In response to the downturn in construction brought about by the COVID-19 pandemic, the Australian Government have released a $25,000 grant for people who are building or substantially renovating their home.
With every new Government scheme comes a raft of questions, mostly around eligibility and the practicalities of applying for the scheme. In short, to be eligible you need to:
- Be over 18 and an Australian citizen.
- Have an income under $125,000 for singles and $200,000 for couples. Your 2018/19 tax return will be used to calculate your income eligibility.
- Enter a building contract between 4 June 2020 and 31 December 2020 to either:
- Build a new home up to the value of $750,000 (includes land value).
- Conduct home renovations to a value between $150,000 and $750,000 where the value of the existing home and land does not exceed $1,500,000.
On face value, it’s a great scheme and can provide a helping boost to those looking to build or renovate. However, it doesn’t come without its catches. Here are just a few:
- The property being built or renovated must be your principal place of residence, it can’t be an investment property.
- The property can’t be owned via a company or trust, the home must be owned in your personal name/s
- The scheme can’t be used by DIY renovators, work must be done by a registered builder. If you were hoping to do some work yourself to save costs, that won’t work.
Taking a deeper look it doesn’t take long before we can identify some other potential roadblocks.
The Government have stated that your building contract must be signed by the end of year and construction must start within 3 months of signing the contract. In reality, the lead time between signing a build contract and starting construction will be much longer for most builders. These delays may be further compounded if you have purchased land that is yet to title.
From an implementation point of view I suggest this scheme will be used by those who purchase a home and land package where the developer is ready to go or those who have already purchased a titled block of land and by luck haven’t yet signed a building contract.
One other concern I have is the renovation threshold. I put it to you, how many single people earning under $125,000 will be able to afford a renovation of at least $150,000. I dare say not many. The enticement of a grant might see people overspend on their initial renovation plans. With this in mind, I don’t see this side of the scheme being used too much.
Whilst I have harped on the issues with the scheme, if you would like to explore your options I’d be more than happy to have a chat. Simply call the office on 03 5224 2700.