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2022 Federal Budget changes to impact First Home Buyers

The 2022 Federal Budget announcement didn’t throw up too many surprises, however, there was certainly some good news for first home buyers.

One major announcement was the continuation and expansion of the New Home Guarantee Scheme.

This scheme was introduced back in 2020 to support eligible first home buyers to purchase their first home sooner.

How does the New Home Guarantee (NHG) Scheme work?

Usually, first home buyers with less than a 20% deposit need to pay lenders mortgage insurance.

Under this scheme, part of an eligible first home buyer’s home loan from a participating lender will be guaranteed by NHFIC.

This is aimed at enabling you to purchase your first home sooner with as little as a 5% deposit.

What is changing?

The government are more than doubling the number of eligible NHG places on offer to 50,000 per annum for the next 3 years.

10,000 of the spots will be reserved for a new regional home guarantee, that will support eligible citizens and permanent residents who have not owned a home for five years to purchase a new home in a regional location with a minimum five per cent deposit.

What type of home can I purchase under this scheme?

  • Newly constructed dwellings
  • Off-the-plan dwellings
  • House and land packages
  • Land and a separate contract to build a new home

The second big announcement was confirmed changes to the First Home Super Saver Scheme (FHSSS) which was also introduced to combat housing affordability for first home buyers.

How does the First Home Super Saver Scheme (FHSSS) work?

The FHSSS lets first home buyers build a deposit inside their super, giving them a tax cut and boosting the savings they can put towards a deposit.

What is changing?

From July 1, the maximum amount of voluntary contributions that can be released under the FHSSS will be increased from $30,000 to $50,000.

We are here to help with all your lending needs

If you are looking to reassess how much you can borrow to purchase your first home after these announcements, please reach out to Loreen at First Things First.

Loreen has access to over 40 different lenders and can quickly ascertain your borrowing capacity and who the best lender is to suit your circumstances.

Investing In Brisbane Property – Market Update

The question on everyone’s mind though, will this strong performance continue over the next 12 months and beyond?

Certainly the challenges surrounding COVID-19 haven’t really impacted property transactions, with more buyers moving to Brisbane for the lockdown-free lifestyle.

Brisbane property:

increased 0.6% over the last week;
increased 1.8% over the month of September, and
19.87% over the last year

And even though restrictions are beginning to ease in NSW and VIC, we believe there is still plenty of growth left, due to Brisbane property being considerably more affordable when compared to the other east coast capital cities.

With international travel set to resume soon, jobs on the rise and substantial infrastructure spending in place as the city looks ahead to the Olympic games in 2032, the future looks bright indeed.

Economic Benefit Olympic Games 3032

A recent report prepared by Urbis highlighted the key pipeline of opportunities that will provide economic and social benefits for Brisbane, Queensland and Australia.

The resurgence of buyer interest in the Brisbane property market has meant that auction clearance rates have consistently been in the 70% range, which is unusual as the city is not typically known for its auction culture.

This is certainly an indication that there are more buyers than there are sellers and this always leads to higher property prices.

Finding value in a surging market is the real challenge for buyers right now, particularly when we talk with clients about houses and townhouses across the city.

We believe good quality owner occupier driven apartments in lifestyle rich locations near Olympic facilities and new infrastructure will perform well in the long term.

There is no doubt the Brisbane market will also face strong medium- term rental pressures over the next 3-5 years as demand continues and little new rental supply is added.

Would you like to schedule a chat with a Property Investment Adviser at The Hopkins Group to understand if Brisbane is where you should be investing in your next property?

If the answer is yes, please complete the form via the link below and we will be in touch. Alternatively, you can call our office on 1300 726 082 and ask for Stephen Phillips.

Interview with Brad Carlin Smith

Talk Investment with Mark Wenzel speaks to Brad Carlin Smith from The Hopkins Group about property.  We discuss:

  • Melbourne Property market
  • How to buy property in a red hot market
  • Why a buyers advocate might be your best investment
  • Is now a good time to buy in unloved area’s and what those area’s are?
  • Why property will continue to be an attractive wealth accumulation medium.

A must listen to episode from another expert from The Hopkins Group.

Compound your wisdom!

 

 

Latest incentives for property buyers ripe with opportunity

Governments generally don’t like economic decline. When spending is down, they’ll usually do whatever they can to get people buying again. With 2020 being what it was across the world, we saw this effect in action with both federal and state governments in Australia putting a lot of focus on stimulating the economy and incentivising us to spend big in areas such as property and construction.

