Property And Related Lending - Light At The End Of The Tunnel?
Adam Held, Held Lawyers
With the 2019 federal election now behind us, it is to be hoped that sellers and buyers will be encouraged by a number of fresh government initiatives to re-enter the property market, and for developers to proceed with projects.
The last 18 months has seen a steady decline in activity in the property and lending areas, due in part to a combination of factors, including:
- No interest rate cut since August 2016.
- State government increased stamp duty for foreign purchasers.
- State government removal of off-the-plan concessions for investors.
- State vacant residential property tax - an annual 1% tax rate levied on dwellings that are vacant for more than a total of six months in a calendar year.
- Foreign resident capital gains withholding tax - a non-final withholding tax on payments made to foreign residents that dispose of certain taxable Australian property.
- GST withholding tax - a non-final tax on payments made on disposal of certain taxable Australian property.
- SMSF lenders exiting the lending market.
- Off-the-plan purchasers where the lead time to completion was some years finding the property value has declined.
- ATO ""Safe Harbour"" Lending requirements for lending by SMSF members to their SMSF.
- Tighter lending criteria, including requirements that borrowers show they can service a loan at a 7% interest rate.
Whilst there is no indication that some of these factors will change in the near term, it is hoped that the situation will improve following:
- Predicted interest rate cuts to soon flow through to borrowers.
- Easing of lending restrictions, with expectations that the serviceability requirement will be reduced to 2.5% above the market rate.
- Proposed first homebuyer loan subsidy.
If you would like further details or assistance or to discuss the information contained in this article or more generally, please do not hesitate to contact us at Held Lawyers, or visit our website at www.heldlawyers.com.
This article is intended to provide commentary and general information only. It should not be relied upon as legal advice. It is not intended to be a complete or definitive statement of the law on the subject matter covered. Further professional advice should be sought before any action is taken in relation to the matters described.