4 min readBy now you will have heard the latest news about the HomeBuilder grant from the Federal Government, intended to bolster the property market and construction industry by offering a cash incentive to Australians to get started and move forward with plans that may have been on hold.
Why is the government providing $25K grants with a long list of qualifying terms? Here’s everything you need to know before you plan your reno or build and apply for the new HomeBuilder grant.
Everything you need to know about the HomeBuilder Grant
Who qualifies for the HomeBuilder grant?
The HomeBuilder grant is an initiative by the Australian government to boost the economy in the middle of the global pandemic. Owner-occupiers are the main recipients of the HomeBuilder grant. The scheme will provide $25,000 to qualified homeowners who wish to undergo renovations to existing properties. However, this also applies to those building a new home. This is similar to the various first homeowner’s schemes, but with some small changes.
First off, the first home buyers grant in Queensland was only awarded to newly constructed homes and to those who made their first property purchase.
The HomeBuilder grant, conversely, is intended for homeowners and the renovation of existing homes or the construction of new houses. There are more rules about the HomeBuilder grant that we’re going to get to later.
First, let’s take a closer look at the HomeBuilder grant terms and conditions. The HomeBuilder grant applies to most Australians striving to enhance their current home or use it as a cash boost to construct a new home. ABC NEWS reported the following after the Treasury announcement:
- The government will award $25,000 grants to owner-occupiers for work in their properties.
- Beneficiaries will have to spend at least $150,000 of their own money.
- Grants will be means-tested to exclude couples making more than $200,000 a year and individuals making over $125,000 per year.
- New builds are capped at $750,000.
- Renovation work can cost anywhere from $150,000 to $750,000.
- The scheme does not apply to investment properties.
- No owner-builders are authorised.
This is very different from the previous grant schemes such as Queensland’s First Home Buyers Grant or the New South Wales First Home Buyer Scheme. To draw a comparison, let’s look into the first home buyer scheme in New South Wales.
To apply for a $10,000 grant under the First Home Owner Grant (New Homes) scheme, you must:
- Have a contract to buy a new home.
- Or, a building contract by the owner of the land.
- Or, be the owner of the land building their own home.
- To qualify, the purchase price of your new home must be no more than $600,000.
- If you’re buying land to build a new home, the total price – including the land and home – must be no more than $750,000.
- You must be an individual, not a company or trust.
- You must be over 18.
- You, or at least one person you’re buying with, must be an Australian citizen or permanent resident.
You won’t be eligible for the First Home Owner Grant (New Homes) scheme if you or your spouse have previously:
- Owned or co-owned a home in Australia.
- Received a first homeowner grant in Australia.
However, you may still be eligible if:
- You purchased a residential property after 1 July 2000 and
- didn’t live in it for more than six continuous months.
As can be seen, the new HomeBuilder grant is almost twice as generous being over double that of New South Wales previous new homeowner scheme, so what is the catch?
The fine print of the HomeBuilder grant
We all know money does not grow on trees. However, there is some fine print to the HomeBuilder Grant, preventing property investors from accessing the grant as well as owner-builders. Some of these include:
- HomeBuilder would be available for building projects signed contracts between 4 June 2020 and 31 December 2020 where construction or renovation starts within three months of the date of the contract.
- Renovations must be completed by a licensed builder (also depending on what state or territory you are in).
- Applicants need to be an Australian citizen (without a company or trust).
- The conditions of the contract should be reasonably acceptable and the quality of the contract will not be elevated by comparison with the fair market position.
- The grant from the HomeBuilder won’t be taxed.
- The grant is only valid for the next six months.
What can you achieve with the HomeBuilder grant?
Because of the government’s requirement that at least $150K be committed to renovation or construction work, the extra $25K could be used to enhance the usability, security, and feasibility of the building. Moreover, some applicants may have already had some form of renovation or building scheduled. Items of construction deemed acceptable are:
- Kitchen renovations.
- Bathroom renovations.
- House extensions.
- Combining all of the above is also possible.
- Renovations should improve the availability, viability, and security of the property.
- However, it can not be for additions to the property, like swimming pools, tennis courts, outdoor spas and saunas, sheds, or garages (unless connected to the property).
How does the HomeBuilder grant actually help the individual?
As already stated. HomeBuilder grants mainly help homeowners and residents of Australia. It does not help people with investment property portfolios, nor does it help current homeowners who are looking for DIY renovations.
This program is meant to encourage Australians who may have otherwise avoided construction or renovating because of uncertainty due to the coronavirus pandemic. Thus, the cash boost is providing people with the confidence to follow through with their reno or building plans.
Also, Australia’s housing and construction industry are responsible for over 82,000 jobs, among 46,000 businesses and contributing to a market value of $59B. Therefore, it is a key role in Australia’s economy to keep the construction and trade industry moving.
Therefore, if you are planning to apply, we recommend talking to a licensed builder, draftsman, or architect to find out how an additional $25k can focus on improving your planned work.