What the 2018 federal budget means for homeowners

2018 Budget Explained

While first home owners were the big winners in last year’s federal budget as the Government moved to boost support among the younger population, this year the Coalition has older voters in its sights. There was nought mention of first home owners this year, with Federal Treasurer Scott Morrison instead introducing a few new measures that will affect older Australians who own their homes – and vacant land owners, who now face a ban on expense claims. What the? First homebuyers missed out in this year’s budget.Looking beyond the immediate winners and losers, extensive investment in roads and infrastructure – particularly in regional areas – is also likely to impact the housing market by providing regional areas with better access to major cities and therefore boosting the appeal for families living farther away from major metropolitan districts. Property investors should also take note of areas surrounding the new airport at Badgerys Creek in Western Sydney, where housing prices are likely to increase over the coming years.

Investment in roads and infrastructure likely to impact regional housing market

The 2018 budget includes investment in new major rail and public transport infrastructure, which UNO Home Loans founder and CEO Vincent Turner says could drastically impact housing trends across the country. The $50 million committed to a business case for the Western Sydney Airport North-South Rail Link, which will connect St Mary’s station in Sydney to the new Western Sydney airport at Badgerys Creek, is of particular significance, he says. The new Western Sydney airport at Badgerys Creek could boost property prices for local residents. It’s the vibe of the thing…“What you’ll find is that the land and housing around those areas – in places like Badgerys Creek, Luddenham, Rossmore and Bringelly – are likely to go up in value,” he says. “This could be great news for homeowners in those areas, as well as investors looking for the next hot spot in which to purchase.”

  1. Turner says interested buyers and investors would be smart to consider the services of a buyer’s agent to help with sourcing and securing property. Read: How Buyer’s Agents Can Tilt the Odds in Your FavourOther investments in infrastructure include the Government’s allocated $400 million to duplicating a section of the Port Botany Rail Line and $300 million set aside for the Brisbane Metro project would provide more public transport services between Eight Mile Plains and the Roma Street Busway and between the Royal Brisbane and Women’s Hospital and the University of Queensland. The minister for regional development, territories and local government, John McVeigh, said congestion cost the national economy more than $16 billion in 2015 and that commuters are sick of being stuck in traffic rather than spending time with their families. “The Government is hellbent on busting congestion but the offshoot of all this investment will be the access regional communities will have to city hubs and major institutions like hospitals and universities,” says Turner. “What that means is access to more jobs for people living outside the CBD and ease of access for those workers living in regional areas. This will greatly widen the urban sprawl, meaning more affordable housing options for workers outside city areas.”

The government-funded Pensions Loans Scheme

Seniors have more to sing and dance about than young people, with $1.6 billion over four years put towards enabling elderly people to stay in their homes.The 2018 budget allocates $1.6 billion over four years for 14,000 elderly people to stay in their homes rather than nursing homes. “Just because you’re getting older does not mean you should surrender your dignity or your choices,” Treasurer Scott Morrison said. While most of the funding has been allocated towards home care packages, including mental health services in residential aged care facilities, a Government loans scheme to allow older people to borrow against the equity in their home has also been extended. Treasury figures show the proportion of Australians living longer is increasing: in 1974-75 Australians aged 85 or older made up 1% of the population; by 2054-55 it’s expected to climb to 4.9%. The government-funded Pensions Loans Scheme, dubbed The More Choices for a Longer Life Package, enables homeowners to borrow up to $11,799 for singles, and $17,800 for couples, in home equity each year (allocated in fortnightly pay packets). “The Pensions Loans Scheme will be opened to all older Australians, including full-rate pensioners and self-funded retirees, so they can boost their retirement income by up to $17,800 for a couple, without impacting on their eligibility for the pension or other benefits,” the Treasurer told Parliament.

