in need to be done, they might have thought twice about buying into the
complex. Furthermore, the extra levies would only cover the cost of the
fence expenditure and wouldn’t leave anything for other work, so the
levies had to be continued for another length of time to ensure there were
funds for more maintenance (such as painting) or that ‘just in case’
scenario!
For nearly 18 months the owners needed to kick the can an extra $600
per quarter to meet the cost of the fence. Many of these owners were
new and weren’t keen to find the extra funds demanded by the body
corporate, suggesting that there should have been enough money
available in the sinking fund already, and there should have!
Both my husband and I had owned our units for quite a few years and
at each body corporate meeting in the past years we had urged the
committee to lift the fees in order to cover the costs but to no avail. The
same older owners didn’t want the fees to rise and therefore voted
against it. Consequently, when the premises finally needed some real
attention, the body corporate didn’t have the money to do it. During that
time one of the new owners sold his unit, but was forced to incur the
agreed increase levy and the monies owed was taken out of his
settlement.
The moral of the story is that you should always find out the amount
of money in the sinking fund before you purchase the property. You
don’t want to find yourself in a situation where you think you have
covered all the bases financially then be hit with unexpected special
levies. Ouch!
When buying into a body corporate situation,
ask the question, “How much is the building
insured for and what does it cover?”
From my own experience I have found that the insurance has
definitely been in place but that the coverage wasn’t keeping up with the
replacement building costs because no one bothered to raise the
premium to a more substantial level. This needs to be kept an eye on,
particularly when the market is booming.
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The Australian first home
owners grant
What is it?
The First Home Owner Grant (FHOG) began on the 1st of July 2000,
and was established to offset the effects of the GST (Goods and Services
Tax) when first home owners were purchasing a home. In other words, it
was a grant that was meant to encourage and assist people into first
home ownership.
The amount is up to $7,000 to those people eligible and if you are
eligible you may also be entitled to an additional payment shown as the
First Home Bonus, of $3,000 or $5,000. The grants are not constrained
by the price of the property or means tested, so it doesn’t matter whether
the house is $200,000 or a million dollars. As long as you fit the
eligibility criteria you can get the grant.
If you have owned investments i.e. property within Australia after the
1st of July 2000, you may still be eligible for the First Home Owners
Grant when you purchase a ‘Principal place of residence’. Unfortunately,
if you’re like me, and bought before the 1st July 2000, you are deemed
ineligible.
So what is the eligibility criteria?
✔ You and your spouse/partner must not have received a grant in
any State or Territory of Australia.
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✔ You and your spouse/partner must not have owned residential
property, either jointly, separately or with some other person
before 1st July 2000, in any State or Territory of Australia.
✔ You and your spouse/partner must not have occupied for a
continuous period of at least 6 months, a residential property in
which either of you acquired a relevant interest on or after 1 July
2000 on any State or Territory of Australia.
✔ You must be a natural person (not a company) and at least 18
years of age at the time of settlement or completion of
construction.
✔ You (or at least one applicant) must be a permanent resident of
Australia citizen at the time of settlement or completion of
construction of home.
✔ You (or at least one applicant) must occupy the home as
your/their principal place of residence for a continuous period of
at least 6 months, commencing within 12 months of either
settlement or completion of construction.
If you are a first home buyer now is as good a time as any because the
FHOG is in place and for how long? Who knows?
What's wrong with the first home owners grant?
On the surface, the First Home Owners Grant appears to offer
assistance to many people who ordinarily might struggle getting into a
house of their own: the young first home buyers who are just starting out
or low to middle income earners battling to put together a deposit. For
these well-deserving folk who are Australians, pay taxes and have
contributed to Australian society for a length of time, there is no
question of that assistance being given. However, there seems to be
some misguided ways in which it is being distributed. In Australia, the
Australian Bureau of Statistics reports that as many as 100,000 people
on a given night are homeless. With figures like this and a predicted rise
of twice that in the next five years, shouldn’t that issue be addressed
first? Couldn’t we utilised some of those FHOG funds to house our own
people who are in crisis?
Instead, the Australian taxpayer benevolently pays overseas
immigrants, who have gained permanent visa status, a First Home
Owners Grant simply because they are purchasing a home in Australia
for the first time, even when they have owned a house or many homes
in their native country!
