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Stamp Duty Choice: Which is the better way to pay?

Stamp Duty Choice: Which is the better way to pay?

Jul 4, 2022 | Uncategorized

New South Wales Premier, Dominic Perrottet has revealed that the state will be giving eligible first home buyersd the option of paying stamp duty upfront or an annual property tax (based on the ‘dutiable value’ of the property) from January 16th 2023, but which choice is the right choice?

The answer really depends on your circumstances – and your property may not even be eligible.

This property tax option will be available for properties valued up to $1.5 million. To be eligible, you must move into the property within 12 months of purchase and live in it continuously for a minimum of 6 months.

Under the new scheme, first home buyers who opt for the property tax will pay an annual property tax plus a percentage of the land value of the property.

What will the property tax rates be?

The property tax rates for 2022-23 will be:

  • $400 plus 0.3 percent of land value for properties whose owners live in them;
  • $1,500 plus 1.1 percent of land value for investment properties

These rates will be indexed each year and will rise in line with average incomes.

A property tax calculator will be available after the enactment of legislation and before January 16th 2023 when buyers can opt-in to property tax.

What about first home buyer exemptions?

First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000, with concessions also remaining in place for properties between $650,000 and $800,000.

How do the options compare?

Let’s run through an example.

First home purchase: $1,200,000

Stamp duty on purchase: $50,875

2022-23 property tax: $2,560 – Based on Assessable Duty of $750,000 (ie. land value)

With half of all owner-occupier selling their property within 10 years, not paying stamp duty would help to lower the up-front costs of purchasing a property, however, for an owner who is planning on staying in their property long term, a once-off stamp duty purchase may be a better option – and there would be no need to budget for that yearly repayment.

What is the purpose of the stamp duty scheme?

This new scheme is part of a multi-billion dollar housing package that was announced in the 2022-23 NSW budget, aiming to deliver “quality, accessible and affordable housing” across the state.

The Premier hopes that the option of stamp duty or annual tax would help a broader group to become first home buyers, suggesting that stamp duty adds about two years to the time required to save the up-front costs of the median NSW dwelling (based on  a NSW household with the median income saving 15 per cent of their income).

Looking to purchase your first home?

Get in touch with us to make sure you have everything sorted before heading to that first open home. From purchase prices to pre-approval, we’re here to help make the purchasing process as smooth as possible.

Apartments vs Houses: What should you invest in?

Apartments vs Houses: What should you invest in?

Mar 3, 2022 | Investment Property, Purchase

You’ve decided you’re ready to invest – but the decision process doesn’t stop there.

Houses, units, apartments, townhouses, new builds, existing builds – where should you put your money?

Purchasing any property is a highly considered process. In previous years, houses were considered the best purchase, with apartments and units only really an option for those on a lower budget.

Today, however, this is a thing of the past as the Australian property market continues to thrive, attracting overseas investors, infrastructure evolution and changing living situations.

So what should you invest in?

Deciding whether an apartment or house is the right purchase for you all depends on your budget, strategic goals and the current market.

With any major financial purchase, it’s important to look beyond your personal preference to the overall environment. You need to set your feelings aside and look at the property purchase as a rational financial transaction to ensure you’re spending your money wisely.

By focusing on economic indicators such as auction clearance rates, interest rates and median purchase prices, you can develop a solid strategic plan.

But you shouldn’t do it alone. Seeking professional assistance from real estate agents, mortgage brokers and financial planners is critical as it allows you to properly evaluate this information and apply it to your goals.

What is the best type of property to invest in?

When considering investment opportunities, it’s important to look at the facts. There are three important indicators that need to be considered before purchasing an apartment or house:

  • Economic Factors – understanding key economic drivers such as cash and interest rates, clearance and vacancy rates, demographics and employment figures will help illustrate how the market is currently performing, as well as give you an idea of what may happen in the future.
  • Supply and Demand – how many apartments are on the market currently compared to the number of houses? Which are leasing faster? Are house prices increasing faster than apartments or vice versa? By understanding these factors, as well as any developments in the area, you are able to determine whether there is an oversupply or undersupply in a particular location.
  • Affordability – understanding the affordability of a property will ensure you are not over or under-capitalising on your purchase. Rental yield is also an important factor to consider for the affordability of prospective tenants.

