Federal Government releases the HomeBuilder grant
As of June 4, the Government revealed their latest scheme in response to the Coronavirus-lead economic downturn with the HomeBuilders grant. This comes as the Treasurer yesterday confirmed that Australia has entered a recession after 29 years of continuous economic growth.
The government revealed the highly anticipated HomeBuilder grant commenced at midnight last night. The HomeBuilder grant will see $25,000 provided to new builds or renovations contracted between now and the end of the year. Of course, with this grant comes a list of specific eligibility criteria.
To be eligible for the HomeBuilder grant, you must:
- 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).
- Enlist a licenced builder to complete the construction
While many may identify as eligible, there are many things to be aware of when it comes to the HomeBuilders scheme.
The grant is only applicable to owner-occupiers (including first home buyers)
This means any investors looking to take advantage of the grant are excluded. It also means that competition to receive the grant is increased due to the vast majority of people eligible.
The grant is tax-free
Need we say more??
All dwelling types are included
House, apartment, house and land package, off the plan etc are all included under the scheme. However the grant will not apply to owner-builders or those who are planning to build a new home or renovate an existing one as an investment property.
External additions to the home are excluded from the grant
This means pools, garages, tennis courts and the like are not to be built with the $25,000 if they are not physically connected to the house.
Building must commence within 6 months of the contract signing
The grant will be offered to any contracts entered between June 4 and December 31 but will be voided if construction has not commenced within 6 months of signing the contract.
**Update – on August 5, the government extended the original 3 month window required from contract signing to build commencement to 6 months in response to stage four restrictions in metropolitan Melbourne.
The scheme is uncapped
While there is no limit to the number of grants provided, the government estimates that around 27,000 grants will be applied, costing the government an estimated $688 million.
What does this mean for First Home Buyers?
Ultimately, it’s another leg up into the property market. People have criticized the renovation aspect of the grant, claiming that most people with a salary of under $125,000 as a single or $200,000 as a couple, won’t have the money to fund a renovation costing at least $150,000.
However, with the cap of new home builds at $750,000, there’s plenty of opportunity to capitalise on. With PDX house and land packages all priced under $577,900, the grant is a complete money saver and complements existing State and Territory First Home Owner Grant programs as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.
While in recent years the property market has appeared near impossible for First home buyers to break into, it seems that with all the First Home Buyer schemes provided by the government, including the latest HomeBuilder grant, First Home Buyers should feel a greater sense of support and opportunity than ever before.
To read more about the HomeBuilder Grant, visit these links: