Last week, the Commonwealth Government announced the latest of its economic stimulus packages – the HomeBuilder program. Grants of $25,000 are available to eligible recipients and is designed to ensure that residential construction work planned for between now and the end of the calendar year goes ahead in as many cases as possible.
The program is available to people building or substantially renovating a home to live in for themselves – investment properties do not qualify. Properties must be owned in individual name/s and those individuals must be Australian citizens. If you are an individual, then your income for the 2018/19 year must not have exceeded $125,000. If you are a member of couple, then your combined income for the 2018/19 year must not have exceeded $200,000. (It is not stated if you apply for the grant after the end of the current financial year, your income in the 2019/20 year will become the relevant one – however your year end financial planning is still important: see our article two weeks ago and talk to us directly if you would like to know more about these thresholds).
The grant can be used by two broad groups. The first is people building a new home. In this case, the completed value of the property must be below $750,000. If the home being built is a first home, the HomeBuilder grant can complement any first home buyer’s incentive the owner is already qualified for. The second group is people who already own a home and are renovating it. In that case, the cost of the renovation must be between $150,000 and $750,000 and the value of the existing property must not exceed $1.5 million.
In either of these cases, the contract for the work must be signed between June 4 and the end of December 2020. The actual work must commence within three months of the contract being signed.
There are some limits on the funding: it cannot be used for things that would make politicians look silly, like tennis courts or swimming pools. The contractor must also be someone who is at ‘arm’s length’ from the grant recipient: so too bad if you were going to use a relative or the best man at your wedding to do your renovation. The work also needs to be carried out by licenced tradies, so DIY’ers will generally miss out as well.
Given all these parameters, in most cases the grants will be used by people who were already fairly advanced in their plans to build or renovate – and, in the Government’s mind, might have been having doubts about whether to go ahead given the current economic circumstances. The Government wants as much of the potential work in local construction to actually happen as soon as possible, so as to avoid a downturn in the building industry (and probably also the housing markets). These grants are essentially intended to encourage people to go ahead with plans they were almost certainly already thinking about.
Altogether, the Commonwealth expects that the program will cost around $680 million.
If the HomeBuilder incentive is relevant for you or someone you know, please feel free to contact us and we can provide you with more detailed information.