The HomeBuilder scheme, a housing stimulus package of $25,000 for owner-occupiers to build a new home or renovate their existing house has just been announced by the federal government. The total value of the package is estimated to be $688 million, allowing for around 27,000 grants.
Stimulus packages are not a new term in the construction space. The federal government often offers various grants to home builders or first home buyers. State governments too have their own forms of grants. But what makes this one so special?
Here is everything you need to know about the new HomeBuilder Grant.
What is the HomeBuilder Grant?
The COVID-19 pandemic had a drastic effect on the Australian economy leading to a recession never seen in three decades. Out of the various stimulus designed by the government, the housing stimulus package is targeted to benefit residential construction jobs.
The home builder scheme will offer homeowners who are planning to renovate their home or build a new one with a grant of $25,000 per project that is contracted between June and December of 2020.
This is designed to help the construction industry to stay active and keep professionals and employees paid. This grant is expected to support about 140,000 direct jobs and 1,000,000 secondary support jobs.
The Prime Minister, Scott Morrison said in a press conference: “If you’ve been putting off that renovation or new build, the extra $25,000 we’re putting on the table, along with record low interest rates means now is the time to get started”.
Further, he added how important the property industry is to the economy and how this home builder program is likely to boost the overall Australian economy.
This $25,000 grant combined with, for example, the existing grant of around $15,000 in QLD for first home buyers offered makes it ideal for first-time buyers to start right now.
Criteria to avail $25,000 housing stimulus grant
- You must be a citizen of Australia, older than 18 years of age, and be a natural person to apply for this grant.
- The place of build or renovation should be the principal place of residence for the applicant. Commercial projects and investment properties are not engaged under this scheme.
- The building project has got price limits. For a new construction or buying an apartment, the upper cap is set at $750,000 which includes the value of land and building. For renovation, it must be a substantial renovation project costing anywhere between $150,000 to $750,000. The renovated property must also be valued less than $1.5 million to be approved for the grant.
- The income cap for singles is $125,000 per annum or $200,000 for couples per annum, both based on the 2018-19 financial year.
- The contract has to be signed between June and December of 2020 with licensed contractors.
- The construction must commence within three months of signing the contract.
- All of the contractors contracted for the construction must be licensed to do their particular job, before the government’s announcement of the HomeBuilder package, which restricts newly licensed professionals and focuses on existing residential construction professionals to benefit from the scheme.
- Owner builder is not eligible for the grant as it is targeted to benefit licensed professionals. You are required to do it under the supervision of a licensed builder.
- Renovation must help improve the accessibility, safety, and liveability of the primary residence. Which means it must be improving on existing space, like adding a new room or extension. It will not include detached structures like shed, pools, or tennis courts.
You can apply for the HomeBuilder Grant if you satisfy all the above criteria. Also, make sure to check the eligibility for the first home buyer program provided by your state. Don’t forget to sign the contract before December 31st 2020. With the usual pre-construction work requiring around 6 months you need to speed up the process to avail the grant.
What is in it for first home buyers?
To start with, there is no special allowance or additional discount for first home buyers in the newly announced HomeBuilder Grant.
The good thing is that there is no limitation to the grant if you are eligible for a first home buyer scheme. You can avail both for the same project without any restrictions.
Estimated benefits of around $15,000 (Queensland) for the first home buyer program added with the $25,000 grant is great if you have plans of building your new home. (Note that other grants potentially apply in NSW and other states)
If you don’t own your home yet, you should start right now to make the best use of these government schemes. If you are lucky you might even get some other grants from your state or territory.
Keep in mind that not all state and territory offer the same kind of first home buyer program. It differs, some offer straight-up grants, while some contribute by relaxation on stamp duties, rebates of various forms, etc. Check out our Stamp Duty Calculator for more information on stamp duty, and other costs.
On the other hand, if you are interested in buying something or require one of the grants, you need to act fast. For an idea of how much time do you need to factor in, check out this article from Renovation Junkies.
If you are going the long route of starting from scratch or perhaps buying off the plans, remember that these are time-consuming processes and you might not be able to lodge your application on time.
Overall, be prepared for time-consuming processes. The preliminary stages for most projects can take longer than the construction time. Council Development Approval can take longer than expected and loans can be another part of the process that is best to start early.
If you have any questions or would like to talk to a professional about finance or any points raised in this article, please contact Australian Mortgage Corporation on +61 7 5456 2928. We will be happy to help you.