After weeks of speculation the Government has finally released the details of the HomeBuilder scheme.
The scheme is designed to prop up the residential building sector, keeping builders and tradies on the tools.
The Government grants will provide financial assistance to Australian owner-occupiers building new homes, as well as those undertaking major renovations.
Here are the basics:
How much? $25,000
When? Building contracts entered into between 4 June 2020 and 31 December 2020
Who is eligible? Singles with an annual income not greater than $125k, and couples with a combined income not greater than $200k.
What is eligible?
New Builds – Owner occupied homes valued at no more than $750k (including land value).
Renovations – Where the cost of the renovation is between $150k and $750k, and the existing home and land is valued at no more than $1.5m. Owner occupied only.
The grants are paid in addition to any state-based incentives that people might be eligible for, such as first homeowner’s grants and stamp duty exemptions.
What about the $50k?
Over the last couple of weeks people have been talking about figures of $40k or $50k for the construction stimulus.
This was never floated by the Government however.
The $50k figure came from a proposal from the Property Council of Australia, whilst the $40k figure was proposed by Master Builders Australia.
Renovation restrictions
The renovation stimulus is a great idea since many tradies work on renovations rather than new builds.
But there are some fairly tight restrictions when it comes to renovations.
The $150k minimum is quite high, especially considering the means test. $150k is a big renovation for a couple earning no more than $200k.
We’re not saying it doesn’t happen, but it certainly cuts the numbers down in terms of how many people will meet the criteria.
There are also some major exclusions. Pools and tennis courts are excluded, along with sheds and garages.
According to news.com.au the renovation must “improve the accessibility, safety and liveability of the dwelling”. The Australian Financial Review adds that “any other structure not attached to the home will not be eligible”.
Other restrictions
Aside from the restrictions already mentioned, such as the requirement to be an owner-occupier and to meet the means test, there are a few others to consider.
The grants are only available to Australian citizens, and you must be an individual. This means companies and trusts are not eligible to receive the grants.
What does the Government have to say about it?
Prime Minister Scott Morrison is keen to see Australians utilising the HomeBuilder grants to help keep tradies on the tools”
“If you’ve been putting off that renovation or new build, the extra $25,000 we’re putting on the table along with record low interest rates means now’s the time to do it.
“This investment isn’t just about helping Australians bring their dream home to life, it’s about creating jobs and helping support the more than one million workers in the sector including builders, painters, plumbers and electricians across the country.”
Treasurer Josh Frydenberg say the grants will support 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector.
“The construction sector is the number one industry covered by the Government’s JobKeeper program with more than a million Australians employed across the sector.
“However with dwelling investment expected to decline by around 20 per cent through the June Quarter, the HomeBuilder program will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most.”
It’s estimated that the scheme will cost taxpayers $688 million, which is a pittance compared with the $130 billion cost associated with the JobKeeper scheme.
What do we think?
With building approvals dropping off a cliff thanks to COVID-19, the Government had to do something to keep the residential construction industry moving.
From what we’re hearing from tradies, there is plenty of work to keep them busy right now, but they’re concerned about what happens when the current pipeline dries up.
Hopefully these $25k HomeBuilder grants are sufficient to kick people back into gear and start signing up for new builds and renovations, so they can start filling up that pipeline of work for builders and tradies again.
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