Building a home? Your guide to the HomeBuilder Grant

Building a home? Your guide to the HomeBuilder Grant

21 Sep, 2020

While it may seem surprising in light of the COVID-19 pandemic, there’s never been a more appropriate time for Australians to build their own home.

As you may have heard, the Federal government recently introduced the HomeBuilder project, which offers a $25,000 grant to Australians to build, renovate or buy off-the-plan homes. This federal scheme was introduced in response to the pressure COVID-19 has put on the Australian economy – particularly in the construction industry.

While the main goal of the HomeBuilder is to stimulate the struggling residential sector, it’s also had seen a positive response from home-seeking Australians. In fact, in just the first month after the scheme was announced, more than 7500 had registered their interest.

The fact that the grant is available in conjunction with other initiatives like the First Home Owners Grant gives a rare headstart to those looking to build their dream home. However, it’s only available until the end of the year, and there are a range of restrictions involved (which may explain why only a few hundred formal applications have been made so far)

Here’s everything you need to know about the Government’s HomeBuilder grant  — from how it works to the expected timeframes and eligibility requirements.

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What is the HomeBuilder scheme?

The HomeBuilder scheme provides a grant of $25,000 to eligible owner-occupiers (including first home buyers) to construct a new home or significantly renovate an existing one. It exists to reinvigorate the construction industry by encouraging new builds, as well as assisting Australian home-seekers.

How can I apply for the HomeBuilder scheme?

You can apply for the HomeBuilder scheme directly through your local State or Territory Revenue office. Each of these jurisdictions has its own application forms and online portals, so be sure to check your relevant office for the necessary information. You can find the appropriate website to apply at the end of this guide.

When can you apply for the HomeBuilder scheme?

Submissions for the HomeBuilder grant are now open in every Australian state and territory. Applications close on  31 December 2020 so it’s best to supply any necessary documentation as soon as possible, to ensure adequate time to process it. However, different jurisdictions have slightly varying deadlines, so be sure to check with your relevant Revenue office.

When is the Home Builder grant paid and by who?

In most cases, the grant will be paid by the relevant State or Territory straight to the account of the applicant. The date of your HomeBuilder payment will depend on whether you’re building, renovating or buying off the plan.

New builds:  The grant will be paid after foundations have been laid and you have transferred the first progress payment to your builder

Substantial renovations: The grant will be paid after construction has started and at least $150,000 of the contract price has been paid

Off-the-plan/new homes: The grant will be paid once the applicant’s name has been registered on the title

Will the HomeBuilder grant be pre-approved?

No, the HomeBuilder payment isn’t pre-approved — it will only be paid after the relevant milestones listed above. However, if you are in Tasmania, the timing of the grant may be different depending on your circumstances so be sure to refer to the State Revenue Office of Tasmania website for further information.

How long does the HomeBuilder application process take?

The time it takes to have your HomeBuilder application processed depends on the individual Revenue Office and the volume of applications. It may also vary depending on the type of application. The best way to speed up the application process is to submit all the necessary documentation at the time of application.

Is the HomeBuilder grant taxed?

No, as with the existing State and Territory First Home Owner Grant, the owner-occupied isn’t taxed on the HomeBuilder grant.

What documents or proof do you need to apply?

The documentation you will need to submit depends on where you live, as each Revenue office has different requirements. Be sure to check the website for your local jurisdiction at the end of this article to find the documentation required.

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What is the eligibility criteria for the HomeBuilder grant?

Applicants

Who can apply for the HomeBuilder grant?

There is a range of requirements owner-occupants must meet in order to be eligible for the HomeBuilder grant.

They must:

  • Be a natural person, meaning not a company or trust
  • Be 18 years or over on the contract date
  • Be an Australian citizen at the time of application
  • Have earned less than $125,000 per annum for their 2018-2019 or 2019-2020 taxable income, if they are an individual applicant
  • Have earned less than $200,000 for their 2018-2019 or 2019-2020 combined taxable income, if they are a couple
  • Have entered a contract from 4 June 2020 up to 31 December 2020
  • If they are  constructing a new house, the property value (land and home) must not exceed $750,000
  • If they are  substantially renovating an existing home, the construction must not exceed $1.5 million
  • If they have purchased an off-the-plan new home, the contract price must not exceed $750,000, and construction must not have started before 4 June 2020
  • Whether building, renovating or buying off the plan, the property must be intended as a primary place of residence

What is an owner-occupier?

An owner-occupier is defined as the registered proprietor of the land at which they live. The property must also be their primary place of residency, and they must be a natural person (ie. not a company or trust).

Do the applicants need to be listed on the title?

