The Senate has today passed legislation that will enable prospective first home buyers to save for a deposit inside superannuation through the First Home Super Saver Scheme (FHSSS) and reduce pressure on Australians looking to downsize.
Thanks to broad support from the crossbench, the Turnbull Government will now be able to legislate to give first home buyers a significant leg-up towards saving their deposit, which is often the main barrier to getting into the market.
Through the FHSSS, individuals can contribute up to $30,000 (up to $15,000 a year within existing caps) into superannuation. This means an eligible couple could contribute up to $60,000, supercharging their deposit savings. Most first home buyers will be able to accelerate their savings by at least 30 per cent using the Scheme.
The FHSSS provides a much needed tax cut to young Australians saving for their first home. From 1 July 2018, first home buyers will be able to withdraw voluntary superannuation contributions they've made since 1 July 2017, along with a deemed rate of earnings, to help buy their home.
For Australians looking to downsize, from 1 July 2018 when individuals aged 65 and over sell a home they have owned for at least 10 years, they may contribute up to $300,000 from the proceeds into their superannuation accounts (over and above existing contribution restrictions). Both members of a couple may take advantage of this measure, together contributing up to $600,000 from the proceeds of the sale into superannuation. This will encourage Australians, where appropriate, to free up homes that no longer meet their needs for younger growing families.
While the Turnbull Government is delivering on its commitment to reduce pressure on housing affordability for all Australians, Labor has continued to treat the issue like a political football, voting to deny first home buyers a tax cut and downsizers with the benefit of superannuation concessions. Thankfully, Labor was completely isolated in voting against these measures in the Senate.
Labor’s only answers are higher taxes on housing. These housing taxes will just push investors into new residential estates and developments, locking out first home buyers, and drastically hike up rents for the 30 per cent of Australians in the private rental market.
Only the Turnbull Government has a comprehensive plan to tackle the challenges of housing affordability across the entire housing spectrum – from first home buyers, to renters, to those in social and affordable housing and those experiencing homelessness.
This builds on a series of measures to improve housing affordability including just last week, the announcement of key design features of the Government’s National Housing Finance and Investment Corporation, which has been widely welcomed by the sector.