  • The debt will attract a compounding interest rate of 5.25% until the loan is repaid – usually when the senior moves into an aged care facility and sells the house, or dies, in which case the debt is taken from the estate. This interest rate compares favourably with most commercial reverse mortgage interest rates which stand around 6%. “Many older Australians have their wealth tied up in property and little cash coming from anywhere else,” said Turner, adding it was great news for elderly, cash-poor Australians. “It means that a retired 70-year-old who lives til the age of 90, can effectively access $235,980 over 20 years to improve their quality of life and help pay for necessities such as their health and medical fees, food and general living expenses.” But Turner added that, while a win for the aging population, the scheme was unlikely to free up housing for future generations as it encouraged seniors to hold onto their family homes for longer. This in turn may impact younger people accessing the family home and/or equity from their parents to buy their own home. “This is where guarantor loans might become a more favourable and necessary option for many young people trying to crack the property market,” says Turner.
  • Guarantor loans provide a way for homebuyers to buy property with a small deposit – or no deposit at all. A guarantor is someone with an existing property who is legally responsible for paying back the entire loan if the borrower cannot or will not make the loan repayments. They will also have to pay any fees, charges and interest. A parent may act as a guarantor to first-time buyers seeking help getting a home loan. Read: Can I get a home loan without a deposit?To learn more about no deposit home loans and whether they’re right for you, book a call with our customer care team or start an online application at https://unohomeloans.com.au/find-me-a-home-loan/ where you can speak to a UNO adviser about your options.

Changes for vacant land owners

The government is penalising property developers who hold onto land for years and do nothing with it.In one of the few property-related measures announced in this year’s federal budget, Federal Treasurer Scott Morrison announced a provision that will deny deductions for expenses associated with holding vacant land. The change, targeting property developers, is set to add $50 million to the budget’s bottom line. Where previously if you purchased vacant land with the intent to build an investment property, you may have been able to claim tax deductions for expenses such as loan interest, council rates and other ongoing holding costs, the Government has now introduced a ban, effective July 1, 2019, clamping down on such claims. “This is an integrity measure to address concerns that deductions are being improperly claimed for expenses, such as interest costs … where the land is not genuinely held for the purpose of earning assessable income,” the budget papers say. “It will also reduce tax incentives for land banking, which deny the use of land for housing or other developments.” The move allegedly follows multiple instances involving property owners who have claimed expenses such as council rates and maintenance costs for vacant land in their tax returns, as well as claiming deductions on land that is not tagged for income generation. “The government is effectively penalising property developers who hold onto land for years and do nothing with it – who intend to make a profit by selling it in the future,” said Turner. “It’s actually good news for home buyers as with more land freed up in the future, that’s more housing for people who need it and in turn that might bring property prices down.” The ban will commence on July 1, 2019 so current vacant land holders have until then to decide what to do with their land. If you are interested in discussing investment loans, guarantor loans or are interested in finding a home loan or refinancing your current loan to get a better deal, or start an online at Book in a call with UNO