What are the advantages of investing in an apartment?

  • Generally a cheaper purchase price
  • Often located in highly sought-after inner city or beachside locations
  • Strata maintenance assists in the upkeep and maintenance of your property
  • Higher levels of rent relative to the purchase price provides investors with a better yield
  • When investing in apartments, you’re often able to hold more property over the long term due to lower purchase and maintenance costs

What are the advantages of purchasing a house as an investment property?

  • More privacy for tenants – often attracting higher rental prices
  • More scope for renovations when looking to add value quickly, without the need for signoff from strata or body corporate
  • Ownership of appreciating land
  • Can be more resilient to market changes

What are the disadvantages of purchasing an apartment as an investment property?

  • Restrictions on pet ownership can turn away tenants
  • Upgrades and renovations can be restricted
  • Less privacy for tenants
  • Fewer facilities including pools, backyards and outdoor areas

What are the disadvantages of investing in a home?

  • Higher purchase prices
  • Maintenance of grounds including gardens and pools
  • No strata or body corporate to assist with building maintenance or compliance

What type of property is the best to invest in?

Ultimately, there is no clear winner when deciding between houses or apartments. Instead, the key is to assess each opportunity on a case-by-case basis, determining which is the right purchase for you.

Need help deciding? That’s where we come in. To find out more about whether an apartment or home is the right investment for you, contact our team on (02) 9095 6888 or [email protected]

What You Can Expect from the Sydney Housing Market in 2022

What You Can Expect from the Sydney Housing Market in 2022

Jan 18, 2022 | Property Market

It’s no secret that the last few years have been a bit of a rollercoaster.

Housing market booms, interest rates at an all-time low, pandemic induced lockdowns, protests, bushfires, floods, stock market crashes, housing booms – you name it, it feels like we’ve experienced it.

But what can you expect from the housing market in 2022? With prices continuing to climb, many are asking what will happen next. Can we expect an epic fall? Or will prices continue to soar?

Let’s have a look at what’s happened recently and what that means for the new year.

High demand = high property prices

Throughout 2020 and 2021, the property market has been a seller’s market, with buyers battling it out to secure properties.

At the end of 2021, homes were selling across the country with minimal negotiation and homes were selling an average of 23 days early. Auction clearance rates held strong at 70-80% across the major auction markets.

With competition at an all-time high, real estate agents were seeing offers coming in from buyers on the day of listing – often well above the list price in a desperate attempt to secure a property.

On auction day, buyers frantically bid well above the reserve to secure their “dream” property in a seller’s market where the right property was hard to come by.

With demand so high, prices just didn’t seem to stop rising – from the “starter” unit to modest family homes right through to multi-million dollar estates.

Could the property tables be turning?

But all hope is not lost. With December’s housing values increasing by only 1%, economists and property experts are speculating that 2022 could be a buyer’s market.

With a surge in property listings, the pressure is off for buyers whilst vendors cut prices to secure a sale.

What’s causing the property listing surge in Sydney?

In 2020 and 2021 we saw the temporary suspension of open houses and public auctions as states put “lockdown’ restrictions in place. With Omicron now in the picture, many experts are speculating that the potential threat of future lockdowns has convinced vendors to act quickly.

In addition to this, the continuation of the pandemic has forced the hand of many vendors, selling their properties to recoup lost income or to purchase a home that suits their new lifestyle.

What are Australian home buyers doing?

For many buyers, the last two years have been a waiting game. Waiting for the right property. Waiting for the right price

When speaking with local agents as well as our clients, we’re finding that buyers are now “biting the bullet” and getting serious about purchasing after missing out on properties, struggling to find the right property or waiting to see where the market would move.

What about housing affordability and deposits?

When the property market exploded, housing affordability tanked.

