Australian Property News
HECS-style loan mooted for homebuyers
Posted on Thursday, November 27 2008 at 4:18 PM
The Federal Government should rethink the outdated grant system for first homebuyers and implement something more like the HECS loans scheme for university students, according to building advisory service Archicentre.
Archicentre is urging the Government to increase the first homebuyer's grant to $30,000 but convert it to interest-free loan that's paid back when the home is sold, rather than a straight grant.
The system would be similar to the well-established Higher Education Contribution Scheme (HECS), Archicentre says.
The service's managing director, Robert Caulfield, says the Government should implement a far more creative policy than is provided by the current grant system and one that will be more beneficial to the individual, the community and the environment.
'Whilst there is support for the current action and it's reasonable for the Federal Government to utilise an existing framework, it's also important to look at a more creative and stronger policy from a total federal and state government perspective including housing, environmental and financial sustainability,' he says.
Archicentre is also proposing that the grant be linked to environmentally sustainable designs, which would assist with climate change policy.
Caulfield acknowledges that the idea of paying back the grant will be contentious.
'However, the concept of individuals who have received funds from the community, such as HECS grants for students who get education allowances now and pay back when they start earning, is already an established principal in Australia,' he says.
Having people pay back the grant when their home is sold will make more money available for future first homebuyers, Caulfield argues. 'The amount being paid back would not incur any interest charges and on average people move home every seven to ten years,' he says.
'The capital gain usually experienced over this period would more than compensate for the pay back.
'The plan is to maximise the use of taxpayers' money and the payback of funds would be easily managed with a covenant on the property that would be activated on sale.
'This policy would over time see a growing fund for the next generations of Australian homebuyers, provide even greater assistance to first homebuyers, encourage more sustainable homes and reduce the tax burden on future taxpayers.'
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