FHSSS slightly more attractive

super saver scheme

The First Home Super Saver Scheme may have more appeal for some given the reduction in minimum deposits on home purchases included in the budget.

The 2022 budget measure reducing minimum deposits required to purchase a home for single parents and first-home buyers may make the First Home Super Saver Scheme (FHSSS) more attractive for certain individuals on face value, but must be considered with macroeconomic factors in mind, a technical manager has said.

This year’s federal budget included a provision for single parents to buy a home with a deposit as low as 2 per cent and for first-home owners to buy a home with a deposit as low as 5 per cent.

According to Accurium head of education Mark Ellem, these measures could make the FHSSS, increasing from $30,000 to $50,000 on 1 July 2022, more attractive, but other factors still need to be taken into account.

“If it means people have got more chance of getting into the housing market, well then yes it does become a more powerful tool,” Ellem told selfmanagedsuper.

“But you’ve got to balance that off with the expectation that interest rates will go up. It’s a good thing to help people get into the housing market, but they’ve also got to be conscious that it is a long game.

“So even if it’s slightly easier to get into the housing market because of the reduction to these deposits, you still have to meet the loan repayments once the interest rates have been raised.”

Like Ellem, SuperGuardian education manager Tim Miller emphasised the point that individuals wanting to use the FHSSS had to recognise it is a strategy now requiring a longer time frame.

“For the average person the increase of the FHSSS from $30,000 to $50,000 means the savings strategy moves from a minimum of two years, because you can only apply $15,000 per annum to it, to a four-year strategy because you can only utilise $45,000 over a three-year period,” Miller noted.

Both SMSF specialists were disappointed more detail was not provided with regard to other measures announced on budget night last year.

“It would have been nice, given that nearly a year has passed now since the last budget, just to get a reconfirmation of some of the measures that have not passed through parliament, such as the residency rules and the relief for legacy pensions,” Miller said.

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