Summary

The First Home Owner Grant (FHOG) is an Australian Federal Government grant given to first home buyers, ostensibly to make housing more affordable.

History

Introduced 1 July 2000 by Howard Government to offset the effect of the GST on home ownership.
(First home builders grant was 14k under howard?)
Oct 18 2008 (stimulus 1 for economic crisis) - FHOG 14k, First unoccupied home 21k (time limited to June 2009)

Eligibility

– Applicants must be 18 years of age or over;

– Both the owner and their spouse/partner must not have owned a home previously (this means that if either one of the applicants have previously owned a home, then they will both be ineligible);

– The home must be the PPOR for at least one applicant for a period of 6 months within 12 months of completion or settlement.

Criticisms

Capitalised into prices
Increases demand without doing anything to supply so grant is simply capitalised into prices. Thus it should really be known as the Home Sellers Grant.

TanyaPlibersek (Federal housing minister) said:


(for the full story, see TanyaPlibersek page)

Serving as a deposit:
-Provides one for those who can't save (higher risk people, bringing forward demand from the future)
-With a 5% deposit (20x deposit multiple), an extra 14k gives $280k extra spending power and $266k debt!)

A Developers handout

While claiming to "stimulate construction" the 21k first home builders grant explicitly allows the money to be used on existing homes that have never been occupied rather than for construction. This means that it can be used to clear out developers backlog of unsold homes.

In unrelated news real estate developers are some of the biggest donors to the Labor party.

SCAMS

Vulnerability to misuse by speculators, disrupting tenancies and causing artificial supply scarcity

Part of the eligibility for FHOG is that the recipient must live in the house as their PPOR for 6 of the first 12 months. However, investors have been known to use it, by pretending to live in a house (while it remains vacant). This causes renters to be evicted after only a few months, and a house to sit empty (or be used when it wouldn't be) for 6 months to claim the grant. (Note: This is not illegal)

Examples from real estate investor forums (to demonstrate how popular this is)

YoungGun



Fishcake



Denz


Tash 85
(actually living in the home she claimed a FHOG for would be hard as she couldn't claim tax deductions on the interest)

Bayside


Witzl


HomeBuy


VBman


Buying in Child's name

Loophole closed


Buying in Child's name



(note: The transfer of ownership wouldn't work, but it shows how people are trying to scam the system)



Altering date to claim FHOG increases



Partner scams