HOME LOANS

News, info and tips to help you save smarter

NSW considers pay-as-you-go stamp duty plan

About this post

First home buyers in New South Wales could be allowed to pay off their stamp duty over several years under a proposed scheme designed to kick-start the property market.

The Real Estate Institute of NSW's (REINSW) pay-as-you-go plan would see buyers pay off their tax bill over three years.  The group says the government would be "protected", with stamp duty guaranteed against the property in the same way as unpaid land tax.

The proposal comes at a time when state and federal governments are busily reducing the amount of cash support being given to first home buyers, either by reducing grants or limiting stamp duty concessions.

In NSW first-time buyers now only have the benefit of the original $7000 federally-supplied First Home Owners grant when buying a pre-existing property.

State treasurer Mike Baird said a pay-as-you-go stamp duty scheme for first home buyers was "an interesting idea" that was being considered by the government.

First home buyers still absent

Despite an increase in first-home-buyer activity in recent months, first home buyers largely vacated the field in the past two years, according to RateCity chief executive Damian Smith.

"Just 7800 first-time buyers entered the property market on average per month last year," he said.

"In 2008-09 there were over 172,000 first home buyers in Australia. In 2010-11 there were around 90,000 – a fall of over 80,000 buyers, or over $24 billion of borrowing."

A slow home loan market means lenders are hungry for more business and many are still willing to negotiate on rates and fees, according to Smith.

"Despite rising funding costs, the biggest single issue for lenders is a slow market; they desperately need to kick-start lending. That's good news for first home buyers, but only those with solid deposits, a good track record of savings and the knowledge and tools to shop around."

But prospective buyers are being urged to do the sums before rushing into the market.

Aussie Home Loans' John Symond said: "I think you've got to be careful. Young, inexperienced buyers can easily get over their heads".

This is an information service. By browsing on the website and/or using our search tools, you are asking RateCity to provide you with information about products from multiple financial institutions. We will try to show you a range of products in response to your request for information. The search results do not include all providers and may not compare all features relevant to you, for further details refer to our FSCG. The rating shown is only one factor to take into account when considering these products. See the rating methodology. We not a credit provider, and in giving you product information we are not making any suggestion or recommendation to you about a particular credit product. If you decide to apply for a product, you will deal directly with a financial institution, and not with RateCity. Rates and product information should be confirmed with the relevant financial institution, and you should review the PDS before you decide to purchase. See our terms of use for further details. This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.