With housing affordability, lack of housing supply, inflation and interest rates all remaining pressing issues for Australians, the 2023-24 federal budget’s housing-related policies and initiatives are crucial. Let’s look at the key measures in this budget that affect homebuyers, homeowners and investors.
1. Expansion Of The Home Guarantee Scheme
This was the biggest news – and the biggest win – for the housing market in this year’s budget and the announcement came early. The government has loosened the eligibility requirements for all portions of the Home Guarantee Scheme from 1 July 2023 onwards, to help more people buy homes. Now, permanent residents, friends and family members, and non-first-home buyers will be able to apply. Places are limited and are expected to go quickly. Visit our article on Home Guarantee Scheme updates to learn more.
Our mortgage brokers can give you more information or help you apply for any part of the Home Guarantee Scheme. Call us on 1300 889 743 or enquire online for free today!
2. Extended Parenting Payments
Another benefit for some homeowners will be the extension of the single parenting payment to include parents of children up to age 14 (currently, age 8 is the cutoff). Home Loan Experts senior mortgage broker Jonathan Preston said this would make more income available straight away for affected homeowners, albeit a relatively small amount.
3. Stage 3 Tax Cuts Untouched
One big piece of news for homebuyers, homeowners and investors was something that didn’t happen – the stage 3 tax cuts were not scrapped. Preston says they will be a big benefit for homebuyers, once they take effect.
“The stage 3 tax cuts will begin on 1 July next year,” Preston said. “This will boost borrowing power for people. The benefits really take off for those earning $120K or more a year, with people earning $200K or more saving $9075 a year. This is good for many of our clients.”
4. Energy-Efficiency Upgrades For Housing
The government is making an investment of $1.3 billion to create the Household Energy Upgrades Fund to improve the energy performance of households. The fund will provide low-interest loans and facilitate upgrades for social housing. The investment injects $1 billion into the Clean Energy Finance Corporation to unlock over 110,000 low-interest loans for energy-saving home improvements. Additionally, the government fund will partner with states and territories to allocate $300 million for energy performance upgrades in social housing, which are expected to reduce the energy consumption of 60,000 social housing properties by one-third. This will benefit tenants, who will save on their energy bills.
5. Relief For Some Renters
About 1.1 million households will benefit from a 15% increase in Commonwealth Rent Assistance. This increases the maximum assistance by $31 a fortnight, to $240. Housing advocates welcomed the increase but said it was not enough to help low-income renters amid the tight rental market.
6. More Homes For Rent – But Not Enough
Eligible developers of build-to-rent projects will get a reduction in the withholding tax rate for fund payments from managed investment trusts, from 30% to 15%.
They will also get an increase in their tax deductions for capital works – from 2.5% to 4%, annually. This means that newly constructed build-to-rents developments will have increased after-tax returns.
These incentives are offered to address the shortage of rental homes in the market. Industry projections suggest this move could lead to about 150,000 additional rental properties within a decade.
In Home Loan Experts’ view, these and other budget measures designed to address the lack of housing supply are inadequate and won’t take effect soon enough.
“It will take years to get these online, and immigration is just so strong,” Preston said. “If they build even 500 units per development – which would be huge – and there are two people per unit, that is only 1,000 occupants per building,” Preston explained. “At 300K net migration, we would need a new building to come online daily.”
We’re Here To Help!
If you want to know more about how the federal budget affects you or want to take advantage of the Home Guarantee Scheme, our expert mortgage brokers are here to help. Call us on 1300 889 743 or fill in our free online assessment form and we’ll get back to you!