In an attempt to get the construction sector moving again under Covid19 conditions, the government has announced the $25,000 HomeBuilder Grant for both new builds and home renovations for owner occupier home owners.
The big difference between the HomeBuilder Grant and other building and construction initiatives is that this grant is available to existing home owners, not just First Home Buyers. The government grant isn’t there to incentivise people to renovate or build when they had no intention, it’s there to encourage those who have been thinking about renovating or building to do it now. The limited timeframe on the grant (between 6 June and 31 December 2020) means the government wants home owners to fast track their plans, to get trades back into work now. If the government didn’t provide this grant, many home owners would delay their renovation plans till 2021 when there is more certainty in the economy. We think this grant will help home owners make the decision to move ahead with their plans, and that’s a good thing to keep the economy moving.
Additional bathrooms and bedrooms add value to a property. Bathroom renovation completed by Termi Home & Commercial
What type of construction works are eligible for the HomeBuilder Grant?
The HomeBuilder Grant is applicable to several types of builds and renovations that are not investment (you must be or planning to live in the property) including;
House and land packages
New house builds where you already own the land
Renovation of an existing home
New off-the-plan apartment purchases
Knock down and rebuild
What renovations are eligible for the HomeBuilder Grant?
The renovation works must be to improve the accessibility, safety and liveability of the dwelling. Essentially, it needs to be connected to the main dwelling. For example;
Internal renovations like kitchens, bathrooms, laundry etc
Extensions to the main dwelling like a new living room, bathroom, second storey extension
New pergola or decking attached to the house
What isn’t allowed:
Any alteration or addition that isn’t connected to the main house such as swimming pools, tennis courts, outdoor spas and saunas, sheds or garages.
Termi Home and Commercial working on a major renovation project on the Central Coast of NSW. Kitchen by Vogue Kitchens
Are you eligible for the HomeBuilder Grant?
To access HomeBuilder, owner-occupiers must meet the following eligibility criteria:
you are a natural person (not a company or trust);
you are aged 18 years or older;
you are an Australian citizen;
you meet one of the following two income caps:
$125,000 per annum for an individual applicant based on your 2018-19 tax return or later; or
$200,000 per annum for a couple based on both 2018-19 tax returns or later;
you enter into a building contract between 4 June 2020 and 31 December 2020 to either:
build a new home as a principal place of residence, where the property value does not exceed $750,000; or
substantially renovate your existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of your existing property does not exceed $1.5 million;
construction must commence within three months of the contract date.
Can I borrow to fund my renovation?
Yes, you are still eligible for the HomeBuilder Grant if you borrow the funds to complete your renovation, addition or alteration. Working with a mortgage broker like Mint Equity can help you access the equity in your property to fund all or some of the renovation works.
Taking advantage of the $25,000 HomeBuilder Grant for those renovations that you’ve been putting off for years, will not only support the construction sector, but it will help you improve the value of the property and liveability.
For example, if your renovation costs $160,000 (just over the minimum requirement) and you receive $25,000 from the government, you’ll only pay $135,000 – which is a 15.6% discount on the contract price.
While Anthony Albanese said today that people don’t have $150,000 sitting in their bank accounts, he didn’t consider that most people borrow to fund their renovation and add the costs to their home loan.
“Borrowing $135,000 on 2.55% standard variable home loan interest rate adds $67 per week to your home loan on interest only, or $124 per week on Principal and Interest repayments, over 30 years.* ”
Building contract must be at arms length – no special relationships
In negotiating a building contact, the parties must deal with each other at arm’s length. This means 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.
Renovations or building work must be undertaken by a registered or licenced building service 'contractor' (depending on the state or territory you live in) and named as a builder on the building licence or permit.
How to apply for the $25,000 HomeBuilder Grant
You will be able to apply for HomeBuilder through your relevant State or Territory revenue office or equivalent authority, once the State or Territory Government that you live in (or plan to live in) signs the National Partnership Agreement.
States and Territories will backdate acceptance of HomeBuilder applications to 4 June 2020 once the National Partnership Agreement is signed.
You should contact your relevant State or Territory revenue office for more information about when and how you will be able to apply for HomeBuilder.
What documentation will I need to provide to receive the HomeBuilder Grant?
You’ll need to provide some documentation to show that you meet the home ownership, contract price and income test requirements. It is expected that you will need to provide the following at a minimum:
proof of identity;
a copy of the contract, dated and signed by you and the nominated registered or licenced builder;
a copy of the builder’s registration or licence (depending on the state you live in);
a copy of your 2018-19 tax return (or later) to demonstrate your eligibility against the income cap; and
documents such as council approvals, building contracts or occupation certificates and evidence of land value.
Need to know more?
For more information on the $25,000 HomeBuilder Grant download the Australian Government fact sheets or visit the Treasury website.
Home Builder Grant Fact Sheet
Home Builder Grant FAQ
* Figures and amounts accurate at time of publishing