Australia: What is the new HomeBuilder Grant and am I eligible?

What is the new HomeBuilder Grant?

The Federal Government has recently announced a new HomeBuilder Grant which aims to give the residential construction industry a boost as the industry recovers from the Covid-19 crisis. The HomeBuilder Grant provides $25,000.00 to eligible owner-occupiers to put towards the cost of building a new home or substantially renovating an existing home.

Am I eligible for the new HomeBuilder Grant?

The HomeBuilder Grant applies to all owner-occupiers provided certain criteria is met. To access the Grant, owner-occupiers must be a natural person (not a company or trust), aged eighteen (18) years or above, be an Australian Citizen and meet one of the two income caps.

For an individual, the income cap is $125,000.00 per annum based on their 2018-19 or 2019-20 taxable income. For a couple the income cap is $200,000.00 per annum based on both combined 2018-19 or 2019-20 taxable income. A couple is considered as two (2) people that are legally married, in a domestic relationship, or living as a couple on a genuine domestic basis (excluding relations such as siblings).

For contracts to build, the applicant must be registered as owner of the land by no later than the laying of foundations and by the time the first progress payment is made. For substantial renovations, the applicant must be registered as the owner of the property at the time the Domestic Building Contract is entered into. For off-the-plan contracts the applicant must be registered on title as the owner of the property when the building is completed and the applicant is entitled to take possession which must be no later than 31 October 2022.

Upon completion of the construction, renovation or settlement, each applicant must live in the property as their principal place of residence for a continuous period of at least six (6) months. Each applicant must not have previously received the HomeBuilder Grant for any other property in any other Australian state or territory.

Which Domestic Building Contracts does the grant apply to?

The grant is only available for Domestic Building Contracts signed between 4 June 2020 and 31 December 2020 (inclusive). Under the federal program construction must commence within three (3) months of the contract date, however in light of the stage 4 restrictions in Melbourne effective from 2 August 2020 and stage 3 restrictions in regional Victoria effective from 5 August 2020, applicants in Victoria will have six (6) months to commence construction from the date of the contract. The Commissioner of State Revenue has exercised his discretion to provide a blanket extension of three (3) months to the construction commencement date however this means the Commissioner does not have discretion to grant any extensions beyond the six (6) month period.

The Domestic Building Contract must be for either a new home or for substantial renovations for a premises that are a principal place of residence. The Building Contract must be at arm's length, meaning the parties to the contract must act freely and independently of each other. The terms of the contract must be reasonable and the contract price should reflect the market price and not be inflated or deflated. The works must be completed by a registered or licensed builder who is named on the building licence or permit.

We strongly recommend obtaining legal advice regarding prior to signing a Domestic Building Contract. For advice on Building Contract reviews please click here.

For a new home, the property value (being house and land combined) must not exceed $750,000.00 (inclusive of GST). For substantial renovations to an existing home, the renovation contract must be between $150,000.00 and $750,000.00 (inclusive of GST) and the value of the existing property prior to the renovation (house and land) must not exceed $1.5 million. If your home was destroyed during the 2019-20 Victorian bushfires or you are demolishing your house to rebuild these will be treated as a substantial renovation.

If an applicant has cancelled a previous contract to build the same or a substantially similar home they may not be eligible to receive the HomeBuilder Grant.

Is an owner-builder eligible?

If you are an owner-builder, you will be ineligible for the Grant. An owner-builder is someone who takes responsibility for domestic building work carried out on their land.

Are there any restrictions on the type of works the grant can be put towards?

The Grant cannot be put towards investment properties or additions to a property (for example swimming pools, tennis court, outdoor spas and saunas, shed or stand-alone garages). It can however be put towards improving accessibility, safety or liveability of a dwelling or increasing a home's energy efficiency (for example, solar power and batteries, draught sealing, insulation and heat pumps for heating, cooling and hot water). Renovations that are primarily cosmetic such as landscaping, painting and re-carpeting will not be classed as a substantial renovation.

When does construction commence under the HomeBuilder Grant?

In Victoria, construction must commence within six (6) months of the contract date. For new builds and off-the-plan contracts, commencement of construction means the commencement of excavation and site preparation works. For a substantial renovation, commencement of construction means the date when the builder commences the renovation works at the Property.

The original time for construction to commence was three (3) months however in light of the additional restrictions imposed by Covid-19, the Commissioner of State Revenue has exercised his discretion under the National Partnership Agreement to provide a blanket extension of three (3) months to the construction commencement timeframe. As a result, no further extensions will be granted.

How do I apply for the HomeBuilder Grant?

Applications for the HomeBuilder Grant are to be lodged through an online portal which will be made available by the State Revenue Office shortly. Applications can be lodged in a multi-step process with the initial lodgement being after a HomeBuilder contract has been entered into. Once construction of the home has commenced and the payment eligibility requirement milestones have been met, any additional supporting documentation can be lodged through the online portal. Applications that are complete will be reviewed and accepted or declined within fifteen (15) working days of being submitted.

If an application is declined an applicant can lodge an objection within 60 days of the date of the letter advising the applicant of the decision.

If my application is accepted, when will I receive the HomeBuilder payment?

For a new build the HomeBuilder Grant will be paid after foundations have been laid and the first progress payment has been made to the Builder. For a substantial renovation, the HomeBuilder Grant will be paid after construction has commenced and a total of $150,000.00 has been made to the Builder. For an off-the-plan contract, the Home Builder Grant will be paid after evidence has been produced showing that the applicant is the registered proprietor on the certificate of title. For an off-the-plan contract, applicants must be registered on the certificate of title by no later than 31 October 2022.

The HomeBuilder Grant will be paid to an account that is either an Australian cheque or savings account.

Who administers the HomeBuilder program?

The State Revenue Office will administer the HomeBuilder Program in Victoria on behalf of the Federal Government. The Australian Government HomeBuilder Grant is subject to the provisions of the National Partnership Agreement between the Victorian Government and Australian Government.

We note, the Home Builder grant is available in addition to any other grants that may be available to you. For example, if you are a First Home Owner, you will be entitled to receive both the HomeBuilder grant and First Home Owner grant provided you meet the eligibility requirements for each. The HomeBuilder grant is non-taxable to remain consistent with the current First Home Owner grant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.