HomeStart upbeat on first home ownership scheme

May 2000

The introduction of the Federal Government's First Home Owners' Scheme grant of $7000 is likely to provide a major kickstart at the lower end of the market in the new financial year, according to HomeStart Finance.

HomeStart's Relationship Marketing Manager, Mr Jeff Tomopoulos, believes the grant, due to come into effect in July, will go a long way to offsetting the impact of the Goods and Services Tax (GST), particularly as the South Australian Government will continue its waiver of stamp duty for means-tested first home buyers.

"I think the First Home Owners' Scheme will have the greatest impact on the lower end of the market as it is likely to have the most substantial effect on home owners looking at homes in the $90,000 bracket," Mr Tomopoulos said.

"Getting $7000 towards the cost of buying a home is very significant to low-income families - we know that the lack of a deposit is the main reason that many of these families are still renting."

However, Mr Tomopoulos warned that at the time of preparing this article, the First Home Owner's Scheme had yet to pass through Federal Parliament so there could still be some changes to the details of the package, effective from July 1.

But it was clear the grant would only apply to contracts to buy or build homes, signed after July 1.

The scheme, which will not be means tested, will only apply to people who intend to live in the homes they build or buy.

Some of the other arrangements, which were likely to apply, covered basic aspects such as Australian citizenship.

"To be eligible for the grant, applicants must be Australian citizens, and neither the applicant or their spouse (or defacto) may have owned a house before."

Mr Tomopoulos said HomeStart would even accept the grant as a part of the deposit required to be eligible for a HomeStart loan package, provided there are no major changes to the legislation.

"All potential first home buyers need do is demonstrate they can save $1 000 over at least three months - if they're Housing Trust tenants they need only save $500 in the same time," he said.

"So if first home buyers, whether couples, or individuals, start saving now, they may be able to get their deposit together in the next few months so that in July when the First Home Owners scheme comes into operation, they may be eligible for a home loan."