The First Home Owner Grant (FHOG) scheme

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When it comes to buying a home, it can be both an exciting and stressful time. There are many things that need to be considered (and taken care off) before you receive the keys and start the next chapter in your life. Importantly, in our animation, ‘First Home Super Saver Scheme (FHSSS)’, we talked briefly about the impact that housing prices, wage growth and livings costs are having on prospective first home owners.

The time and effort required to save an adequate deposit to buy your first home, particularly when trying to circumvent the need for Lenders Mortgage Insurance or a loan guarantor arrangement – the national average* for saving a 20% deposit is currently 4.6 years (house) and 4.2 years (apartment).

With this in mind, as part of the 2017-18 Federal Budget, several proposed measures (e.g. the downsizing measure, the FHSSS, and reducing allowable deductions for property investors) were introduced with the aim of helping to resolve this issue – these proposed measures have now been legislated. In addition, there have been (e.g. First Home Savers Account) and continue to be (e.g. Stamp Duty concessions and the First Home Owner Grant) other measures also aimed at assisting in this regard.

 

The First Home Owner Grant (FHOG) scheme

The FHOG scheme was introduced on 1 July 2000 to offset the effect of GST on buying or building a home. It’s a national scheme that is both funded and administered by the states and territories.

Whilst it has undergone changes over the years (e.g. it’s no longer payable to applicants who purchase an established property), as it stands, the FHOG scheme entails a one-off grant payable to applicants who buy or build a new home to live in, where the transaction meets the relevant eligibility criteria.

Please note: The one-off grant is payable per eligible transaction, regardless of the number of applicants. Furthermore, there is no means test on income or assets to qualify for the one-off grant.

Below you will find the most recent and relevant eligibility criteria for the FHOG scheme with respect to each state and territory. However, for brevity, New South Wales will be covered in detail, whereas the states and territories that follow will only highlight relevant deviations away from New South Wales.

New South Wales

For eligible transactions made on or after 1 January 2016, the grant amount is up to $10,000 (i.e. the lesser of the consideration actually paid for the eligible transaction or $10,000). Notably, to be eligible to receive the grant:

  • The contract to purchase a new home or build a new home must be on or after 1 January 2016. Owner builder transactions may be eligible if building work has commenced on or after 1 January 2016.
  • The home must be a brand new home. A new home is a home that has not been previously occupied or sold as a place of residence, and includes a substantially renovated home and a home built to replace demolished premises. Furthermore, the type of home must be a fixed dwelling that is suitable for residence, for example, a single dwelling, duplex, flat or townhouse.
  • The total value of the residential property must not exceed the First Home Owner Grant Cap. From 1 July 2017, this is $600,000 for new home purchases and $750,000 for a property where you enter into a contract to build, or are an owner builder.
  • An applicant must be 18 years or over (exemptions may apply), a permanent resident or Australian citizen, and a natural person [not a company or trust (exemptions may apply regarding a trustee for a person with a legal disability)].
    • Where there are joint applicants, at least one applicant must be a permanent resident or Australian citizen, and each applicant must be a natural person.
  • An applicant or their spouse must not have previously received a grant in any state or territory (unless it has subsequently been repaid).
  • An applicant or their spouse must not have held a relevant interest in residential property in Australia:
    • Prior to 1 July 2000; or
    • On or after 1 July 2000, if they resided in the property for a continuous period of 6 months or more.
  • An applicant must occupy the home as their principal place of residence within 12 months of settlement or completion of construction, and for a continuous period of at least 6 months.
  • An applicant must lodge a completed FHOG scheme application and all supporting documents within 12 months of settlement or completion of construction for their new home.

Victoria

For eligible transactions made on or after 1 July 2013, the grant amount is up to $10,000; however, for eligible transactions made on or after 1 July 2017 (and before 1 July 2020), with regards to new homes built in regional Victoria, the grant amount is up to $20,000. Notably, to be eligible to receive the grant:

  • The contract date must be on or after 1 January 2013 [or on or after 1 July 2017 (and before 1 July 2020), as per the abovementioned considerations].
  • The total value of the residential property must not exceed $750,000.
  • An applicant must occupy the home as their principal place of residence within 12 months of settlement or completion of construction, and for a continuous period of at least 12 months.

Queensland        

For eligible transactions made on or after 1 July 2018, the grant amount is up to $15,000. Notably, to be eligible to receive the grant:

  • The contract date must be on or after 1 July 2018.
  • The total value of the residential property must not exceed $750,000.

Western Australia

For eligible transactions made on or after 1 July 2017, the grant amount is up to $10,000. Please note: A $5,000 boost amount was available for eligible transactions made between 1 January and 30 June 2017. Notably, to be eligible to receive the grant:

  • The contract date must be on or after 1 July 2000.
  • The total value of the residential property must not exceed,
    • $750,000, in instances where it’s located south of the 26th parallel (of southern latitude).
    • $1,000,000, in instances where it’s located north of the 26th parallel.

South Australia

For eligible transactions made on or after 1 January 2014, the grant amount is up to $15,000. Notably, to be eligible to receive the grant:

  • The contract date must be on or after 1 January 2014.
  • The total value of the residential property must not exceed $575,000.

Tasmania

For eligible transactions made on or after 1 July 2018 (and before 1 July 2019), the grant amount is up to $20,000. Notably, to be eligible to receive the grant, the contract date must be on or after 1 July 2018 (and before 1 July 2019) – for eligible transactions made on or after 1 July 2019, the grant amount is up to $10,000.

Australian Capital Territory

For eligible transactions made on or after 1 January 2017 (and before 1 July 2019), the grant amount is up to $7,000. Notably, to be eligible to receive the grant:

  • The contract date must be on or after 1 January 2017 (and before 1 July 2019).
  • The total value of the residential property must not exceed $750,000.
  • An applicant must occupy the home as their principal place of residence within 12 months of settlement or completion of construction, and for a continuous period of at least 12 months.

Northern Territory

For eligible transactions made on or after 1 January 2015, the grant amount is up to $26,000. Notably, to be eligible to receive the grant:

  • The contract date must be on or after 1 January 2015.
  • At least one applicant must be 18 years or over (exemptions may apply).

 

Moving forward

Whilst we have provided you with the finer details of the FHOG scheme, and the part it can play with assisting prospective first home owners entire the property market, it’s important to remember to not rush into buying or building your first home. Home ownership will undoubtedly be one of the biggest financial decisions that you will make in your lifetime and as such needs to be carefully considered and planned for.

If you have any questions regarding this article, please do not hesitate to contact us.

*Bankwest. (2017). Bankwest First Time Buyer Report.