In addition to any existing First Home Buyer Grants available across each state AND access to the First Home Loan Deposit Scheme which eliminates the cost of Lenders Mortgage Insurance, today Federal Government has launched its new HOMEBUILDER SCHEME. The program is designed to boost the construction sector due to the economic fallout from COVID-19 whilst supporting middle income earners to enter the property market.
Today the federal government announced an extraordinary scheme to stimulate the economy by giving people $25,000 to renovate their homes or build a new house.
The HomeBuilder Scheme is available to ALL Australian’s who meet the eligibility criteria NOT only First Home Buyers.
However, in QLD for example, it does mean a first home buyer building a new home could get a total of $40,000 in grants to build and stamp duty concessions when the HomeBuilder grant of $25,000 is combined with the existing state scheme.
The cash splash will be offered for any contracts entered into between 4 June 2020 and 31 December 2020.
It also means that anyone who is eligible and currently building a new home will miss out on the cash with the short, sharp HomeBuilder stimulus to end on New Year’s Eve.
Investors and owner builders will be banned from claiming the cash with the scheme designed to help low and middle income earners to climb on the property ladder.
The grants are available for renovation works that cost between $150,000 and $750,000 and for new homes valued at less than $750,000.
Renovations must improve the ‘livability’ of the home, meaning swimming pools, tennis courts, outdoor spas and saunas, and detached sheds or garages do not count.
The government has decided to target the construction industry because it has been hammered by the Coronavirus downturn.
Half of new home builds and renovations have been cancelled or postponed as Aussies decide to preserve their cash.
This far exceeds the 17 per cent reduction seen during the global financial crisis. And dwelling investment is expected to decline by around 20 per cent through the June quarter.
Treasurer Josh Frydenberg said:
“The HomeBuilder program will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most.”
“The Government’s economic support measures including HomeBuilder are designed to be temporary, targeted and proportionate to the challenge we face so that we can ensure Australia bounces back stronger on the other side”. he said.
So who is eligible?
To access HomeBuilder, owner-occupiers must meet the following criteria:
- You are an individual, not a company or trust;
- You are aged 18 years or older;
- You are an Australian citizen;
- Individuals earning less than $125,000 or;
- Couples earning less than $200,000;
- Contracts must be entered between 4 June, 2020 and 31 December, 2020.
What can be built?
- A new home as a principal place of residence valued up to $750,000 (including land).
- A renovation to an existing home as a principal place of residence, with renovations valued at between $150,000 and $750,000 with the dwelling not valued at more than $1.5 million before the renovation.
- The renovation works must be to improve the accessibility, safety and livability of the dwelling.
- Swimming pools, tennis courts, outdoor spas and saunas, and detached sheds or garages do not count.
- The renovation can be a combination of works (i.e kitchen and bathroom renovation) but must be under the supervision of a registered or licenced builder.
- Construction must be contracted to commence within three months of the contract date.
Who can do the building?
Renovations or building work must be undertaken by a registered or licenced building service ‘contractor’. They must have held the building licence or endorsed contractor licence before 4 June.
The contract must be made by two parties freely and independently of each other, and without some special relationship, such as being a relative.
The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market price.
Click here for information about how to apply for the HomeBuilder Scheme.
If you have any questions about the new HOMEBUILDER SCHEME or require assistance with arranging finance to build/renovate or making application for any of the current Govt schemes available please call our office on 1300 888 299 or send us an email.
General Advice Warning: The advice has been prepared without taking into account your objectives, financial situation or needs. You should therefore consider the appropriateness of the advice, in light of these objectives, financial situation or needs, before following the advice. We recommend that you speak to your accountant and financial adviser to help you determine whether direct property investment is right for you.