It can be easy to look at the property markets in the capital cities with disdain for the fact that first home buyers are missing out. Earlier generations had the opportunity to buy close to the convenience of the city and didn’t have to struggle for a deposit or make mortgage payments on their new home. They could raise a family and know they had the security of their home to last them the rest of their life. These days it is a little different. The first home buyer is purchasing much later in life, those under 30 and staying at home much longer and a greater number of people are purchasing an investment property over a place to live.
Rentvesting is now becoming an increasingly viable solution for first home buyers but the industry is still struggling to keep up with this rapidly rising trend. As identified by this article in Lifestyle.com.au, the advantages for first home buyers are:
- Gets them into the market
- Gives them a chance to build equity
- Reduces temptation to use savings.
While this is a great adaption to a changing market, there is an issue which isn’t being talked about. This is, stamp duty exemptions and some of the other benefits that go along with purchasing your first home, doesn’t apply for investment properties depending on the state you are living.
There is also the fees and rates being vastly different when a property is being purchased for investment rather than a home to live in for a first-time buyer. For investors, the focus is generally towards the tax deductions and capital gains from the investment. What is less considered is the fact that the investor is more likely to be paying a higher interest rate and stamp duty when they make their purchase and the capital gains associated with investment when they decide to sell. This is all aside from the fact that owning a property comes with rates, maintenance, strata fees and costs associated with acquisition.
If we are to embrace rentvesting as a solution to get more first home buyers in the market to compete with exorbitant property prices, we need to consider that the same benefits should apply for these first-time buyer/investors. We need to take a serious approach to getting young people into the property market and make it easier rather than keeping these barriers, preventing entry level investors from making their mark.
Regardless of the current systems in place, rentvesting offers first time home buyers and alternative to purchasing their own home to live in and while it does come with costs, it is a strategy that creates financial security for the long term which can’t be said about purchasing a place of residence in today’s market where it is not only difficult to acquire a property but the pressures which come with owning property regardless of whether you are investor or an owner occupier.