Introduction
Entering the property market in New South Wales (NSW) can be challenging for first-time buyers. This is due to the rising property prices and substantial upfront costs. Shared Equity Arrangements offer a practical solution by allowing purchasers to share the purchase price with another party and benefit from reduced transfer duty obligations. Shared equity arrangements in NSW are particularly beneficial for first home buyers, as they provide an opportunity to enter the property market with less financial strain.
What are Shared Equity Arrangements in NSW?
In a shared equity arrangement, a first home buyer partners with another party. This party is not their spouse or partner. Together, they jointly purchase a property. Each party owns a percentage of the property corresponding to their financial contribution. This collaboration lowers the individual financial burden for the first home buyer making homeownership more accessible.
Advantages for First Home Buyers
- Reduced Financial Burden: Sharing the purchase cost means a smaller deposit and lower mortgage repayments for the first home buyer.
- Access to Better Properties: Pooling resources can enable buyers to afford properties in more desirable locations or with better features.
- Transfer Duty Concessions: Under certain arrangements, first home buyers can benefit from reduced transfer duty, further decreasing upfront expenses.
Legal Framework for Shared Equity Arrangements in NSW
The purpose for this publication focuses on the concessional aspect of a shared equity arrangement in NSW and the primary provision is The Duties Act 1997 (NSW). The eligibility of a shared equity arrangement in other States will depend on the different legal framework of each States and legal advice.
Section 78B of The Duties Act is the primary part of the legislation that covers this arrangement. It allows first home buyers to receive transfer duty concessions even when purchasing with someone who is not a first home buyer. To qualify:
- The first home buyer(s) must acquire at least 50% interest in the property.
- The agreement or transfer would be eligible under the first home buyer scheme if the first home buyer were the sole purchaser under the agreement.
First home buyers can purchase a property with another party who is not their spouse or partner. They can still benefit from reduced transfer duty on their share.
Conclusion
Shared equity arrangements help first home buyers in NSW enter the property market with less financial strain. By partnering under The Duties Act, buyers share costs and enjoy transfer duty concessions. This makes homeownership more attainable
We recommend that you contact our office on (02) 9232 8033 or here to discuss your options if your purchase of a property with another party is eligible for the shared equity arrangements concession.