And why wouldn’t they? There’s no denying property is a big part of our culture in Australia. We love talking about it, buying it, building it, flipping it. It’s also a huge part of our economy. In fact residential building activity totalled $72.2 billion over the year to June 2020 alone and it’s also a significant segment of our employment sector, with 1.18 million Australians directly employed in the construction industry (which is equivalent to almost 1 in 10 jobs across the economy).

From the introduction and extension of the HomeBuilder Grant to state based incentives like the land transfer duty waiver in Victoria, we’re being incentivised to buy property like never before (and likely won’t ever be again, in our lifetimes at least). These new incentives paired with the fact that interest rates are so low right now (and will be until at least until 2023) means if you’ve been considering property, there’s really no time like the present to take action.

It’s not just hyperbole – the window of opportunity is actually closing on some of the incentives on offer at the moment, so let’s break down what’s out there and why you need to do something sooner rather than later if you plan on taking maximum advantage.

Land transfer duty (aka stamp duty) waiver

As part of the Victorian State Budget announced in late 2020, a special land transfer (duty) waiver was announced for Victorian residential property with a dutiable value of up to $1 million. This means:

  • For new residential properties, a 50% land transfer duty waiver of the duty otherwise payable applies.
  • For existing residential properties, a 25% land transfer duty waiver of the duty otherwise payable applies.
  • For vacant residential land, a 25% land transfer duty waiver of the duty otherwise payable applies.

It’s also worth noting that this waiver applies after all other benefits available on property purchases in Victoria (such as the first home buyer duty concession and principal place of residence concession) but does not apply to the additional foreign purchaser duty. This is great news if you’re looking to increase your stamp duty savings (we’re looking at you, first home buyers purchasing property between $600,000 and $750,000!)

All residential property purchases in Victoria with contracts signed on or after 25 November and before July 2021, with a dutiable value of $1 million or less are eligible for this duty waiver regardless of whether the property is intended as an investment or your principal place of residence. It just can’t be a transfer that obtains the commercial and industrial land concession, a gift, or with a dutiable value of greater than $1 million.

Key takeaway: Whether you’re an investor, owner-occupier or first home buyer looking to purchase a property in Victoria with a dutiable value of $1 million or less, you have until 30 June to save up to 50% of your stamp duty costs (sometimes even more, after other concessions are applied).

HomeBuilder

Taking a step up to the national level, just as the curtains were about to draw a close on the popular HomeBuilder Grant, the Federal Government announced a last-minute extension to the program (albeit with a few tweaks).

For those who missed the news at the time, HomeBuilder was designed to provide eligible owner-occupiers (including first home buyers) with a grant to build a new home or substantially renovate an existing one. Originally, the grant provided a $25,000 boost for those who got in before the December 2020 deadline on qualifying property transactions.

With the new extension, qualifying owner-occupier property purchases will be able to access a revised $15,000 grant for appropriate building contracts signed between 1 January 2021 and 31 March 2021, inclusive. Also extended is the deadline for all applications to be submitted – you now have until 14 April 2021 inclusive to apply for the grant. This deadline extension also applies retrospectively to those who may have qualified for $25,000 grant last year but may not submitted their application in time. Other changes include:

  • An extension to the construction commencement timeframe from three months to six months for all HomeBuilder applicants. This will apply to all eligible contracts signed on or after 4 June 2020.
  • An increase to the property price cap for new build contracts in New South Wales and Victoria to $950,000 and $850,000, respectively, where the contract is signed between 1 January 2021 and 31 March 2021, inclusive.
    • The existing new build property price cap of $750,000 will continue to apply in all other States and Territories.
  • A change in licensing requirements and registration for builders, as below:
    • Where an eligible contract is signed on or after 29 November 2020, the builder must have a valid licence or registration before 29 November 2020.
    • Where an eligible contract is signed before 29 November 2020, the builder must have a valid licence or registration before 4 June 2020.

Aside from these changes, existing program criteria apply.

What is the demand for Rooming Houses in Victoria?

The rooming house landscape across both metropolitan and regional Victoria is a competitive one for both investors and tenants, and in this article we wanted to delve deeper and investigate why this is.

What do Rooming Houses offer today?