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles

TESTIMONIALS

What our customers are saying

Sam Rezai
October 2, 2024
I have gone through 6 different mortgage brokers prior to meeting Andrew Wyers. He is the most patient mortgage broker I’ve encountered and also the most knowledgable about the bank’s lending process and products available. It took me 1 year to find a house I was happy with and Andrew was always there to assist with any issues or questions I had; he always return my phone call, even on the weekends or when his away on holidays. The loan process was smooth and I had no complications. The process with Andrew was again nice and easy, he took the time to find and put together the right package that was suited to my situation. I have recommended Andrew to my family & friends and everyone have been grateful and completely satisfied with his service.
Read more
S Wilko
September 23, 2024
I had not dealt with Scott or UNO before finding them on the internet. Even as an Australian citizen living and working overseas, I knew obtaining a loan would be difficult. However, Scott went above and beyond what I expected from a mortgage broker. I genuinely don’t think you could find another company that works as hard as they did to get my home loan approved. I cannot recommend them highly enough. Everyone I dealt with at UNO were extremely professional and helpful. If you are looking for a broker, you would be mad not to give them a go. Thanks to Scott Wilkinson, Dalby Bajwa, Jena Lasquite and Andrew Pacini. Shaun.
Read more
Shan Liao
September 3, 2024
I had an outstanding experience with Tian Liu. He was incredibly professional and attentive, going above and beyond to meet my needs. His expertise and dedication made the entire process smooth and stress-free. Tian's deep knowledge of the market and commitment to finding the best solutions for his clients truly sets him apart. He was always available to answer my questions and provided invaluable guidance throughout. I highly recommend Tian Liu to anyone in need of a reliable and skilled broker!"
Read more
Nathanael Chin
September 3, 2024
Tian Liu provided exceptional service throughout the entire process. His professionalism and keen attention to detail were evident from the start. Tian consistently kept us informed and offered insightful advice that made us feel confident in our decisions. He truly cares about his clients and works tirelessly to ensure the best possible outcome. We couldn't be happier with his assistance and highly recommend Tian to anyone looking for a trustworthy and knowledgeable broker.
Read more
Patrick Winters
August 14, 2024
For the past three years, it has been an absolute pleasure to work with Mike Parsons. He has consistently helped us navigate commercial property loans with skill and efficiency. Mike’s timely and professional responses to our inquiries have been invaluable. We have built a strong, reliable relationship with him and eagerly anticipate continuing our collaboration in the future. We highly recommend his services.
Read more
Lee Robibaro
August 6, 2024
I am so thankful and grateful to have Scott Wilkinson as my broker. He not only looked after me every step from start to finish he gave me confidence and I was able to trust him and his expertise. My children and I are now happy in our new home and very appreciative of Scott's help. I will definitely be only having Scott as my broker from here onward as there is no mucking around and straightforward answers. Thanks again
Read more
Steve Mav
August 6, 2024
Scott and the whole team at uno have been amazing. Super responsive and helped us achieve a result that we couldn’t have possibly achieved on our own.
Read more
Thien Pham
August 5, 2024
Scott, Dalby and Jena were awesome to work with for my recent Home Loan, they are responsive and knowledgeable - which helped ensure a smooth purchase from pre-approvals to settlement. This is the second property I've purchased with UNO as my mortgage broker and would definitely recommend their services. Thanks again to the UNO Team for the awesome support.
Read more
Scott Hutchinson
August 5, 2024
I am writing this summary in support of recommending Mike Parsons as a Mortgage Broker. At the time of writing this, I have known Mike for 4 years and he has executed 4 mortgages deals for me (including 2 refinances) over that time. Mike has provided me incredible service as a mortgage broker as follows : - Works painstakingly on getting the scenarios together to provide you options that optimize your position. - Works inordinate hours on the detail necessary to support the scenarios. - Mike keeps you updated on the status and progress of the applications and also helps you work through answering questions and any complexities that may arise. -In my cases, given the complexities and timings of my situations , these application processes would take many weeks to finalize . Mike never gave anything other than utter commitment and focus to getting the job done. Mike acts as a true business partner throughout this whole broker /mortgage journey. I simply would only go to Mike for any future dealings on getting a loan from a bank (and as will my kids in the future !) . There is no way a bank (I have seen anyway) would provide this kind of time nor service to a customer. You can rest assured that once Mike has done the deal, you have ended up with the most optimized position taking into account all the variables/scenarios in play. Scott Hutchinson
Read more
Jason Seam
August 5, 2024
I've worked with Scott Wilkinson for my last 2 properties and he's been excellent. He sourced multiple options and didn't push a specific bank, tailoring his recommendations to me based on my requirements. I was specifically requesting a "medico loan" and Scott could navigate that extra requirement with expertise. When I was initially working with Scott, I was also trialling 2 other brokers and neither of those 2 had the same breadth of lenders, or could provide the same deals. I've referred multiple buyers to Scott and his team; one of them said to me after working with him, "how'd you find this guy, he's so good compared to all the other broker's I've worked with!" I'm going into my next purchase with Scott as my broker partner again. I recommend him to everyone
Read more
Tina Anderson
July 29, 2024
My experience with Mortgage Broker - Scott Wilkinson, and his team - exceeded my expectations! I couldn’t be happier after settlement - in this current financial climate. He listened to what my requirements were in a loan and then devised a suitable plan for me moving forward. Which was something I didn’t think was possible to achieve. I strongly believe that Scott’s qualifications and previous experience in the Finance Sector - sets him apart from other Mortgage Brokers as he has more insight into the industry and the needs of the customer. Scott was professional, provided solid options, was timely with communication and gave great advice. I will definitely be using Scott’s services in the future and I highly recommend him to anyone as a Mortgage Broker.
Read more
Marlon Baena
July 22, 2024
Karis dedication to assisting with our home loan, even while I was on holidays, truly exemplifies a commitment to excellent service. It's the small things that often make a big difference, and it seems Karis attention to detail and clear communication were key to our smooth home purchase. I highly recommend using UNO and Karis for your home loan needs.
Read more