Budget boost – what does it mean for home buyers and brokers?

Federal Budget measures to attract more buyers into the property market will benefit brokers and builders, say industry representatives.

The co-founder of property investment advice firm Wealthi, Domenic Nesci (pictured), said the Regional Home Guarantee Scheme, announced by Treasurer Josh Frydenberg on Tuesday during his Budget speech, would give brokers the opportunity to bring forward loans that would normally be written two to three years from now.

The Regional Home Guarantee scheme will provide brokers in regional areas a unique opportunity for Australians wanting to purchase property. It begins on October 01, and will provide 10,000 guaranteed spots to support eligible homebuyers, including non-first home buyers and permanent residents, to purchase or construct a new home in regional areas subject to the passage of enabling legislation.

“First home buyers take between three to six years depending on the state to save their first deposit so the assistance of the government being guarantor for loans of up to 98% will bring forward purchases and give brokers larger loans,” Nesci said.

Read more: Property investment adviser Wealthi adds broker service

Also announced in the Budget, the New Home Guarantee scheme is an incentive to support eligible first home buyers purchase their first property sooner, requiring only a 5% deposit, with the government guaranteeing the remaining 15% and avoiding the need for lenders mortgage insurance.

Nesci said brokers could benefit from this initiative by being the local expert in this space, however, the incentive would put more pressure on the building industry and drive-up build prices in regional markets.

“With an influx of building materials and construction costs to regional areas, the scheme will be effective in bringing buyers to the market but will exacerbate construction costs, adding pressure to an already tight market,” he noted.

Master Builders Australia CEO Denita Wawn said the budget would provide relief for builders, trades, and SMEs hard hit by the increasing cash and cost crunch.

“Temporary relief at the fuel bowser is a big win for the building industry. Builders and tradies who spend billions on fuel each year are reporting that they are being slammed by a 25% to 30% spike in fuel costs in the March quarter,” Wawn said.

She said SMEs in the building industry have welcomed tax deductions announced in Tuesday’s budget.

“Our industry has more SMEs than any other sector in the economy and one of the lowest rates of digital take-up, so it’s great to see the government announcing new tax deductions that will support thousands of mum-and-dad businesses to take up more digital business management solutions,” she noted.

Master Builders of Australia also welcomed the expansion of the home guarantee and regional home guarantee schemes.

“Home ownership, particularly building new homes is a major engine of a strong economy and the expansion of both schemes are going to build on the success of the government’s measures,” Wawn said.

“They will save hundreds of thousands of jobs from being lost and builder and tradie businesses from going under in our industry during COVID.”

Read more: Rising building material costs affects brokers

Australian Small Business and Family Enterprise Ombudsman Bruce Billson said the Budget offered welcome targeted support to Australian small and family businesses to drive employment and economic growth.

“The budget represents a financial and strategic commitment to ensuring small and family businesses are digitally enabled, resilient, and have the support, incentives, skills and training needed to be truly competitive,” Billson said.

Small businesses with annual turnover of less than $50 million will have access to a 20% tax deduction for the cost of external training courses delivered to their employees by Australian registered providers.

“The cost of training staff can be significant, and this tax deduction will support small and family business owners investing in upskilling staff to drive productivity and competitiveness,” Billson said.