Since the early 2000s, a model of profitable private rooming houses has emerged to challenge the often more expensive residential rental market and offer an alternative for investors tired of purchasing negatively geared property.

How many Rooming Houses do we have in Victoria?

In 2020 the state recorded more than 1400 rooming house locations registered with Consumer Affairs which might sound like a lot, but is it really?

According to the 2016 Census this figure makes up only 0.05% of all homes, so it is safe to say owning one would certainly put you in a very exclusive group of investors.

Why invest in Rooming Houses vs other residential dwellings?

The biggest stand-out benefit to investing in a rooming house development is the high rental yield and securing a cash-flow positive property practically from day one.

The high rental return and associated operational requirements are the main reasons why this investment works very differently to a standard residential apartment or a house.

Owners like that if one tenant moves out, they still have four or more residents paying rent to ensure their investment costs continue to be covered.

Also, while a rooming house will cost a little bit more than a standard house in its respective suburb, they are substantially cheaper than purchasing eight or nine apartments to achieve an equivalent rental return.

What is the demand for tenancy?

According to the latest census data, 2.3 million Australians are living in a single-person household – that is 1 in every 4 people.

The problem is only 5% of dwellings in this country have 1 bedroom only – so many are forced to share accommodation with others or stay at home with mum and dad to save money.

Rooming houses satisfy this segment of the market by providing a secure and private single person dwelling – often with a private bathroom and important shared facilities for a more affordable rate.

Achieving independence is a significant milestone for the younger generation today, especially as over 50% of 18 to 29 year olds are still living at home.

A rooming house will typically be cheaper to rent then a standard one-bedroom house/apartment but still provides the freedom they desire.

Now let’s look at the numbers in Victoria

In 2016 there were 521,828 people living in single person households.

However, there were only 107,356 one-bedroom dwellings recorded in the census.

These figures already give you an indication of the supply demand challenge.

Here are some rental figures we have pulled from some of the most popular suburbs across Melbourne.

The average rental return for a one-bedroom residence as of 20 September 2020 – this is while Victoria is in stage 4 lockdown so we can expect a slight increase to these numbers.

Fitzroy – $430pw

Melbourne CBD – $400pw

Richmond – $400pw

South Yarra – $390pw

Rooming House – $200pw to $300pw

Location and whether the rooming house property is self-contained or provides shared facilities impacts the rental amount and these rental agreements often include all utilities.

A rooming house investment will typically return between $2000pw and $2500pw in rent depending on the location and number of bedrooms. In a recent survey we conducted the average number of bedrooms in a rooming house was 8.

(Source: ABS Statistics)

Conclusion and how to get started

There is no doubt demand for single occupancy living is high and will continue to be strong long into the future. Having to pay more to live in a larger property with 2-3 bedrooms and sharing is certainly not a long-term ambition for many.

It only takes a couple of quick searches on popular websites like Gumtree and Flatmates to determine the rental market is competitive, costly and lacking single occupancy opportunities.

If you want to discuss your property investment strategy in more detail and determine if a rooming house development should be on your radar, please do not hesitate to get in touch with The Hopkins Group

Our industry leading rooming house management service is led by a team of expert property professionals, who take great pride in maintaining high service standards and achieving outstanding results for clients.

If you have any questions whatsoever regarding rooming houses you can contact our office on 1300 726 082 or email info@thehopkinsgroup.com.au.

The latest on Melbourne’s property market

In Melbourne, 124 homes were scheduled for auction this week, down from 223 over the previous week and 545 this time last year.

With stage 4 restrictions in place until 14 September, open homes, private inspections and on-site auctions have ceased.

This has had a major impact on the number of auctions scheduled across Melbourne as the city continues to experience a decrease in sales throughout the lockdown period.

We expect this downward trend to continue for the next 3-4 weeks while buyers are limited to either making an offer sight unseen or via an online auction.

Interestingly the property withdrawal rate has been much lower relative to the previous lockdown period in April and early May this year.

The preliminary data collected indicates 31% of Melbourne auctions were withdrawn from the market this week, compared with a peak of 65% through the second week of April.

Of the 64 Melbourne auction results collected so far, 60.2% were successful, although this will be revised lower as the remaining auction results are collected.

Last week saw a final clearance rate of 60.8% recorded across the city, while this time last year, 69.3% of Melbourne auctions were successful.

Realestate.com.au reported that there were also 883 private sales in Melbourne this week, significantly fewer than the number sold last week (1,254) and the 1,262 properties sold by private treaty the week before.

