There is a simple and sustainable solution to Labor’s and others opposition to the proposal that first home buyers being able to draw on their super to provide a deposit according to real estate industry veteran, RE/MAX WA Managing Director, Geoff Baldwin.
“The argument is that allowing a draw down on super would harm the system and the future security of retirees however this can be easily overcome with a ruling that all funds plus a levy must be deposited back into the super fund upon the sale of that first property.
“This would also encourage people to hold their property for a longer period and in doing so have a more settling effect on the market and a more sustainable effect on individual borrowings.
“Using properties purchased under this system as security for other borrowings should also be disallowed ensuring that future equity remains unencumbered.
“The levy amount should be based on the capital gain of the property at sale after costs. In other words, if the property netted 20 percent more than its purchase price when sold in the future then the levy would be 20% of the amount drawn from the super fund in addition of course to the original draw down.
“Any argument that this would cause people to pay more for a property such as argued by Chris Bowen, is clearly wrong. A buyer using a super fund deposit would be restricted by their borrowing capacity as are most buyers so saying that everyone will suddenly find “another 30,000 and pay more” is rubbish.
“Much of the opposition to this proposal (apart from the opposition themselves) is emanating from the financial sector who see this as a threat to their income in that, for the most part, they are biased towards the stock market. They see money drawn from super funds for home deposits as money on which they will not be earning fees.
“In the right format this proposal is a good one and one that does not need to harm the superannuation system. In fact, with people reimbursing their super funds with the amount borrowed plus a levy it could be argued that the super system will be boosted over the longer term”, Mr Baldwin said.
Media contact – Geoff Baldwin