Yes, but the timeline by which the applicant(s) need to be registered on the title depends on the type of contract they’re entering into:

For building a home: Generally, you should be registered on the title by the time of laying foundations and the first progress payment. However, this varies amongst jurisdictions so its best to check with your local Revenue office.

For substantial renovations: Applicants should be registered on the title as owner of the property at the time you enter the contract for renovation.

Applicants who have lodged a caveat on the title are not eligible for the grant, as they are not an owner-occupier.

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What happens if more than one person is listed on the title?

In cases where more than one person is listed as registered proprietor, they must apply for the HomeBuilder grant together as a couple. The grant can only be claimed once per property.

What is the definition of ‘couple’?

For the purposes of the HomeBuilder grant, the definition of a couple is similar to the  Commonwealth’s First Home Loan Deposit Scheme. That is, they are legally married, in a registered domestic partnership or are living together on a genuine domestic basis. However, the definition of a couple varies between State and Territory authorities, so it’s important to check with your relevant office.

How will my income be assessed?

For your HomeBuilder application, your income cap is assessed based on your taxable income in either your 2018-19 or 2019-20 Australian tax return. It’s at your discretion which statement you provide as part of your application, but make sure to keep the income caps in mind: $125,000 per annum for an individual applicant or $200,000 per annum for a couple.

How do I prove my taxable income?

Taxable income is shown on your notice of assessment. The notice of assessment is issued by the Australian Taxation Office once your tax return for an income year is processed and this can be used to demonstrate your taxable income.

Does the tax return have to match the name on the building contract and land title?

Yes, the name on the tax notice of assessment must be the same as the individual listed on the title of the property as the registered proprietor.

Is there a limit to how many people can access HomeBuilder?

No, the HomeBuilder grant is uncapped, for any Australian citizen who meets the criteria. However, it’s important to keep in mind that it’s only open for a limited amount of time (until the end of 2020) and only one grant can be received per property.

Can I apply for both the HomeBuilder grant and other housing grants offered by my State?

Yes, you can apply for both the HomeBuilder grant and other home buyer grants and programs. These will not affect your eligibility for the HomeBuilder grant or vice versa.

I am not a first home buyer – can I access HomeBuilder?

You do not necessarily need to be a first home buyer to be eligible for HomeBuilder — as long as you meet the other criteria. However, it’s not available for property investors or owner-builders.

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Contracts

What is the contract price cap (for new builds and renovations)?

For new builds, house and land packages and off-the-plan purchases, a national dwelling house cap of $750,000 applies. For renovations, there must be a contract price range of between $150,000 to $750,000, and the value of the property before renovation cannot exceed $1.5 million.

What type of contracts are eligible under HomeBuilder?

Contracts signed between  4 June 2020 and 31 December 2020 are eligible for HomeBuilder, as long as they meet the other requirements. For new builds and renovations, the building contract is the relevant contract. For developer projects, including off-the-plan builds, the contract refers to the sales contract.

What is meant by ‘commencement of construction’?

The definition of ‘construction of commencement’ depends on where you live, and the type of contract you’re entering into. In some jurisdictions, this starts as early as the excavation and site preparation, whereas others define it as laying the slab.

For renovations, commencement of construction is defined as when the works in the contract start. For off-the-plan builds, this could be the site preparation stage, or laying the foundation of slab for a carpark (whichever occurs first) For the most accurate information, check the website of your  State or Territory Revenue office.

Who needs to undertake the construction?

Wondering if you can build the house yourself, or get your handyman uncle to do it?

According to the Government website, construction must be done by a licensed or registered builder, who has held their license prior to 4 June 2020.

They must be named as a builder on the building licence or permit. In some States or Territories, the construction may be carried out by a friend or relative, so long as they are a registered builder and the relationship is kept professional (ie. no favours) The HomeBuilder grant is also not available to owner-builders.

What is the definition of an owner-builder?

An owner-builder is defined as a registered or licensed builder who takes on the legal responsibility for construction work or substantial renovations on their own property or land. They are not eligible for the grant.

What happens if construction is delayed due to an issue with development approvals or other unforeseen circumstance? Can I apply for an extension?

To be eligible for the grant, construction must generally start within three months of the contract date. However, in the case of delays caused by unforeseen circumstances, a maximum extension of an additional three months may be provided on a case-by-case basis. This will be assessed by the relevant State or Territory office, who will use their own discretion as to whether an extension is warranted.

How are timing delays associated with acquiring new land for construction dealt with in HomeBuilder?

So, what if you’re able to obtain the grant, but you’re struggling to acquire land by the end-of-year deadline? You may be able to fast-track your land acquisition for a new construction project, however, this will be a case for your relevant States and Territory authority.

