business@mclaughlinlawyers.com.au or phone us on 07 3808 7777.
Have any questions? Send us an email:
Read some of our other residential conveyancing articles:
· Buying a home and claiming PPR
The current Act which governs Real Estate Agents in the sale of residential property (Property Agents and Motor Dealers Act) is on its last legs and a new Act, to be named The Property Occupations Act will, when passed by Government, then govern real estate agents and the selling of residential property in Queensland.
There are a number of changes under the new act which has been designed with a view to cutting red tape and improving the operation of the legislation. This will be welcome news for all stakeholders in the real estate industry as the existing PAMDA has been a nightmare.
Notable changes include:
- Streamlining home sale contracts and statement – currently PAMDA prescribes a complex process which must be followed when presenting and delivering residential real estate contracts. These processes require several approved forms to be presented and delivered to a buyer in a specified way and order. In addition, failure to comply with these provisions constitutes grounds for terminating the Contract. The existing Warning Statements (information sheets) will be replaced with a simpler requirement for a prescribed statement to be included in the contract, once, and in a conspicuous way, directly above where the buyer executes the Contract.
- The maximum commission constraints which an agent can charge will be removed meaning an agent can charge whatever commission they wish, provided of course, the Seller agrees to it.
- The prohibition on agents receiving a commission for beneficial interest sales will be removed provided the seller acknowledges and agrees to the agent acquiring the beneficial interest in the Sellers property.
- The Lawyers Certificate requirements will be removed.
- The limit on lengths of appointments for a sole or exclusive agency will be extended from 60 to 90 days.
- The requirement for agents to disclose to a buyer the commission the agent is receiving from the seller will be removed.
- Agents will be allowed to disclose the fact that a reserve price has been set for a property going to auction (but not the reserve price itself).
PPR advice from the leading solicitor in Springwood
When buying a home to live in you are entitled to claim a Principal Place of Residence concession whereby you pay stamp duty at a lesser rate. In order to qualify for this concession you must sign a declaration and in that declaration are one or two points which are often overlooked by buyers (this happens frequently when buyers don’t ask the advice of a solicitor in Springwood).
Firstly, you cannot “dispose” of the land or the residence, lease or otherwise grant exclusive possession of part or all of the property to another person if you are claiming the First Home or Principal Place of Residence concession. This also may include renting out a room within the home. There have been cases where a buyer, in order to help meet the mortgage payments has rented out a bedroom to a friend and that has been held to be “disposing” of part of the residence.
Secondly, to qualify for the stamp duty concession you must occupy the home within twelve (12) months of the settlement date. This time limit is strict, there is no way around it. The seller can continue to occupy the property after settlement provided they vacate the premises within six (6) months. If the property is tenanted at the time of purchase then the existing tenants can continue to occupy the property after the settlement date provided they vacate at the end of the term of their lease or within six (6) months of the settlement date, whichever is first to occur. It is important to note that the lease arrangement had to be in place prior to the settlement date and that it cannot be renewed or extended.
We had a case recently where a client failed to qualify because she didn’t take occupation within the time period and had to pay an additional $15,000 in stamp duty.
Be very careful when signing the Form 2.1 Declaration. Read it carefully and make sure you understand what you are signing and that you are going to be able to meet the criteria. Your best step is to speak to your solicitor in Springwood who can guide you through the process.
As of the 1st July, 2000 first home buyers may qualify to receive a one off $7,000.00 grant from the Federal Government. Maybe you, your children or someone you know can take advantage of the grant!
There appears to be a lot of confusion and misinformation about who is eligible for the grant. For example, I had a client who was informed by her Bank Manager that she was not eligible for the grant because she was not buying a “new” home. Wrong!
Lets have a look at some of the requirements for eligibility.
- For a person to be eligible for the grant they must:-
- Be buying or building their first home.
- Enter into a Contract to buy an existing home or build a new home on or after 1 July, 2000.
- Be an Australian Citizen or permanent resident.
- Intend to reside in the home as their principle place of residence.
- Start living in the home within a reasonable time.
Other points to know are:-
- The payment is not means tested.
- Trusts and Company’s are not eligible for the grant.
- The payment will be made regardless of where the person buys or the value of the home they are buying/building.
- It applies to both new and established homes.
- It does not apply to holiday houses or investment properties.
There are some catches to eligibility so it is vitally important you speak with a person who knows what they are talking about.
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