What does the future hold?

It’s the silver lining to the COVID-19 recession for those fortunate enough to still have a job, who already own a home or are looking to purchase in the coming months.

Low interest rates are here to stay for the next 2-3 years based on reports from the RBA Governor Philip Lowe, leading economists and comments from Prime Minister Scott Morrison.

We also expect to see some great opportunities for investors and first home buyers ready to take advantage of prices either falling or remaining stagnant across the state.

Access to the new HomeBuilder grant is projected to stimulate the market with $25,000 available to anyone securing a house and land package or substantially renovating their existing home.

If you would like to confirm if you are eligible for any government grants please speak with a representative from The Hopkins Group.

Downward pressure on Melbourne rents

Asking rents in Melbourne have continued to soften, even though there’s been no further apparent increase in the vacancy rates this month.

Inner suburbs like Melbourne CBD, Southbank and Docklands have experienced some of the biggest falls in rent this quarter.

We think this is due to the increase in rental supply now owners are forced to search for tenants in the absence of overseas travellers.

Our property management team are stressing to clients the importance of caring for and maintaining your investment portfolio during this time as tenants won’t have to look far for a comfortable and affordable home.

The availability of online 3D tours is also proving to be a valuable asset for owners during these periods of isolation and social distancing.

Click this link to view a 3D property tour we recently shot for one of our clients in Ascot Vale.

This technology allows the user to view every corner of the property online from the comfort of their own home.

Why property investors shouldn’t be deterred from investing in Melbourne

Before coronavirus hit our markets, Melbourne property prices were surging with dwelling values up 12% on the previous year.

However, housing values in Melbourne moved through the fourth month of decline, racking up a cumulative 3.5% decline between the recent March peak and the end of July.

We believe this small and steady fall is no need for alarm as COVID-19 restrictions were almost certain to halt the markets progress.

The city’s housing market conditions have been weaker than Sydney and Brisbane, which we attribute to the states extended period in isolation.

Our lack of exposure to overseas migration and foreign students as a source of demand has also had a significant impact on recent figures.

Despite these weak conditions, buyer activity has improved over the past three months, after-sales fell by around 41% in April.

If Melbourne emerges from lockdown in 3-4 weeks’ time and cases continue to fall to similar levels in NSW, we expect a dramatic increase in activity and a similar resurgence to Sydney’s housing market.

Let’s talk property investment

So how is your property portfolio performing?

What are your short and long-term property investment goals?

Will your direction enable you to achieve the financial success and choices you’re looking for?

How are you assessing your investments’ performance?

The Hopkins Group property investment advisory team would love to help you answer these questions in an obligation free video meeting or phone call.

Melbourne’s population was forecast to increase by around 10% in the next 4 years and will remain one of the most liveable cities in the world when we get through to the other side of this pandemic.

If you’d like to talk about your circumstances and how we can help you discover sound investment properties across Melbourne please contact The Hopkins Group on 1300 726 082 or email info@thehopkinsgroup.com.au.

Important Update – Still here, albeit from afar

You will have seen the news, read the headlines, been inundated with emails – Melbourne has now entered stage four restrictions as we try to claw back some control over the dreaded coronavirus.

As a result of these new restrictions, businesses around Melbourne must shut their doors for at least the next six weeks – and our business is no exception.

However, despite having to close our doors at Level 23, 500 Collins Street – our virtual doors are always open as our team continues to work from home and provide support to our clients remotely. Your financial planner, accountant, mortgage & finance, property management, property investment, and property sales advisers are standing by, ready to help in any way we can.

We could go on and on, but we’ll keep this brief. We’re here for you now as we always have been, committed to providing you support and the high level of service you’re used to, when you need it most.

Whether it’s a chat on the phone or a virtual “face-to-face” meeting via the wonders of Microsoft Teams video calling technology, The Hopkins Group team is always here for you – even when we must be physically apart.

Keep strong,

The Hopkins Group

A beginners guide to rooming houses

Rooming houses are increasingly becoming an attractive option among property investors, looking for a new way to grow their property portfolios and maximise their rental returns. In this blog, we break down the basics for a beginners guide to rooming houses.

What is a rooming house?

