One of the largest industries feared to become a casualty of COVID-19 was the construction industry. Through a combination of state-wide lockdowns, job losses and an unstable economy it was estimated that the number of new home builds would drop by 50% in the second half of 2020. It was believed that the flow-on effect would be felt by the 140,000 people employed by Australia’s construction industry, as well as those on its peripheries, such as project managers, architects and designers.
In response to this fear, the first HomeBuilder Scheme was announced in June 2020. The Scheme set out to provide grants of $25,000 to eligible applicants who were either building a new home or renovating their existing one. Set to expire on 31 December 2020, the HomeBuilder Scheme has since been extended to 31 March 2021.
Why is the Homebuilder Scheme being extended?
The initial offering under the HomeBuilder Scheme has been extremely successful, with an estimated 27,000 new homes set to be built under the program. So far, almost 24,000 applications for the grant have been made nationwide. Of the 24,000 around 19,000 applications were for new home builds and about 5,000 were for home renovations.
Prime Minister Scott Morrison has said that the HomeBuilder Scheme Extension is expected to play a part in a further 18,000 new home builds, bringing the Scheme’s contribution to approximately 42,000. Those in Victoria have made the most applications for the grant with 7,636 made. Around 6,000 applications have been made by Queenslanders and more than 4,000 applications have been made in New South Wales.
Scott Morrison credits the Scheme with creating a “steady pipeline of construction activity to keep tradies on the tools" and believes that extending the offering will help to rebuild the country’s economy. There have also been calls from the construction industry to provide a deadline extension due to the sheer number of applicants who may miss out on grants because of the tight timeframes.
It was expected initially that the program would cost the Commonwealth $680m, but that cost has now been revised to more than $900m.
Is the HomeBuilder Scheme Extension different to the initial HomeBuilder Scheme?
Yes. There are some important changes being made and anyone who is considering applying must be aware of them.
Firstly, rather than receiving a grant of $25,000 to put towards home renovations or a new home build, the amount of the new grant will be paid at a lower rate of $15,000.
Homeowners will now have more time to make a start on their renovations with the deadline being extended to six months from the date of the builder’s contract. The initial offering required works to commence within three months of the contract being signed. This means that those who apply for the grant will have up until 31 March 2021 to engage a builder and enter into a contract with them for works commencing up to 30 September 2021.
While price caps for new builds have lifted in NSW and Victoria, they will remain at $750,000 in Queensland. The income test has also remained the same, with individuals earning under $125,000 and couples who share a household and earn less than $200,000 also being eligible to access the scheme.
Applicants to the HomeBuilder Extension Scheme must not have already received the initial HomeBuilder Scheme grant in any state or territory of Australia.
For assistance with applying for the grant or understanding if your new build or off the plan purchase is eligible, contact one of our mortgage brokers who will be able to assist you with the application process.