What is classified as a new build?

What types of dwellings are eligible under HomeBuilder?

As long as an applicant meets the other requirements — such as property value limits— houses (including home and land packages) and apartments (including off-the-plan) are eligible for the HomeBuilder grant.

I already own land but haven’t signed a contract to build a new house – am I still eligible?

Yes, so long as you own the property and land and knock down the house to rebuild, as this would be considered a substantial renovation. You would also need to ensure the renovation price falls within the range of $150,000 to $750,000 and the value of the property cannot exceed $1.5 million. If you own vacant land before 4 June 2020 and then construct a new home, the value of the build also cannot exceed $750,000.

I want to build a new home in a land lease community. Is my property eligible for the HomeBuilder grant?

No, you must own the land and property you are planning on constructing on, in order to be eligible for HomeBuilder. This means you must be the owner-occupier listed on the title as registered proprietor.

What if I want to buy a recently built home that has never been lived in before? (E.g. spec build)

Generally, if a property began construction before 4 June 2020, it won’t be eligible for the HomeBuilder grant. However, if it started after that date and a contract was signed and provided no later than three months after the contract, you may still be eligible.

What if I want to buy an off-the-plan apartment or townhouse?

Buying off-the-plan refers to purchasing a property that is yet to be constructed, based on a developer’s plan and renderings. Off-the-plan apartments and townhouses are eligible for the HomeBuilder grant if the construction of the plan started after 4 June 2020.  You must also be registered on the title as the owner of the property by no later than 31 October 2022.

What is classified as a substantial renovation?

The government defines a substantial renovation as one that significantly improves the accessibility, safety and liveability of a property. However, exactly how this criteria is assessed varies between States and Territories. Knock-down rebuilds are also considered substantial renovations for the purposes of HomeBuilder.

What renovations are eligible?

Renovations must significantly alter the property in terms of the above criteria, and range between $150,000 and $750,000. Generally, work that is primarily aesthetic in purpose (such as landscaping) or those involving standalone granny flats, swimming pools, tennis courts or structures not connected to the property  (such as hot tubs) are not eligible.

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What happens if an applicant has multiple contracts for renovations (totalling more than $150,000)?

Only one renovation contract can be used per application, and this must be valued between $150,000 and $750,000.

How will the $1.5 million value be assessed for substantial renovations?

To satisfy the $1.5 million limit, you may need to provide documents like the contract of sale, a bank or independent valuation or a rates notice identifying the Capital Improved Value. However, the documentation required varies between jurisdictions, so you will need to contact your local Revenue office.

I would like to renovate my investment property – would it be eligible for HomeBuilder?

Investment properties generally aren’t eligible for HomeBuilder. However, if you move into the property as your main place of residence straight after the renovation and meet all the other criteria, the grant may still be payable.

What if I renovate my house and then want to sell? Is there a limit on how long I need to live there?

Yes, in order for the property to be considered your primary place of residence, you must live there for six months after the certificate of occupancy or final inspection certificate is issued, or the renovations are completed (depending on the type of contract). However, there may be some timing differences between the States and Territories.

What integrity measures has the government implemented for HomeBuilder?

In order to manage demand and maximise the safety of this scheme, the government has implemented a range of integrity measures. These include the income caps, which align  with the existing First Home Owner Grant programs.  There are also restrictions around who can build and purchase homes, and what work can be done. For example, the grant excludes owner-builders and those looking to build or renovate an investment property. These measures ensure construction is only carried out safely by licensed builders, which also maximises the intended goal of the program — to support the residential construction sector.

If you have been considering buying or renovating, HomeBuilder grant provides a unique opportunity to get on the property ladder faster. If it’s the right next step for you, be sure to have your documentation in well before the 31st December cut-off. While the $25,000 will provide a great boost, you may also find you need additional funding to get your dream build off the ground. eChoice’s team of trusted brokers can help you compare the hundreds of home loans on the market so you can find the right ones for your needs.

Additional resources

To find more information on the Government’s HomeBuilder program, including the application forms for your local jurisdiction, please see below.

For more information on the HomeBuilder grant:

Visit the Treasury’s website

New South Wales:

Visit Revenue NSW’s website

Northern Territory

Visit the Northern Territory Revenue Office’s website

Queensland

Visit the Queensland Office of State Revenue (OSR) website 

South Australia

Visit the RevenueSA website.

Tasmania

Visit the State Revenue Office of Tasmania website.

Victoria

Visit the State Revenue Office Victoria website.

Western Australia

Visit the Revenue WA website

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