HomeBuilder Scheme for First Time Home Buyers

Last week the government announced its $688 million HomeBuilder scheme. While it has been the subject of some controversy, the fact remains that it’s an opportunity for first time home buyers to supplement their own funds when building or renovating their first home.

So, what is the HomeBuilder scheme? Who is eligible to receive it? And what are its pros and cons? Let’s take a look.

What is the HomeBuilder Scheme?

The HomeBuilder scheme is a $25,000 tax-free stimulus grant that will be given to owners planning to renovate or build a new home. It applies only to new homes and renovations, and to be eligible, applicants must meet the criteria set by the government.

The goal of the HomeBuilder scheme is to help the residential construction industry to recover from the economic downturn brought on by COVID-19. Under the scheme, eligible owner-occupiers, including first home buyers, will be able to use the grant to build a new home or substantially renovate an existing one.

What are the Eligibility Requirements?

Of course there are strict requirements to receive the grant. These include:

• Recipients must use the grant to build a new home or ‘substantially renovate’ an existing one.
• All types of dwellings are eligible.
• Recipients must have signed the building contract between 4 June and 31 December 2020.
• The contract must be made by two parties independently of each other and without any special relationship (such as between relatives). The terms of the contract should be commercially reasonable. The contract price should not be inflated compared to the fair market price.
• A licensed builder must commence construction within three months of contract date.
• The builder must demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at July 1, 2019, if requested by the purchaser.
• If the grant is to go toward a new home, the home must be worth less than $750,000.
• If the grant is to go toward renovations they must be between $150,000 and $750,000 and result in the property being priced at $1.5 million or less.
• The government will means-test grant eligibility. It will only be available to singles who earn less than $125,00 a year or couples who earn less than $200,000.

What Can’t the Grant Be Used For?

There are other limitations as well. Recipients can’t use the cash on investment properties or to construct structures outside the home. So, things like swimming pools, tennis courts, outdoor spas and saunas, sheds or unconnected garages are out. And the grant isn’t available to owner-builders.

HomeBuilder will Complement Existing Schemes

Interestingly, HomeBuilder can be used in conjunction with existing federal and state schemes, including Queensland’s First Home Owner Grant program and the Commonwealth’s First Home Loan Deposit Scheme.

That means first time home buyers could potentially double their money. For example, here in Queensland, you could receive $15,000 through the First Home Owner Grant. And if you meet the criteria, you could also save up to $10,000 through the Commonwealth First Home Loan Deposit scheme’s 15% guarantee.

What are the Benefits to First Home Buyers?

$25,000 could certainly help home buyers, particularly first home buyers. With this grant, new home owners might have the opportunity to do more than they might otherwise be able to do. Or, choose to take on less debt to accomplish their home owning goals.

It is also an opportunity to support the residential building industry, and give a boost to the economy.

How to Apply

Eligible Australians will be able to apply for the HomeBuilder grant after their state or territory signs the National Partnership Agreement with the Commonwealth Government. Information about when and how you will be able to apply will become available for Queensland through the Queensland Treasury Department’s economic recovery site.

Takeaway

Despite the controversy, the HomeBuilder grant can be great for those who qualify. There certainly is no downside. And, at the end of the day, it can help you accomplish your home owning goals.

If you’re a first home buyer interested in understanding how the HomeBuilder grant can help you build or renovate your new home, get in touch. We’re here to help.

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