Scheme Summary: HomeBuilder provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home. HomeBuilder will assist the residential construction market by encouraging the commencement of new home builds and renovations.
Are you considering the HomeBuilder Scheme?
Here’s what you need to know!
While we know the scheme was initiated in response to boost the economy within its current downturn; HomeBuilder essentially aims to not only stimulate the residential construction industry but to also provide a lifeline towards a pivotal sector in the Australian economy that is ailing in light of COVID’s wake. The upturn of this scheme furthermore enables a spark in employment which allows workers and trades a like to be put back to work. It’s an incentive that HIA estimates could help generate more than $15 billion in national economic activity. In sum, the HomeBuilder Scheme equates to not only houses being built but will support thousands of jobs across Australia to be kept.
Since the unveiling of the package however in early June, the HomeBuilder Scheme has been widely misapprehended – particularly by its tight-based eligibility criteria. While not suited for all Australians, the Government expects the grant to be accessed by approximately 27,000 homeowners and/or builders. And despite Homebuilder only acquiring a limited temporary end-of-year status, it aims to build 30,000 homes by Christmas alongside thousands of renovation projects – with a caveat that the construction of a new home or a substantial renovation must be contracted to begin within three months to prevent a rise in house prices.
Another misconception is that you are required to be a first home buyer in order to qualify for the HomeBuilder scheme – this is simply not true. The main qualifying criteria for the scheme revolve primarily around these three components: the type of property, your income and who you use as the builder and an assessment of the project cost.
Eligibility for the HomeBuilder scheme are as follows:
- Be an Australian citizen aged 18 years or older and be an individual, not a company or trust.
- Be on an income of less than $200,000 for couples, and $125,000 for singles.
- Be spending between $150,000 and $750,000 on a renovation for a home that has been previously valued at less than $1.5 million.
- Be building a new home worth less than $750,000 (this includes land value).
- Applies for contracts entered into between June 4th and December 31st, 2020.
So, what else do we know about the scheme itself and what it entails once granted? Firstly, for those who are eligible, the $25,000 grant is a tax-free program. In addition to this, the scheme will be able to work alongside state and territory first-home owner grant programs, duty concessions and other grant schemes – which includes the federal government’s first-home loan deposit scheme and first-home super saver scheme. And finally, all dwelling types including houses, apartments, house and land packages and off-the-plan purchases qualify for this scheme.
But further stipulations ensue:
- You are required to be the occupant of the built/renovated property; therefore, the grant is ineligible for investment properties.
- Renovations must be for the improvement of a dwelling’s accessibility, safety and liveability. The HomeBuilder Scheme cannot be used for property additions such as pools, tennis courts, outdoor spas and saunas, sheds or garages that are not connected to the property.
How does this scheme benefit property investing overall and what does it mean for you?
The reality is, the associated social and economic impacts of our current climate cannot be fully grasped until well into mid to even late 2021. Therefore, those that are lucky enough to be eligible and participate within the Homebuilder Scheme, the essential takeaway is to be smart about it. Not only does the scheme help first home buyers into the property market, renovating can add real value to your property, improve lifestyle and potentially improve financial futures. But it is important to be careful not to overcapitalise.
For more information on the HomeBuilder Scheme, please visit: