First home buyers in one Australian state given lifeline as mortgage prices soar

One Australian state has permanently lifted restrictions on first home buyers which deterred owners from renting out a room to help with skyrocketing mortgages.

Queensland homeowners purchasing their first property have now been urged by the state's housing minister to rent out a room or two following a major rule change.

The state government announced a ministerial directive to assist with the affordability of rentals and ease pressure on Queenslanders buying their first home.

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Previously, first home owner grants and stamp duty concessions were barred if buyers rented out a part of their property within the first year of moving in.

Now, fresh legislation introduced to the state parliament has tweaked the laws to allow owners to take advantage of the discounts and still rent a room out.

"From today, young Queenslanders can rent out a room without being slugged and losing their concessions," Premier David Crisafulli said.

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Housing Minister Sam O'Connor told first home buyers to use the new rule change to keep mortgage stress at bay.

"We strongly encourage Queensland first home owners to take advantage of it … It'll save you money, and it'll put the roof over the head of a mate," he said.

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O'Connor told media yesterday the law change could mean there would be a "a lot of rooms available for rent immediately".

About 20,000 homeowners in Queensland are expected to benefit from the rule change.

Treasurer David Janetzki said in a statement the laws would be introduced to parliament this week to formalise the changes, which are already in effect.

The LNP under new premier David Crisafulli made the election promise in a bid to address low rental supply and soaring mortgage prices.