Election 2019: who has the best first homebuyer policies?
Say what you will about the major parties, at least they’re actually considering first homebuyers. There are, of course, plenty of reasons to choose one party over another: infrastructure, education, employment and more. But for many of us, the elected party’s policies could have a significant impact on our access to housing.
Let’s take a look at what some of the parties propose ahead of the May 18 election:
On Sunday May 10, just six days out from the election, the Liberal party announced that first homebuyers who’d saved a five per cent deposit could access government support, through the proposed First Home Loan Deposit Scheme. There’s no doubt working towards a five per cent deposit feels more achievable than a 20 per cent deposit. Through the National Housing Finance and Investment corporation, there’ll be $500 million up for grabs for singles earning up to $125,000 and couples earning up to $200,000. Essentially it means borrowers can avoid the cost of lender’s mortgage insurance (LMI).
But keep in mind, lender’s mortgage insurance can be a small percentage of the overall cost of the property that’s built into your loan and there can be tax benefits, too. It’s still possible to get a loan with a five per cent deposit and LMI. So if this policy gets over the line, you’d need to decide whether you’re cool with the government acting as a guarantor or whether you’d rather go it alone.
Some experts argue this scheme could push property prices back up. Apparently, the plan is to cap the number of loans at 10,000 per year though, so not every first homebuyer will get access to the scheme anyway (100,000 first homebuyers secured loans in 2018).
The Coalition intends to retain negative gearing tax breaks for investors, which could also keep investor activity consistent, too. On the other hand, if you’re planning to become a rentvestor, knowing that you have those tax benefits moving forward could also be an incentive to enter the market.
The Labor Government’s plans to reform negative gearing and capital gains taxes could be good news if you’re planning to become an owner-occupier. Labor argues that generous property tax concessions mean that first home buyers are being locked out of the housing market, having to compete with investors looking for their fifth, sixth and seventh homes. If Labor takes the reigns, we would see an end to negative gearing, but those purchased before January 1 2020 would be grandfathered (meaning if you buy your investment before then you still benefit from negative gearing tax breaks).
This could level the playing field for first homebuyers, but if you do plan to buy an investment next year, you’d lose out on the negative gearing incentives.
Labor has said they will also match the Coalition’s first homebuyer housing affordability plans. So no mater which party wins, it looks like there will be new options for those looking to get on the property ladder.
There are some ambitious property policies presented by the Greens. They’re proposing more support for both renters and first homebuyers. Some of their plans include:
Building 500,000 rent-controlled public and community homes
Improving rights for renters including long-terms leases and boosting tenancy advocacy services
Phase out negative gearing and capital gains tax discounts over a five-year period
The Greens say this is achievable because phasing out capital gains and negative gearing breaks will improve revenue and enable the party to fund these projects.
Who should I vote for?
We can’t tell you who to vote for. Housing is just one of the many deciding factors that might contribute to your vote. As far as the property market is concerned, federal policies are just one piece of the puzzle. We’re still facing challenges such as tighter lending and market uncertainty. A change in government won’t solve all of our problems, but new incentives for first homebuyers coupled with price falls in some states could provide more hope.
Happy voting, folks!