A rooming house is a building where one or more rooms is available for rent, and the total number of people who may occupy those rooms is four or more. In most rooming houses residents may also share bathrooms, kitchens, laundries and other common areas. In more modern rooming house arrangements, individual rooms will be set up as mini studios, to give residents a comfortable sized private space adjoining the shared facilities.

Often, separate rental agreements may exist for each of the residents in a rooming house, however this isn’t always the case. Sometimes rooming house rooms may be offered for short stays, or may be shared under a ‘shared room right’ agreement. This is more common in crisis accommodation rooming house set ups.

How does a rooming house differ from social housing?

While some social housing takes the form of rooming houses, not all rooming houses are not-for-profit, public owned, or community run.

Many are privately owned investments, with the intention of bringing in profitable rental returns.

Why would someone invest in a rooming house?

In 2015, there were 1,146 registered rooming houses in Victoria and as of 30 June 2020, there are now more than 1,356 registered. While these numbers seem low in the pool of traditional rental properties out on the market, they’re no less a significant property category, as they offer an affordable housing option for lower income earners, students, and even retirees, while still affording investors solid returns.

In a traditional rental property, rents are set for the property as a whole, and compete with other similar properties of the same size and location.

Rooming houses on the other hand, allow investors to set rents per room, which usually means you can maximise your rental potential for the property, collecting a higher rental return than a similar sized, traditional rental property would afford.

There’s also often the benefit of reduced vacancy in these properties. With more than one room available for rent, when someone moves out, you’re still collecting rents from other rooms meaning you’re not experiencing the same costs of vacancy you would be on a traditional rental.

Additionally, because rooming houses are often built on standard residential plots, your land costs are about the same as they would be investing in a typical house, but with the benefits of a higher rental yield. In some cases, rooming houses may also even be exempt from land tax (conditions apply, see the Victorian State Revenue Office’s webpage for more details).

What are some of the rules and regulations around managing a rooming house?

In Victoria, rooming house operators must comply with minimum standards set out in the Residential Tenancies (Rooming House Standards) Regulations 2012. These standards relate to privacy, security, safety and amenity in rooming houses. The minimum standards apply to a rooming house and its rooms, irrespective of whether the resident is on a rooming house agreement or individual tenancy agreement. More information on these standards can be found on the Consumer Affairs Victoria website. For residents of a rooming house on an individual tenancy agreement, the laws governed by the Victorian Residential Tenancies Act 1997 will also apply.

Rooming house operators must also be registered, both with local councils and with the Business Licensing Authority (as per the rooming house operators licencing scheme established in the Rooming House Operators Act 2016). As a rooming house operator, you are essentially running a business, so there are fees associated with setting this up and registering as an operator. Each council also has their own requirements, so it’s best you do your research before investing in the construction/renovation of a rooming house project.

If you are looking to start a rooming house project from scratch, or invest in one that is already established, The Hopkins Group can recommend a number of contacts in this space who are well versed in the ins and outs of this type of investment. Please speak to us if this is something you are considering.

The Hopkins Group’s rooming house expertise

In addition to managing standard residential tenancies, The Hopkins Group has a dedicated team of rooming house experts on board to negotiate the challenges and compliance needs of managing multiple tenancies in a single dwelling.

Our specialised rooming house property management service encompasses all services included for our standard residential properties plus regular maintenance, record keeping of essential safety measures as required by the occupancy permit, and ongoing cleaning of common areas.

All this is done while adhering to the minimum standards as a rooming house operator.

Ready to talk rooming houses? Contact The Hopkins Group’s team today!

June 2020 Property Market Update

Will you benefit from the new HomeBuilder grant?

Last week, the government announced a new HomeBuilder grant to inject more life into the residential construction market across Australia.

So how much is this grant?

The HomeBuilder grant is a $25,000 time-limited program to home owner-occupiers who are either building a home or substantially renovating one.

This grant applies if you are buying a new home worth no more than $750,000, or renovating your current home for between $150,000 and $750,000.

How long is the scheme running for?

The HomeBuilder grant will be available for building contracts signed between June 4 and December 31, 2020, and where construction or renovation starts within three months of the contract date.

What’s the catch?

This scheme has a number of specific caveats. The key one is that the construction price of the new home must be between $150,000 and $750,000.

There’s also the time limit which basically restricts eligibility to within the next nine months so you will need to move quickly.

What next?

To find out more about the HomeBuilder grant, learn more about the eligibility criteria or understand if this scheme could suit your financial circumstances, get in touch with us today.

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