The First Home Buyers Grant has been one of the most successful Government strategies to stimulate the housing market and assist thousands of Australians move into their first home.
The First Home Buyers Grant.
T
he scheme was in fact started in the 1970′s and has been re-worked and re-hashed many times over the years but it’s current form is the most enduring.
Let’s take a quick look at the history then we’ll go over the ins and outs and look at how you might qualify.
At various times during Australia’s history the government has attempted to stimulate the building industry by encouraging the young borrowers to enter the housing market for the first time. The first home buyer’s grant became the easiest way to kickstart the industry by providing cash upfront for new borrowers to help them not only qualify for a housing loan, but also to help pay for other costs like stamp duty.
Remember that the first home buyers Grant does not have to be repaid. It is not treated as a loan but a grant to help you move into your first home.
The First Home Buyers Grant – Reasons.
In the very early stages during the 1970s, borrowers used to receive a cash grant of around $700 after they purchase their house to help them acquire some essential household items such as washing machines all refrigerators. At that stage the stimulus packages were more directed at the retail market but there was a flow on effect within housing as well.
From 2000 onwards successive Federal governments have used systems like the First Home Buyers Grant and made cash grants available in such a way as to stimulate the building industry rather than retail. State governments have become the administrators of a federal scheme whereby first home buyers receive $7000 as a ground to be used in any way the buyout wishes.
Following the onset of the global financial crisis, the Federal government offered a first home buyers grant as high as $21,000 in order to keep the building industry ticking over. Banks also play their part by relaxing lending policies making it easier to qualify for a home loan than ever before.
The grant influenced how much a new borrower could borrow and paved the way for predominantly young people to move into their first home. To be eligible to receive the first home buyers Grant, (originally known as the first home owners grant or FHOG), applicants have to satisfy specific eligibility criteria.
Let’s have a look and see how the first home bonus works.
To qualify for the first home buyers Grant, first-time borrowers need to answer yes to the following questions.
- You must be at least 18 years of age.
- You must not be a company or a person acting as a trustee.
- You must never have been pay the first home owners grant in the past.
- You must never have owned a residential property in Australia before 1 July 2000.
- You must never have lived in a residential property in Australia you have owned from 1 July 2000 and onwards.
- You must have the intention of moving into the house you are purchasing within one year of the property being registered in your name.
- You must live in the house for a continuous period of six months as your principal place of residence.
In order to qualify for the first home buyers grant you also have to provide some documentation including the following.
- Proof of identity. This includes the usual 100 points ID which can be met by producing a driver’s licence, a passport and or a birth certificate. Other forms of ID are also allowed where one or more of these documents are not available.
- A copy of the executed contract of sale. This is simply to provide proof that a property qualifies for the first home owners grant is being purchased in your name.
- Evidence of the art encumbered value of the property must also be proven if you are purchasing from someone who is related to you.
- If you are building your new home you also have to provide a copy of the executed building contract and a certified copy of inspection summary or final inspection report.
An important to remember is that to be eligible for the first home owners grant the property must be registered only in the name of applicants who are eligible for the grant. In other words if you are applying with a partner or spouse and that partner or spouse does not qualify in their own right, then it your application will not be approved.
Exclusion rules also apply to applicants who have previously owned investment properties. In other words it doesn’t matter what sort of property you have owned in the past, you will not qualify as a first home buyer for the first home buyers grant.
But it wasn’t just the Federal government who played a role in stimulating the economy. Every state government in Australia came to the party after the onset of the global financial crisis and introduced stamp duty exemptions for first-time home owners and this created an additional incentive by removing barriers which could previously had prevented a young couple from buying their first home.
Home buyers across the country applied in record numbers for the first-time buyer’s grant and took advantage of the numerous duty concessions. Banks also became agents of the government by organising to advance funds on the government’s behalf on the settlement of the property.
Mortgage brokers also assisted in the process by taking the first home owners grant application forms at the same time that home loan applications were lodged. The process ensured that the grant was paid on time and that potential problems could be avoided.
As was to be expected, the number of new homes being built and purchased in the early days of the global financial crisis reached record levels and almost every municipality in Australia experienced strong housing growth.
Although state governments lost some revenue through not charging stamp duties the first-time buyer’s grant has become more of a symbol for a way in which governments continue to assist first home buyers into their new homes.
The scheme has always been very flexible and has changed to meet growing demands. For example, although you have to be a permanent resident of Australia to qualify for the first-time buyer’s grant, joint applicants with non-Australian residents may still be eligible for the grant providing the other eligibility requirements are met.
The first home buyers grant will no doubt continue to evolve but one thing is certain and that is it is the best and easiest way to get in to the property market when you are young.
