First Home Buyer Choice: What you need to know

First Home Buyer Choice: What you need to know

The rate of young first home buyers has declined in New South Wales as buyers take more time to save funds for transfer duties (also known as stamp duty). Despite this, the Australian Bureau of Statistics (2021) indicates a 10-year national 72% capital gain on property prices. These high property prices, coupled with significant transfer duty fees, have contributed to a decline in homeownership across NSW, dropping from 70% in the 1990s to about 64% in 2022. Fortunately, a newly introduced scheme by the NSW State Government will further ease prospective first home buyers into the market.

Receiving assent on 11 November 2022, the Property Tax (First Home Buyer Choice) Act 2022 provides first home buyers with the choice between paying upfront transfer duty or an annual property tax. According to the NSW Government, “The scheme will offer support to about 97 per cent of all first home buyers, or about 55,000 people per year.”

Existing Laws – First Home Buyer Assistance Scheme

The current First Home Buyer Assistance Scheme was introduced on 1 July 2017. These existing laws entitle first home buyers to a concessional rate of transfer duty or an exemption from paying it altogether.

For new and existing homes under $650,000, first home buyers can apply for a full exemption, avoiding any transfer duties. For new and existing homes valued between $650,000 and $800,000, first home buyers can apply for a concessional transfer duty rate dependent upon the value of their home. In addition, when purchasing vacant land, first home buyers will not be required to pay transfer duty when the land is valued at less than $350,000. Where the vacant land is valued between $350,000 to $400,000, first home buyers will receive a concessional rate.

New Laws – Property Tax (First Home Buyer Choice)

The Property Tax (First Home Buyer Choice) Act 2022 will take effect from 16 January 2023 and, therefore, only apply to contracts that are exchanged on, or after, 16 January 2023. During the transitional period of 11 November 2022 to 16 January 2023, eligible first home buyers will still need to pay stamp duty if their purchase transaction settles before 16 January 2023. After this date, they may apply for a refund of the duty.

It is important to note that this scheme acts in addition to existing laws. Some first home buyers in NSW may already pay zero stamp duty or a concessional rate of duty under the First Home Buyer Assistance Scheme. The introduction of First Home Buyer Choice will not impact these stamp duty savings.

Under First Home Buyer Choice, first home buyers in NSW can now elect to pay either an upfront transfer duty prior to the completion of their property purchase, or an annual property tax. This property tax is levied each financial year, starting from the day after the property has been transferred into the buyer’s name at a pro-rata basis.

Eligibility to the First Home Buyer Choice

First Home Buyer Choice is only available on homes (new and existing) priced up to $1,500,000 or vacant land worth up to $800,000. Although there is no income threshold, eligibility to this scheme is determined upon the following requirements:

  1. The buyer must be over 18 years old
  2. The buyer must be an Australian citizen or permanent resident
  3. The buyer (and buyer’s spouse, if applicable) must not have owned any residential properties in Australia as an individual (as opposed to a company or trust)
  4. At least one of the buyers must move into the property within the first 12 months for a continuous period of 6 months.

Different rates for different types of ownership

The amount of property tax payable will be based on the land value of the first home buyers’ home. If the buyer wishes to use the property as an investment rather than owner-occupied (or vice-versa) RevenueNSW must be informed within 3 months of this decision in order to apply the appropriate property tax rate.

The tax rate for owner-occupiers for the 2022-23 and 2023-24 financial year is $400 plus 0.3% of land value. The tax rate for residential investors during the 2022-23 and 2023-24 financial year is $1,500 plus 1.1% of land value. In the following financial years, the tax rate will be indexed in line with average annual incomes, though the maximum increase in any given year is capped at 4%. In short, if the land value rises, so will the property tax.

When the property is sold

Once a buyer opts to pay the annual property tax and settles their purchase, the property will remain subject to the property tax until it is sold or transferred. The buyer cannot change to the stamp duty option after settlement.

When someone who is not eligible for First Home Buyer Choice purchases a property from someone who is paying the property tax under the First Home Buyer Choice, the purchaser will not be subject to property tax, but they will be subject to stamp duty.

Which is the best choice?

Each first home buyer should obtain independent advice from a financial or accounting professional.  It is important that buyers not only consider their current financial position and the national economic outlook, but also how long the buyer intends to keep their property. As opposed to a single upfront transfer duty, annual property tax payments continue to accumulate the longer the buyer owns their property. To further assist first home buyers in making their own comparisons, an online property tax calculator is available through Service NSW.

Contact Us

To ensure you make the right decision and maximise the benefit of the First Home Buyer Choice scheme, it is best to seek professional legal advice. If you would like to discuss your property matter with a legal professional please contact us on (02) 9963 9800 or at [email protected]

Swimming Pool Compliance

Swimming Pool Compliance

If you’re the owner of a property that has a swimming pool, you need to be aware of your obligations in relation to your pool. Personal swimming pools must be compliant with NSW regulations. These regulations and who they apply to are discussed below.

