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For lawyers, stamp duty reform ‘makes entering the property market even more attainable’
Reforms to stamp duty, as announced in yesterday’s (21 June) NSW budget for 2022-23, are exciting for lawyers looking to buy their first home, further reducing barriers to entry for such professionals.
Jerome Doraisamy
As reported yesterday by Lawyers Weekly’s sister brand, The Adviser, first home buyers in NSW will now be able to choose between an upfront payment or a smaller annual property tax from next year under First Home Buyer Choice reforms.
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NSW Premier Dominic Perrottet confirmed that the state would be giving borrowers the option of paying stamp duty or an annual property tax as part of a multibillion-dollar housing package announced in the 2022-23 NSW budget to deliver quality, accessible and affordable housing across NSW.
The property tax option will be available for properties for up to $1.5 million.
Under the new initiative, first home buyers (FHBs) who opt into the property tax will pay an annual property tax of $400 plus 0.3 per cent of the land value of the property.
From 16 January 2023, eligible first home buyers who opt into the First Home Buyer Choice will not pay stamp duty on their purchase.
FHBs will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000. However, FHBs will not be eligible if they have received a First Home Buyer Grant or duty concessions.
All other purchasers must continue to pay stamp duty as normal.
Speaking to Lawyers Weekly, Legal Home Loans director of sales Cullen Haynes said that the move is an “exciting reform” for FHBs.
“It will help further reduce barriers for lawyers with a significant decrease of the up-front transaction costs,” he explained.
When asked what it could mean for lawyers looking to buy across the state – and also for those across the country, given calls for such reform nationwide – Mr Haynes said that legal professionals around the country already can access very attractive offers, such as buying with a 10 per cent deposit and paying nil lenders mortgage insurance (LMI).
“This reform makes entering the property market even more attainable for lawyers looking to buy in NSW,” he said.
“The government is yet to confirm the enactment date of the legislation, and buyers are unable to opt-in until 16 January 2023. Those who purchase between the enactment date and 15 January 2023 will be able to apply for a stamp duty refund. So, if you’d prefer to avoid paying stamp duty up-front, you will need to wait until next year.”
Lawyers should, Mr Haynes stressed, do the usual due diligence by seeking home loan pre-approval as a first step in the house-hunting process.
“Be clear from the outset on which option you are choosing with your broker, bank, and conveyancer, as transaction costs will be factored in to your bank assessment,” he advised.
“If lawyers are choosing the annual option, banks will assess that as an expense commitment that will affect your borrowing capacity.”
Looking ahead, Mr Haynes noted that full details about the reform are yet to be revealed.
“Buyers will pay 0.3 per cent of the land value, but it is unclear if this will vary each financial year. If so, as your land value increases over time, so will your annual property tax amount,” he said.
“It is also unclear what time period the tax will apply for, whether there will be an end point or if you will need to pay as long as you own the property. We also need to understand what your obligations will become if and when you sell.”
