12/01/2023
GREAT NEWS FOR NSW CUSTOMERS
From 16 January 2023, eligible first home buyers in NSW wanting to purchase a property for up to $1,500,000, or land which they intend to build on for up to $800,000, will be able to choose between:
paying transfer duty (previously known as stamp duty) or
an annual property tax under a new government scheme called ‘First Home Buyer Choice’.
First Home Buyer Choice is designed to make home ownership more attainable, faster. The new option to pay an annual property tax, instead of transfer duty, lowers the upfront costs of purchasing a property and is estimated to cut two years off the time needed to save a deposit.
Existing transfer duty exemptions and concessions for first home buyers in NSW will continue to apply for eligible purchases of up to $800,000.
What you need to do
Please ensure you make your customers aware of First Home Buyer Choice and direct them to the NSW Government’s First Home Buyer Choice website, so they can familiarise themselves with the initiative.
Depending on the option your customer chooses, you will also need to follow the relevant instructions below.
If your customer chooses transfer duty:
Proceed with the application as you normally do.
Explain to your customer that any change in their selected option post-approval may mean that their application must be reassessed or that settlement might be delayed or missed. Ask that they notify you as soon as possible about any changes.
Copy and paste the following into your application notes:
Applicant(s) have been made aware of the NSW First Home Buyer Choice initiative.
Applicant(s) have elected to pay an upfront transfer duty and no further expenses have been captured regarding the initiative.
Applicant(s) have been advised that a change of choice post-approval may result in reassessment of their application and delayed or missed settlement. They have been directed to notify me (their broker) of any changes as soon as possible.
If your customer chooses annual property tax:
Ensure your customer has calculated their annual property tax using the First Home Buyer Choice Calculator and provided you with a PDF output of the calculator. If they are unable to complete and/or provide the calculator, you can assist, however we recommend this is on an exceptional basis only. You must then confirm with your customer that they are satisfied with the expenses calculated.
Check that expenses are in line with the property being purchased.
Calculate the monthly figure from the yearly annual property tax expense and include it in the Financial Position tab in ApplyOnline (under the category ‘O/Occ Strata, Body Corp’) and in the NAB Broker Serviceability Calculator (under ‘Strata Fees/Body Corporate Fees’).
Attach the annual property tax calculator output to the application.
Explain to your customer that any change in option post-approval may mean that their application must be reassessed or that settlement might be delayed or missed. Ask that they notify you as soon as possible about any changes.
Copy and paste the following into your application notes:
Applicant(s) have been made aware of the NSW First Home Buyer Choice initiative.
Applicant(s) have elected to pay an annual property tax. The annual property tax expense has been captured under ‘O/Occ Strata, Body Corp’ in the Financial Position tab and the PDF output of the NSW First Home Buyer Choice calculator has been attached to the application.
Applicant(s) have been advised that a change of choice post-approval may result in reassessment of their application and delayed or missed settlement. They have been directed to notify me (their broker) of any changes as soon as possible.
Direct your customer to contact their solicitor or conveyancer to apply for the annual property tax. They will then lodge the application with Revenue NSW on your customer’s behalf.
Please note:
If the exact property isn’t yet known or can’t be found, a comparable property within the area should be used to calculate the annual property tax expense. Once the property address is known, the annual property tax expense/calculator must be updated.
Annual property tax is an additional expense and is not included under GLEE vs. HEM comparison.
Further support
More information can be found on the NSW Government’s First Home Buyer Choice website.