Who must be compliant with these regulations? 

The regulations apply to all swimming pools and spa pools that are capable of being filled with water to a depth greater than 30cm and are used for swimming, wading, paddling or any kind of human aquatic activity.

Every pool owner must register their pool with the New South Wales Government Swimming Pool Register and also must have a compliance certificate from either their local council or a private swimming pool certifier. This is particularly important if a swimming pool owner plans to sell their property, as a certificate of compliance (or non- compliance) must be attached to the contract for sale. A failure to do so can result in a purchaser being able to rescind the contract.

Certificate of Compliance

A certificate of compliance can be issued by either the local council or a private certifier. In granting the certificate, the certifier will consider a number of safety items, such as the fence and enclosure surrounding the swimming pool and the closure on the gate. The objective is to ensure that children do not inadvertently get into the pool area without the intervention of an adult.

Once either the council or the certifier have assessed the swimming pool they will provide you with a certificate of compliance. The certificate of compliance can be attached to a contract for sale and it will remain valid for three years from the date of issue.

Certificate of Non-Compliance

If the local council or a certifier inspects your swimming pool or spa and they determine it is not compliant, they may issue you with a non-compliance certificate. This certificate lists the reasons that the pool does not comply with the regulations and the items that need to be corrected before a certificate of compliance can be issued.

If the pool is deemed a risk to public safety, the swimming pool owner must rectify the non-compliant issues within a certain amount of time.

If the pool is not deemed to be a risk to public safety, the owner must still attend to the issues of non-compliance within a reasonable time period. However, if the pool owner is selling the property and they have not yet rectified the issues of non-compliance, they must attach this certificate of non-compliance to the contract for sale.

The effect of this is that it passes on the obligation to rectify the issues of non-compliance to the purchaser. The purchaser will have ninety days from the date of completion in which to correct the issues raised in the certificate of non-compliance and to receive a certificate of compliance.

If you would like any further information about swimming pool compliance, please contact our friendly solicitors on 9963 9800.

5 Costs to Factor in When Buying a Home

5 Costs to Factor in When Buying a Home

Etheringtons Solicitors Note: In June 2022, the NSW Government announced legislation to reform transfer duty within NSW, moving to an ‘annual property tax’ system. These changes will take place over a number of years. For more information, click here.

If you are currently in the process of buying, looking or saving for a house, there are extra costs beyond the property’s price tag that you need to know about.

1.  Transfer duty (previously known as stamp duty)

When you purchase a property in NSW, you are required to pay transfer duty. This is a tax on property which varies depending on the value of the property. Generally, the more expensive the property you are purchasing, the more transfer duty you will pay. Transfer duty must typically be paid with 30 days of settlement, and may be a big upfront cost. It is important to factor your transfer duty costs into the other upfront costs you will need to make.

Some websites will help you calculate an estimate for what your transfer duty will be, to help you plan.

2.  Pest and building inspections 

Before purchasing property, it is recommended that you have pest and building inspections to determine the property’s condition. These inspections are especially important for older properties which might have long term problems that are not evident in a general inspection. Make sure you appoint a qualified person such as a licensed builder, surveyor or architect.

3.  Mortgage registration

You are required to pay a fee to formally register your mortgage in NSW. This mortgage registration payment is required by the state government to register the security for a home loan. This is important as it allows any potential buyers to check claims against the title of your property.

4.  Loan application or establishment fee

When you take out a home loan, you may be required to pay an establishment fee. However, some lenders will waive this fee, so it is worthwhile to around and see what your options are.

5.  Mortgage insurance

If you are borrowing more than 80% of the property value, you may be required to pay ‘Lenders Mortgage Insurance’ (LMI). The lender’s valuation of the property determines this fee.

Further Information 

It is important that buyers are aware of any additional costs which may be required when purchasing a property. If you have any questions or concerns, we can provide additional information and advice to you regarding your situation. If you would like to discuss your concerns with a legal professional please contact us on (02) 9963 9800 or via our contact form.

Natural Disasters: My home insurer refused to renew my policy

Natural Disasters: My home insurer refused to renew my policy

The 2020 bushfires across Australia had devastating effects on the lives of so many Australians. Many lost homes, treasured possessions or most terribly, a family member or friend.

In the aftermath of this natural disaster, we had clients call us to seek advice on their rights in respect of their home insurance. Some overlooked paying their insurance premium. When they were told to evacuate their homes, they rang their insurer to check that their policy was current and were told that they had not paid the premium and therefore the policy had expired. They asked to pay the premium immediately to renew the policy. However, their insurer refused to renew the policy due to the high risk of bushfires in the area.

Notice Provided by Your Insurer

The Insurance Contracts Act 1984 provides that an insurer must notify an insured customer in writing no later than 14 days before the expiration of their policy stating that their policy will expire if not renewed or negotiated in that time.

