Five considerations prior to applying for HomeBuilder

By Neville Par­sons 

The Home­Builder Stim­u­lus pack­age pro­vides eli­gi­ble own­er-occu­piers (includ­ing first home buy­ers) a grant of $25,000 to build a new home or sub­stan­tial­ly ren­o­vate an exist­ing home.

Home­Builder is set to assist the res­i­den­tial con­struc­tion mar­ket by encour­ag­ing the com­mence­ment of new home builds and ren­o­va­tions in 2020.

Sub­ject to meet­ing the terms and con­di­tions, Home­Builder is avail­able where the con­tract is signed between 4 June 2020 and 31 Decem­ber 2020. Con­struc­tion must com­mence with­in three months of the con­tract date.

The Home­Builder scheme will be open for appli­ca­tions through Rev­enue NSW soon, how­ev­er we urge you to con­sid­er or ensure you have organ­ised these five aspects pri­or to press­ing sub­mit.

 

1. Ensure you have the loan approved

Home­Builder is designed to com­ple­ment exist­ing State and Ter­ri­to­ry first home­own­er grant pro­grams, stamp duty con­ces­sions and oth­er grant schemes as well as encour­ag­ing exist­ing home own­ers to under­take home exten­sions, ren­o­va­tions or improve­ments.

It may seem an obvi­ous step in the process, how­ev­er ensur­ing you have your home loan or home ren­o­va­tion loan approved pri­or to com­mit­ting to the Home­Builder pro­gram is key.

 

2. Check you meet all the cri­te­ria

To qual­i­fy for the Home­Builder grant there are sev­er­al eli­gi­bil­i­ty require­ments.

Eli­gi­bil­i­ty require­ments about you:

• You must be 18 years or old­er.
• You must be an Aus­tralian cit­i­zen (com­pa­nies and trusts are not allowed).
• You must be an own­er occu­pi­er; prop­er­ty investors and own­er builders are not eli­gi­ble.
• As a sin­gle, you must be earn­ing $125,000 or less based on your 2018/19 tax return or lat­er.
• As a cou­ple, you must have a com­bined income of no more than $200,000 based on your 2018/2019 tax returns.

Eli­gi­bil­i­ty require­ments about your ren­o­va­tion or new build:

• The min­i­mum spend must be $150,000 and up to a max­i­mum of $750,000 on home ren­o­va­tions.
• The val­ue of the prop­er­ty you are ren­o­vat­ing must not exceed $1.5 mil­lion.
• For new builds, the val­ue of the prop­er­ty must not exceed $750,000.
• Con­struc­tion must start with­in three months of the build­ing con­tract date.
• Eli­gi­ble appli­cants must have one of the fol­low­ing dwelling types:
  • House
  • Apart­ment
  • Land pack­age
  • Off the plan
  • Build­ing on vacant land
  • Pre­fab­ri­cat­ed hous­es are also con­sid­ered for Home­Builder if the con­struc­tion is under­tak­en by a licensed builder and meets all the oth­er eli­gi­bil­i­ty require­ments.
• The ren­o­va­tion must com­mence with­in three months of the con­tract date and must be com­plet­ed by a licensed or reg­is­tered builder.

Eli­gi­bil­i­ty require­ments about your builder:

• The builder must be licensed or reg­is­tered.
• The builder must hold a build­ing license or endorsed con­trac­tor license before 4 June 2020.
• The signed con­trac­tu­al agree­ment between you and your builder must be done at arm’s length. Mean­ing, if the builder is your rel­a­tive, they can­not be used as your builder under Home­Builder.

Last­ly, you must enter into the build­ing con­tract between 4 June 2020 to 31 Decem­ber 2020.

 

3. Ensure your planned home improve­ments are not exclud­ed

The Home­Builder grant is designed to be used to sig­nif­i­cant­ly improve the acces­si­bil­i­ty, safe­ty and live­abil­i­ty of your home. It is intend­ed for own­er occu­piers look­ing to improve or enlarge their home by doing ren­o­va­tions inter­nal­ly.

Ren­o­va­tion activ­i­ties exempt from Home­Builder include:

• Swim­ming pools
• Out­door spas and saunas
• Ten­nis courts
• Detached shed
• Granny flat
• Garages

 

4. Be con­scious of your home’s improved val­ue

Home improve­ments are a great way to increase the val­ue of your prop­er­ty. How­ev­er, home­own­ers are encour­aged to com­pare the cost of their home improve­ments with the antic­i­pat­ed increase in prop­er­ty val­ue fol­low­ing the improve­ments.

For exam­ple, under the Home­Builder scheme, eli­gi­ble appli­cants must spend at least $150,000 on home improve­ments. Home­own­ers should weigh up if these improve­ments will trans­late into improved prop­er­ty val­ue to make the project worth­while.

 

5. Con­sid­er if the improve­ments align with your long-term plan

What is your long-term plan for this prop­er­ty?

If you plan on mov­ing from this home with­in the next two to three years, it is rec­om­mend­ed not to invest in home improve­ments that do not increase the resale val­ue of your home.

If you are plan­ning on stay­ing in this home into retire­ment, focus­ing your home improve­ments to ensure com­fort as you age may be the best deci­sion for you.

For more infor­ma­tion on Home­Builder, read the Aus­tralian Gov­ern­ment fact sheet here, or the fre­quent­ly asked ques­tions here.

 

If you are a first home buy­er and want to find out more about how the pur­chas­ing process works, down­load our free con­veyanc­ing e-guide here. Should you require any fur­ther infor­ma­tion on con­veyanc­ing, please con­tact us  on (02) 6583 0400 or info@dohlaw.com.au.