By Justin Mastores – 22/04/2021
The Morrison Government has extended the construction commencement requirement for the HomeBuilder program – from 6 months to 18 months for all existing applicants.
More than 121,000 Australians have applied for either the $25,000 or $15,000 Homebuilder grant, which is expected to pump another $30 billion into Australia’s residential construction industry.
Why extend it now?
The government has said that their decision to provide existing HomeBuilder applicants with an additional 12 months to commence construction is a response ‘to unanticipated delays’ in construction industry supply chains.
These delays would have made it impossible for many applicants to commence construction within the initial 6-month time frame, something The ABC flagged as a potential issue in early March.
These disruptions to the construction industry have been caused by a number of converging factors – COVID-19 ravaged supply chains, local labour shortages, and global events like the recent Suez Canal crisis.
So what is HomeBuilder? Who’s eligible for the extension?
The HomeBuilder grant program was first introduced on the 4th of June 2020. It promised a $25,000 grant to owner-occupiers (including first home buyers) who planned to build from scratch, substantially renovate their existing home, or buy a new, off-the-plan home.
The Government’s reasoning behind the new program is that it will increase confidence in the residential construction sector and keep Australians spending money through a rocky economic time.
Initially, the grant was made available to anyone who entered an eligible contract between 4th of June 2020 and December 31st. It was later extended until March 31st 2021, with the grant amount lowered to $15,000 for those who applied during this period.
Crucially, applications for the HomeBuilder grant closed just last week, at midnight on April 14, 2021. That means this new extension won’t allow any more Australians to join the program and receive a grant – but it means that existing applicants have vastly more time to plan & build, and those who were rejected based on timeframe concerns can now have the decision overturned.
There are a number of different requirements imposed on when & how this grant money can be accessed, and it differs from state to state. You can find the full details for your state here.
Amongst the most important requirements are caps on income and property values. The income eligibility is capped nationally at $125,000 for singles and $200,000 for couples. The cap on property values in most states is set at $700,000. It’s slightly higher on the east coast, at $850,000 in Victoria, and $950,000 in NSW.
When you can access the money depends on the type of construction you’re doing, and your state of residence. In South Australia, for instance, moves have been made to allow the grant to be part of your deposit. It’s an idea which some, but not all, of the state’s lenders have tentatively taken up.
But will it work?
While the benefits of HomeBuilder for those looking to build or renovate are clear, there has been some criticism if – at its initial cost of $680 million – the HomeBuilder package will do enough for the economy overall. Predictably, the biggest discrepancy has been in the number of jobs forecast to be created by the move.
Assistant Treasurer & Housing Minister Michael Sukkar told The ABC in August 2020 that HomeBuilder would “protect hundreds of thousands of jobs” and claimed as recently as last week that it would protect “more than 1 million jobs” in the sector.
This echoes remarks made by Scott Morrison, who claimed upon announcing the program that it would support “140,000 direct jobs and 1,000,000 related jobs in the residential construction sector.” However, recent Treasury analysis undertaken in late 2020 and published by Business Insider suggests that only 9,600 new jobs will be created.
The Housing Industry Association (HIA) disputed this analysis as an underestimation, suggesting that it would be closer to 11,000. But even then, that’s still a long way off of the figures that the coalition have been proudly and publicly claiming.
Key criticisms published alongside the analysis in Business Insider included that the scheme only targets people who were planning to spend a lot of money anyway, with CoreLogic research head Eliza Owen saying it was “akin to robbing Peter to pay Paul.”
Other industry leaders showed support for the package but called for stronger measures, like the extension that was just announced – “The outlook for the industry and the economy is extremely grim. HomeBuilder should be extended for 12 months in the Federal Budget, to help maintain a pipeline of work and be a lifeline for builders and tradies,” said Master Builders Association CEO Denita Wan, in September of 2020.
What should I do?
So, it sounds like The Government has been listening to the feedback, but only time will tell if this recently announced extension will be enough to bring the scheme over the line.
In the meantime, if you’ve already signed up for the HomeBuilder scheme – congratulations! We recommend taking advantage of the extra time to shop around and find the right builder with the right deal.
These new measures take the pressure off both builders and homeowners. Instead of rushing to squeeze renovations or a risky property purchase in to take advantage of the grant, instead take a nice, long deep breath – and then use the extra time to plan wisely.
If you’d like to have a more in-depth talk about your property situation, and how you can best take advantage of the HomeBuilder package, then reach out to us today for a confidential chat. We’ll help you make the right call.
Disclaimer: This advice is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether this advice is suitable for you and your personal circumstances before acting on it.