It is important to note that if the insurer did not provide this notice, even though you did not renew your policy, the policy is taken to continue as if you had renewed for the period of the original policy. So it is important to check first whether you have received this notice.

Special Circumstances

You might be able to show that there were special circumstances that made it impossible for you to renew your policy. These may include that you were overseas, or severely ill and in hospital.

Seeking Legal Advice

It is important to be fully aware of your insurance renewal date and ensure your insurer is keeping you accurately informed about the status of your policy.

If you would like further information regarding building insurance or general litigation or insurance advice, please do not hesitate to contact one of our experienced litigation solicitors on (02) 9963 9800 or via our contact form.

The team at Etheringtons would also like to extend our heartfelt sympathies to all those affected by the recent bushfires and commend the hard work and sacrifice by the fire fighters.

The Difference Between a Barrister and a Solicitor

The Difference Between a Barrister and a Solicitor

What Is the Difference Between a Barrister and a Solicitor?

Barristers and solicitors are legal professionals who may assist you with legal matters. The difference between a barrister and a solicitor is the type of legal work they do. In general, a barrister specialises in making court appearances and speaking on your behalf. By contrast, a solicitor often does the preparation work before your court appearance and liaises with your barrister to prepare your case. Barristers are formally trained in court advocacy and cross-examining witnesses.

In most cases, a solicitor will look after your case initially. They will then engage a barrister for court advice and appearances. Barristers typically do not liaise directly with clients.

When to Involve a Barrister in Your Matter

Clients often ask at what stage we will involve barristers in their matter. A good way to think about it is that solicitors are like general practitioners and barristers are like specialists. Barristers work in particular areas of law and often speak at court.

Sometimes solicitors will discuss your case with a barrister and ask them to provide a written opinion on the prospects of your case. They might also ask their opinion on a specific issue. If a matter is complex or unusual, barristers might also be involved in the drafting of court documents.

Barrister Costs

Barristers are required to provide you with an estimate of their costs. Their costs agreement and disclosure documents are issued to your solicitor.

Barristers usually charge an hourly rate. They can also charge a daily rate, especially for court attendances or mediation sessions. Some barristers will charge a cancellation fee if a hearing settles or is adjourned.

Choosing a Barrister

You solicitor will choose a barrister based on factors including:

  1. Your financial circumstances;
  2. The type of matter; and
  3. Which barrister they believe is most suitable.

A barrister can be perfectly suited to one type of case but not another.

If you need any legal advice or assistance we are here to help. If you would like to discuss the involvement of a barrister in your legal matter contact us today.

How to Protect Yourself from Being Scammed

How to Protect Yourself from Being Scammed

Every year scams cost Australians millions of dollars. It is crucial that you remain alert so that you are not the target of a scam. In 2019 alone, there were over 353,000 reports of scams. In this blog, recent trends in scam activity and methods to protect yourself from being scammed are outlined.

Business Scams

Business email scams accounted for the highest financial losses in 2019, costing businesses $132 million according to the ACCC’s Targeting Scams report. A common technique scammers use is to intercept legitimate invoices and change the payment details so that the recipient will not realise that they have been scammed.

Scammers may also impersonate staff to request the transfer of funds for purchasing gifts for other colleagues or for other business related expenses.

It is essential for businesses and staff to remain alert and to familiarise themselves with common scams they may encounter. Some businesses may wish to encourage payment confirmations, where consumers speak to someone from the business to confirm that the bank account details they have are correct before making any payments.

Consumer Scams

Consumer scams succeed because they mimic genuine deals and catch consumers off-guard. By taking advantage of new technology, new products or services and major events to create believable stories, it is simpler for scammers to target their audience and capture their money or personal details. Scamwatch has received over 2,000 reports about COVID-19 scams and reported losses of more than $700,000.

Scammers set up fake websites, ads on trusted platforms and false social media accounts in the guise of selling real products. They often ask for upfront payments or an initial deposit, plus additional costs such as administration or transportation. Consumers should not click on any foreign links, make any upfront payments if they have not verified the business, and should be wary of any deals that look ‘too good to be true’.

How to Protect Yourself from Being Scammed

Scams target people of all backgrounds, ages and income levels.

The best way to combat online fraud is to stay one step ahead of scammers by learning how to protect yourself. Here are some tips from Scamwatch to help you remain alert:

  • Be alert to the fact that scams exist. Know with who you are dealing.
  • Do not open suspicious tests, pop-up windows or click on links or attachments in emails.
  • Keep your personal details secure.
  • Choose your passwords carefully.
  • Requests for personal details or money should be red flags.
  • In particular, be alert to law enforcement scams.

Unfortunately, scams are becoming more sophisticated and are often very difficult to trace, so in most cases, the money can never be retrieved. For further assistance on any matter relating to scams or competition and consumer law, please contact one of our experienced solicitors on 02 9963 9800 or via our contact form here.