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In other words, if people from other countries decide to become
permanent residents but have owned a portfolio of properties previously
in their own country, then arrived in Australia with a pretty good nest
egg to start off with (especially with a good exchange rate), they still
have the ability to purchase not one but two, three and four properties
and still gain the benefits of the FHOG when they use one of the
properties as their principal place of residence.
Now, forgive me, but with so many Australian citizens living in
abject poverty, without a secure place of tenure and/or struggling to find
affordable housing, is it really necessary for us to pour out as much as
$7,000 to people who quite literally don’t need it? And even if they did,
what makes them more deserving of those funds than people who have
contributed and are natural Australians?
Something to think about… if you qualify for the
Australian First Home Owners Grant (which is
$7,000 at the time of writing this book), you
might want to use those funds for new carpets,
furniture or a shed when you move in, and might
put off the purchasing until you have enough
money to get in first. But may I suggest you think
twice about such a decision. If the grant can be
used to get your ‘own roof over your head’ by
way of solicitor’s fees, a months interest payment
in advance or other fees and charges - then use it
for that and save for all the other items.
Remember, only the property will accrue in
value not the incidentals.
What governments can do to assist
My wonderful, dear, best friend has taken the
campaign for getting people into their own houses
onboard and in doing so has started writing madly to
her local MPs and newspapers with some experienced
piece of advice. In the mid-seventies, on the poverty
line and with three young children to support, my
friend managed to secure a home through public
housing, and while it was an affordable preference it
was also her means to becoming an owner.
Here’s what she had to say today.
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“It seems that home affordability is a mindset! It will always
depend on the individuals and what is considered as a ‘must
have’ and ‘I can do without’, with any home purchase.
If the government intends to assist then maybe they need to
consider real assistance by way of home ownership instead of
talking up expanded land parcels! How many strugglers or
migrants of today started out with their 1st home being a
Housing Trust / Housing Commission home? These homes
were of modest size placed in groupings and in areas of new
development. An example of these areas in South Australia is
the now highly sought after Hallett Cove and Sullivan’s
Beach. In regards to Housing Trust there were conditions of
ownership ranging from red term interest, resale rights and
joint ownership. Today’s Housing Trust doesn’t do home
ownership but only rental relief… Maybe the government
should be doing a rethink of what is a handout as compared
to a far more lucrative hand up! Surely making the home user
more responsible for their own home upkeep would be far
cheaper all round and more beneficial than doing continuous
maintenance on assets that most tenants have no interest in!”
Vittoria Shaw,
Goolwa, S.A.
Vittoria and her family lived in their South Australian Housing Trust
home for near on 15 years, a home which provided security of tenure, a
home base for her children, the opportunity to establish and improve and
the ability to purchase at an affordable price without the stress of high
interest rates impacting on their already minimal budget.
At this point the home was very modest and in a locality that at the
time was described as “out in the boondocks’, but worst of all it was
near a refinery… yuck! However, as with most things, time has a way of
turning things around, in particular the location of the property.
Nowadays, this location is highly sought after because it overlooks
the ocean (and we know what ocean views do to real estate). Multi-
million dollar homes have been constructed on elite estates, all
surrounding that little red brick Housing Trust Home my friend lived in.
Furthermore, the refinery closed down and large, expensive homes were
built blocking any of the original eye-sore the refinery once created.
In the meantime, my friend managed to purchase her own home from
the ‘hand up’ she received from the Government State Housing
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Commission and later purchased her own home independently from the
equity which had accrued over the years.
In other places a Trust Home might be referred to as Home West,
Housing Commission, or State Housing. A similar (but fairly new plan)
in New Zealand is the Home Equity Program (see further).
Getting back to the fact that time has a way of turning things around,
I have had many opportunities in my life to buy into property with a
windfall gain, but chose not to for whatever reason. One of those times
was in the mid 1970s when my dear uncle suggested I put my hard-
earned money into some property north of Western Australia. I had
saved nearly a thousand dollars after working three part-time jobs, to
buy a secondhand car of my own. My uncle told me that I could
purchase a block of land at this particular location for a mere $1,000 and
it would grow in value quickly because the land was going to be
developed into a marina. But the land was thought to be out in the stick,
with nothing else to offer. It didn’t have shopping centres, bus routes or
any real infrastructure to speak of, so compared to my own car it wasn’t
very attractive at all. Suffice to say, I didn’t buy a block.
