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The Mortgage & Finance Association of Australia (MFAA) has criticised the Western Australian government’s plan to change the state’s first home owners grant scheme.
The government announced last week that it will reduce the first home owners grant for the purchase of established homes from $7,000 to $3,000, whilst boosting the grant for those looking to build new homes from $7,000 to $10,000, effective September 15, 2013.
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WA's MFAA state president, Marco Meloni, said the changes will punish more than 75 per cent of first home buyers.
“Not all first home buyers can or want to build their own homes and many have already contacted us today with their concerns about being effectively now blocked from buying a home because of the increased costs,” said Mr Meloni.
“The budget move will also kill off the state government’s Keystart lending program for those purchasing established homes, as they will not be able to afford the extra $4,000 toward their purchase.”
Mr Meloni said that while the government reported there would be savings of $24 million, stamp duty revenue would fall as the proposed changes would mean a lower turnover of established properties.
Mr Meloni warned of a knock-on effect as home owners selling to first home buyers usually upgrade to more expensive properties, paying full stamp duty on a higher purchase price.
The proposed changes may lead to fewer second and third home buyers upgrading, therefore decreasing the state government’s stamp duty revenue.
Neither the MFAA nor The Real Estate Institute of WA were consulted about the proposed changes.
