The federal government has recently announced the HomeBuilder, stimulus package which provides a $25,000 grant if you build a new home or substantially renovate an existing home however there are a few caveats.
To qualify for the Grant, you must be an individual/couple over 18 years old and Australian Citizen. Income must have earned under $125k for singles and $200k for couples in the 2018/19 tax year.
You must enter into a building contract between 4th June 2020 and 31st December 2020 and commence construction within three months. The Total house and land value must be less than $750,000, or the renovation must be a between of $150,000 to $750,000, and the existing property must be less than $1,500,000
The Grant is only for owner-occupiers, and you cant build additional dwellings like granny flats, pools, tennis courts etc.
OK now that’s out of the way, here’s my take. Firstly, unfortunately, at a time when its least needed it seems there are is some politics played with the makeup of the package.
Don’t worry about which income bracket or existing property value gets the benefit. Roll it out for all!
The whole point of stimulus measures is to get money circulating in the economy fast and to keep, and hopefully create more jobs. Why all the caveats on income brackets and existing property valuations?
Here’s my suggestion for the renovation grant.
Up to $50k in renovations, get a $10k grant
$50k – $150k in renovations get $15k
$150K+ in renovations get $25k
The smaller renovations would be able to start almost immediately as in many cases they can be self-assessed. Then the more significant improvements and new builds would kick in later as their DA’s are approved. I wouldn’t stop there as well, include investors as well, incentivise them to upgrade their investment properties. Perhaps a solution is to halve the Grant as they will be able to depreciate the upgrades over time as well.
In regards to the new build grant, as in the past, I think it will probably lead to price increases in many cases and not generate the sales volumes hoped.
However, 1st homebuyers willing to live in a new estate or development for a prolonged period will be the greatest beneficiary’s of the program as they will be able to add the State Grant to the Federal Grant. For example, Queensland offers $15k, so there’s a total $40k on offer as well a stamp duty exemptions for purchases under $550k. It will be appealing to many, especially in regional centres with lower price points.
Engaging an Exclusive Buyers Agent like The Edge Property Buyers for a fixed fee can add some extra value to the transaction as well. New property tends to have high marketing fees paid to consultants/advisors of 3% to the extreme of 10%. Usually, a Buyers Agent can negotiate a discount off those fees and pass it onto the purchaser creating further considerable savings.
If you’d like to have an obligation-free conversation about your property plans, book your FREE Strategy Session with Craig via the link below