Is an extra $25,000 the incentive you need to kick-start your new home build?
The Government’s newly announced HomeBuilder scheme will provide eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home. It is great news for many who are planning on building a new home.
This initiative is expected to cost $680 million and while it is about helping Australians bring their dream home to life, it’s also about creating jobs and helping support the more than 1 million workers in the sector (including builders, material suppliers, painters, plumbers, concreters and electricians) by encouraging the commencement of new home builds and renovations this year.
Specific information on when and how you will be able to access HomeBuilder will become available through the relevant State or Territory revenue office.
ARE YOU ELIGIBLE?
To access HomeBuilder, owner-occupiers must:
- Be aged 18 years or older and an Australian citizen;
- Meet one of the following two income caps:
- Singles earning $125,000 or less per annum based on 2018-19 tax return or later; or
- Couples have a combined income of $200,000 or less per annum based on both 2018-19 tax returns or later;
- Enter into a building contract between 4 June 2020 and 31 December 2020 to either:
- build a new home, where the property value does not exceed $750,000 including land; or
- substantially renovate your existing home, 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;
- Intend for the home to be your principal place of residence (not available for investment properties)
- Engage a Registered Building Practitioner to complete work – Owner-Builders are ineligible
- NOTE: Construction must commence within SIX months of the contract date (Was initially three months however extended due to the introduction of Stage 3 & 4 restrictions in Victoria).
While this support is a fantastic boost for those who are looking to start building, we’re predicting there’s going to be a ‘mad rush’ over the next six months with many people trying to make the most of this opportunity with many hurrying to meet the contract signing and build start deadlines. This will have a flow on effect to relevant professionals including drafts people, architects, engineers, town planners, builders, building surveyors, trades etc.
It’s important you take your time to do your due diligence when preparing, signing and entering a building contract. Remember it’s a legally binding document and rushing to sign it could leave you with variations or unexpected costs that exceed the $25k. Ask anyone who has built before, six months is not a long time to plan a build, prepare and sign contracts and for construction to commence. For your peace of mind, Manse Group can conduct thorough a review of your building contract to highlight discrepancies and highlight risks before you commit.
I have recently signed my building contract before the scheme was announced, can I withdraw from it and re-sign to receive the $25k grant?
We strongly advise having an open and frank discussion with your builder to see if you can come to an arrangement. Some Major Domestic Building Contracts have specific clauses in them regarding cancellation percentages. These percentage typically range from 20% – 30% charges of works completed. Works completed can includes preparation of contracts, selection process, engineering and drawing preparation etc. These costs could be made ambiguous and builders could see an opportunity to make money.
I’ve signed my Preliminary Works Contract, can I still receive the grant?
If you haven’t signed your Major Domestic Building Contract, you should still be able to receive the grant provided you meet the other eligibility criteria.
As a first home buyer, am I only eligible for HomeBuilders grant OR First Home Owners Grant?
First home owners can combine this with the First Home Owner Grant, potentially providing $45,000 for your new build. You may also be entitled to stamp duty concessions as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.
Will the builder just add $25k to the build cost knowing I’m getting the grant?
The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market price. If you have concerns, we recommend asking to see a comparison quote from before 4 June 2020.
I already own my land but haven’t signed a contract to build yet, am I still eligible?
Yes. If you own a property (house and land), and knock the house down to rebuild – this will be counted as a substantial renovation, and therefore subject to the renovation price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre-renovation; If you own vacant land before 4 June 2020, and then build, the total value of the land and new build cannot exceed $750,000; or If you buy the land after announcement, and then build, the total value of the land and build cannot exceed $750,000.