If you come from Western Australia you are probably familiar with
the locality Yanchep Sun City, a magnificent, ritzy suburb with canals
and a marina built by Alan Bond. This was the place my uncle suggested
I buy a block! The price soared as Yanchep developed and the land is
now priceless.
All the same, I did get a great little HB Torana to drive, which stayed
off the road more than it did on, but it looked great when I gave it some
spit and polish. I’m not sure what happened to that car, but I sure know
what happened to the land!
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Getting back to basics
In order for us to work out solutions on how home ownership can
become a reality and not a distant memory of the past, an important
factor must be addressed.
Consumer superfluous spending must be controlled.
Income and expenditure continues to be the central element
recognised by banks and financiers when securing a loan and a loan is
often a sure-fire way of getting closer to that foot int eh door. However,
it doesn’t really matter how much you earn if your expenditure
outweighs your income. This is not rocket science. A person with even a
relatively small income can have a better chance of securing a loan than
a large one if the expenditure of that income isn’t already committed
elsewhere.
So - if your income is being absorbed into pay TV, credit card debt,
mobile phone plans, fast-pace internet services and personal loans, your
chances of securing a loan diminish and you’re not likely to get yourself
into a position of winning that loan until you make some changes to your
consumer spending.
Consumerism
What is it and why do we need to be aware of it?
Consumerism is something that is driven by marketing companies but
unfortunately it is driving us out of control until we hit smack bang into
a wall of debt.
You need to really consider the power of marketing so that you won’t
get sucked in by its ability to brainwash you into buying objects or
material things of no real value.
Marketing is a very clever way of getting you to spend your hard
earned dollars on items you don’t really need but become convinced hat
you do.
At the end of the road there won’t be a house or a lifestyle - just a
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long winding stretch of payback time!
Marketing is all about driving consumerism.
It’s about making you buy and then… buy some more.
Marketing has achieved the ultimate impression by m
aking you feel
like you don’t fit in if you don’t have the best there is, the most you
can get or the right brand. In the western world the prevalence of
marketing is well established, so much so that it is pervasive in just
about every aspect of our lives from the time we wake up.
But the tragedy of marketing is the negative impact that a constant
bombardment of ‘you need this’ and ‘you must have that’ has had on our
mental and physical wellbeing. The unceasing deluge of advertising in
print, online, on screens, on radio, in subliminal messaging and more,
has created a sense of longing for an item. We now view some of the
most successful marketing tools ever known to humankind. Hence, we
now have a ‘can’t do without’ or ‘simply can’t wait’ society.
In effect, this psychological encoding gives us the sense of not being
good enough - of being unworthy and unusual (even geeks) when we
don’t purchase the latest and greatest. Of course, peer pressure has a lot
to do with the wanting side of things, and that pressure is zoned in on
and used by the marketing organisation. It’s just another mechanism to
keep it all happening.
So entrenched have we become with consumerism that our own
position in society is often reflected by the amount of materialistic
wealth we have accumulated. It has become a status symbol of doing
well, looking good and fitting in if you can buy, buy, buy.
But it is not real. It is all a facade.
It is like being controlled by an alien race which is manipulating our
minds. It is no longer a desire to purchase, it is a compulsion to get it.
We are being made to feel compelled to buy, buy, buy.
I think that in due course the realisation will hit that marketing and
consumerism were two of the biggest shams of the 21st century. Why?
Because they have created a throw-away society that consumes then
dispenses at an alarming rate, and with no thought as to the outcome.
Our gluttony of consumption without forethought as to the effect it has
on future generations or the environment must eventually reach in limit.
Oh no - I’m getting on the soap box again!
Now, marketers cleverly design products to have a specific life span.
This is a deliberate ploy on their part to ensure repeat ongoing
purchasing. Think about the watch that seems to just stop within days of
Goodbye Renting Page 18