The government’s $680 million HomeBuilder program is getting a lot of coverage, but the strict eligibility criteria is prohibitive for many households, Azlin Lufti writes.
To support jobs in the residential construction sector, the Federal Government is giving eligible Australians a $25,000 tax-free grant to put towards building a new home or substantially renovating their existing home, under the HomeBuilder program.
Launched on June 4 by Prime Minister Scott Morrison (who can forget footage of that angry resident telling the PM to get off his lawn), HomeBuilder forms part of the government’s Coronavirus stimulus measures.
Before getting too excited, though, the eligibility criteria is so tight that few homeowners, particularly those in Sydney and Melbourne, are likely to qualify.
Successful applicants must be Australian citizens over age 18 and meet the following criteria:
- Earn a maximum of $125,000 per annum for singles or $200,000 per annum for couples, based on their 2018/19 or 2019/20 taxable income.
- Enter 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 spend between $150,000 and $750,000 renovating their existing home, where the property value does not exceed $1.5 million (before renovations).
- Renovations must improve the accessibility, safety or liveability of a dwelling, and must not include standalone structures such as a granny flat, detached garage or pool.
- Construction (by an unrelated arm’s length party) must begin on or after 4 June and within three months of the contract date.
To complicate matters, HomeBuilder grants are not pre-approved, which means that applicants need to commit to undertaking significant renovations before they receive confirmation of a grant. This requirement adds a layer of risk for applicants.
Putting aside the fact that few households are in a financial position to spend $150,000 on renovations, in the current Covid-19 economic climate, even average houses in capital cities like Sydney and Melbourne are selling for upwards of $1.5 million.
Last year, this three-bedroom house in Sydney’s inner west, described by the estate agents as “disturbingly ugly, extremely dilapidated and practically unliveable” sold for $1.625 million, half a million dollars above the auction guide of $1.1 million.
In Adelaide, the median house price is just under $550,000, but in Sydney the median price is $1.1 million and slightly over $900,000 in Melbourne, according to the 2019 Domain House Price Report.
While it is unclear how properties will be valued, the $1.5 million cap will severely limit who is eligible to apply.
It will be up to states and territories to process HomeBuilder applications, accurately value properties and distribute grants. Applications must be submitted by 31 December 2020.
The HomeBuilder program is on top of existing State and Territory First Home Owner grants, stamp duty concessions and other grant schemes.
If you are considering applying for a HomeBuilder grant and would like help assessing your eligibility and gathering information such as your tax returns, please contact Azlin on 02 9222 1422.