Expand the eligibility of the Home Guarantee Scheme
The government has recently unveiled plans to expand the eligibility criteria for the Home Guarantee Scheme. The following enhancements will be implemented:
- Joint Applicants: The scheme will now allow two eligible individuals, beyond spouses and de facto partners, to apply jointly for a guarantee.
- Non-First Home Buyers: Non-first home buyers who have not owned a property in Australia for a minimum of 10 years will now have access to the First Home Guarantee and Regional Home Guarantee.
- Single Legal Guardians: Single legal guardians of children will be able to access the Family Home Guarantee, which provides support for eligible individuals with at least one dependent child to purchase a home with a deposit as low as 2%.
- Australian Permanent Residents: Australian permanent residents will also gain access to the Home Guarantee Scheme, expanding the eligibility beyond citizens.
The Home Guarantee Scheme comprises three components:
- First Home Guarantee: This aspect of the scheme aims to assist eligible first home buyers in purchasing their first home sooner, with a minimum deposit requirement of just 5%.
- Regional First Home Buyer Guarantee: This component supports eligible first-home buyers in regional areas to acquire a home.
- Family Home Guarantee: Designed to aid eligible single parents with at least one dependent child, this part of the scheme enables them to purchase a home with a deposit as low as 2%.
These expansions in eligibility aim to provide increased opportunities and support to a broader range of individuals aspiring to own a home.
Housing (build-to-rent developments)
The government has announced eligible new build-to-rent projects, specifically for those commencing construction after May 9, 2023 (Budget night). The following measures will be implemented:
- Capital Works Tax Deduction: The capital works tax deduction rate, also known as depreciation, will be increased from 2.5% to 4% per year for these projects.
- Withholding Tax Rate: The final withholding tax rate on eligible fund payments from managed investment trusts (MITs) attributed to newly constructed build-to-rent developments will be reduced from 30% to 15%.
These changes will apply to build-to-rent projects comprising 50 or more apartments or dwellings made available for rent to the general public. The dwellings must be retained under single ownership for at least ten years before being eligible for sale. Additionally, landlords must offer a lease term of at least three years for each dwelling.
The reduced withholding tax rate for residential build-to-rent will take effect from July 1, 2024. Consultations will be conducted to determine implementation details, including requirements for a minimum proportion of affordable tenancies and the duration of the dwellings’ retention under single ownership.
Build-to-rent (BTR) developments represent a relatively new concept in urban housing development in Australia. In these developments, the developers own and manage apartment complexes and directly rent out the units to tenants. BTR developments have the potential to offer more affordability compared to traditional rentals, especially when coupled with government incentives.
