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HomeBuilder: What is it, and are you eligible?

HomeBuilder: What is it, and are you eligible?

Planning to build or substantially renovate your house? The HomeBuilder grant is here to help. This latest government stimulus spending is aimed squarely at the construction industry, with huge benefits for homeowners.

What is HomeBuilder?

Treasury says that 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.” Projected to cost around $688 million, the package is aimed primarily at first home buyers eyeing off house-and-land packages. Almost 7% of workers in the construction industry have lost their jobs in the past three months. This package is intended to stimulate demand so those jobs can be recreated.

To access the grant, you must be planning to spend at least $150,000 and not more than $750,000 on building or improving your home. The high minimum spend means that small upgrades, like a new kitchen or bathroom, won’t qualify. If you’re building an extension, though, or doing a complete refit of the interior, it might be a substantial boost to your budget.

The contract for the work must be signed between 4 June and 31 December 2020, and construction must commence within three months of signing the contract. If you don’t already have plans in place, you’ll need to get your skates on to get building and development approvals secured.

Who is eligible?

The grant is only for owner-occupiers. It is not available for investment properties or ‘second homes’ but must be your principal place of residence. Owner-builders are prohibited from accessing the grant.

It is also means-tested. Singles earning over $125,000 or couples earning over $200,000 will not be eligible.

For new builds, the property value must not exceed $750,000.

For substantial renovations to existing properties, the contracted work must cost between $150,000 and $750,000. The value of the property must not exceed $1.5 million.

If you are renovating, the works must be to “improve the safety, liveability and accessibility” of the home. That excludes ‘lifestyle’ additions like swimming pools, outdoor decks, garages and tennis courts.

There have been concerns that the construction industry will simply put prices up by the amount of the grant. In response, the legislation states that a licensed or registered builder must demonstrate that the price is no more than it would have been for a comparable product (in location, size and quality) as of July 2019. If you’re hiring a builder, ask them to provide this assurance. The terms must also be commercially reasonable and comparable to a fair market price.

The work must be carried out by a licensed builder, and the contract must be between two independent parties, so you can’t hire your Dad to do the work.

How do you apply?

The HomeBuilder grants will be administered by each state and territory individually after they sign the National Partnership Agreement with the Federal government. Keep an eye on your state or territory revenue office for more details on the application process.

State and territory grants

If you’re living in Tasmania or Western Australia, you might also be able to benefit from state-based grants of up to $20,000. These are available in addition to the HomeBuilder grant, so you could find yourself with a $45,000 windfall!

The Tasmanian Home Builders Grant offers $20,000 to any owner-occupier who is building a new house from 4 June 2020. Previously limited to first home buyers only, the grant is now available to anyone who signs a contract to build before 31 December, with construction to be completed within two years. It is not available to investors.

In Western Australia, the new Building Bonus goes even further. It makes $20,000 available to both owner-occupiers and investors, and may also apply to purchasers of property that is currently under construction. Grants are available until 31 December 2020 and are not means-tested.

Living elsewhere in the country? Keep an eye out for new announcements from your Premier or Chief Minister. Construction and the housing industry are on everyone’s radar, and there’s a high likelihood that further stimulus will be forthcoming.

In further good news for first home buyers, the package is intended to operate in addition to existing grants. If your state or territory offers a first home buyers’ grant, and/or stamp duty concessions, you will still be able to access these as well as the HomeBuilder grant.

With interest rates at rock bottom, there may never be a better time to build your dream home.

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