Five questions about HomeBuilder grant answered

By Mark Rosanes | 13 Jul 2020

More than a month after it was first announced, the Federal Government has come to terms with each state and territory to push forward with the HomeBuilder scheme.

Prime Minister Scott Morrison unveiled the stimulus on 4 June, which grants $25,000 to Australians planning to build a new home or undertake significant renovations.

Strict eligibility criteria were released but details on how states and territories will implement the scheme were lacking, resulting in a delay.

However, it seems like everything has been sorted out and all states and territories are now signatories to the HomeBuilder National Partnership, with Tasmania the first to announce that it is accepting applications. Online applications for other states and territories are expected to begin as well.

But as the federal and state governments agree on the nitty-gritty details, big questions linger for those who want to apply for the grant.

Here are some common questions people want to know about the HomeBuilder grant, along with the answers.

Can the HomeBuilder grant be used as a deposit?

This is probably the biggest question on everyone’s mind. It’s so big that even Australia’s biggest banks couldn’t give a definitive answer due to “lack of details from the federal government.”

ABC News recently published an article on this topic, saying that while the banks couldn’t agree on a single response, the “unanimous sentiment was they were not keen to allow people with next-to-no personal savings to use the government cash towards a deposit.”

According to ABC News, NAB clients can use the grant as deposit but the total deposit required will not change. ANZ customers can use the funding as part of the equity contributed to the building costs as long as a loan is not subject to LMI. Commonwealth Bank said “normal construction loan lending conditions would apply” but noted that it was still working on through details of the scheme. Westpac did not provide details. 

Can the HomeBuilder grant be accessed with other state grants?

The $25,000 cash grant is on top of existing state and territory First Home Owner Grant (FHOG) programs, stamp duty concessions, and other grant schemes such as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.

However, it must be noted that while first home buyers can access the HomeBuilder grant when building their homes, the funding can only be used for construction and not for the actual purchase of the property.

What renovations or builds can be included?

Apart from cost requirements (renovation contract must be between $150,000 and $750,000, and properties must not be worth more than $1.5m), the HomeBuilder scheme requires renovations to “substantially alter the existing dwelling.” But what qualifies as substantial?

It wasn’t specifically mentioned, but the government said it “need not involve removal or replacement of foundations, external walls, interior supporting walls, floors, roof, or staircases. 

Renovations must also improve the accessibility, safety, and liveability of the home. This means additions to the property that are unconnected to the principal dwelling such as granny flats, swimming pools, tennis courts, outdoor spas and saunas, detached sheds or garages, and landscaping cannot be part of the upgrades. However, combination works like kitchen and bathroom renos are permitted.

Are non-first home buyers eligible?

Non-first home buyers can access the grant provided they meet the eligibility requirements. One thing to note, however, is that an eligible applicant can only receive the HomeBuilder grant once.

What happens if a person’s income changes and goes over the cap?

Under the scheme, income cap ($125,000 or less annually for singles and less than $200,000 a year for couples) will be based on 2018/19 tax return or later. This means an applicant’s income will be confirmed using their most recent tax turn.

Additionally, the scheme states that if person’s circumstances change after being approved for HomeBuilder, they are required to notify their state or territory revenue office immediately.

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