Options to buy
The term’s been used so much lately you could be forgiven for switching off when you hear it – “housing affordability crisis”. But for those feeling like a home purchase is slipping from their grasp, all news on the topic is welcome. And buying that first home might now be a little easier for some, with the Federal Budget’s fine-tuning of the new First Home Saver accounts, now due to kick off in October. Designed to encourage a savings habit Mr Swan will tip in 17% of what you deposit to a max $850 each year, and the earnings of your account will be taxed at just 15%. With that lower earnings tax this might be a good way for family to help you on your way – plenty of parents with 20-somethings still living at home will think it’s a great deal! There’s a bunch of rules (you don’t get govt pennies without them). Your minimum annual deposit is $1000 and max $10,000, and you can’t withdraw anything to buy that home until you’ve had 4 years of deposits. You’ll still qualify for the first home owner grant on top.
Will there be plenty of takers? We hope so, but the four year minimum doesn’t fit the ‘want it now’ approach of today. Recent non-government schemes like “Option 2 Buy” weren’t successful either mind you and they offered an instant solution. Under that now-dead format you got the company to buy your choice of home, you lived in it and made payments to them, and had an option to buy it yourself at a pre-agreed price within 5-7 years. “Option2Buy” went into liquidation earlier this year after a massive advertising campaign and plenty of attention. We read that when they went under the authorities rushed to check the impact on customers – but discovered there were none. Zero!
There’s still others out there offering similar rent-buy plans including one that tempts by offering the customer all capital gains while they “rent” the home. The rent though is apparently somewhat higher than market…
On the ground we’re witnessing more of the group-purchases, with siblings and even friends getting together to buy property. Not our position to advise or warn people but there’s some obvious risks when life takes each of the buyers in different directions. But with prices still rising we’d expect to see more of this. No doubt there’s some parents back home encouraging them too!