For young Australians, the dream of owning a home became harder to achieve with rising prices raising the barrier of entry for young people looking to secure their first home. It’s expected that the results of the most recent census will show that the homeownership rate is at an all-time low.

But it’s not just the property price that’s the problem – it’s the deposit. For many buyers, the home ownership dream is thrown aside because saving for a home deposit seems out of reach.

Luckily, there are options for young Australians looking to purchase their first home. From government grants to incentives from lenders, we’re working with first home buyers to secure their first home (or their tenth!) every day.

But what about interest rates?

With interest rates the lowest they have ever been, it seems everyone wants to know when they will rise – and every expert has their own opinion.

The truth is, even if interested rates rise earlier than expected, it will likely be a gradual process. This gradual rise will continue to support housing demand as the cost of debt is likely to remain well below long-term averages.

Looking to buy or sell property in 2022?

Whether you’re looking to purchase your first property, downsize your home and your mortgage or looking to refinance your loan to avoid paying too much in interest – we’re here to help.

Our team has the experience and skills to help you reach your financial goals in 2022. Get in touch with us today at [email protected]

Thinking about Investing in Property?

Thinking about Investing in Property?

Nov 5, 2021 | Investment Property, Purchase

We’ve got the connections to help

We hear from clients all the time who would love to start investing in property, but just don’t know where to start – and that’s where we bring in the experts.

We’ve been working with the team from Exelero Property Development since 2012 to help our clients find the right investment opportunities for their needs.

About Exelero Property Development

Rebranded in 2021, Exelero Property Development has served the growing need for new property and real estate projects through impressive integrity and a commitment to delivering results with the highest quality standards.

Serving the east coast of Australia growing need for new properties, their experienced team works closely with both investors and landowners in order to deliver results that exceed expectations.

Exelero’s proposed beachside development in sunny Queensland

Exelero’s Property Developments

Starting with house and land packages and then progressing into small townhouse developments right through to multi-level unit developments and luxury beachfront living apartments, Exelero’s property development portfolio is wide and varied as they create opportunities to suit their clients.

All of Exelero’s projects are designed using the latest high-quality materials, with a keen focus on energy efficiency and technology. The Exelero team also know how important style and class is to the consumer, striving to deliver properties that residents and owners can be proud of.

Exelero’s current projects can be found at https://www.exelero.com.au/projects

Wanting to Invest in Property? Want to find out more?

Get in touch with our team for an introduction to Exelero Property Development today.

You can also connect with Exelero directly via their website, Facebook, Instagram and Linked In.

Why the banks won’t give you back your title deeds

Why the banks won’t give you back your title deeds

Sep 15, 2021 | Uncategorized

NSW Government Cancels Certificates of Title – What does that mean for you?

From October 11th, 2021, the NSW Government will no longer be issuing paper Certificates of Title and all existing Certificates of Title will be cancelled as the government transitions conveyancing from paper to digital.

But what does this all mean and how does it affect you?

How will title deed changes affect home owners?

The good news is, not much changes!

As a current property owner, you do not need to do anything as legal ownership details for your property are already in the Torrens Title Register.

This register will continue to be the single source of truth for land ownership in NSW, removing the need for paper certificates of property to settle a property purchase.

When you pay off your mortgage, you will no longer receive a Certificate of Title as you did previously, however, the Torrens Title Register will reflect your ownership of the property.

How will title deed changes affect home buyers?

The process just became a little bit easier. Whilst previously your conveyancer would need to obtain a physical certificate of property to settle your property purchase, it’s now completely digital.

These changes make the process simpler and reduce the risk of settlement delays, errors and fraud in the conveyancing process – however, it does mean that you can no longer act for yourself and will need a lawyer or conveyancer to complete property transactions.

Looking to purchase property?

Whilst now a conveyancer or property lawyer is a necessity, we have always advised our clients to work with a qualified professional when purchasing their property.

If you’re looking to purchase a property, we’re here to help with all of your finance needs and can put you in touch with a number of professional conveyancers and property lawyers who can help you secure your next property.