Written by Hudson Adviser Kris Wrenn
In an effort to provide further stimulus to the economy the Government has announced a couple of new initiatives designed to try and increase activity in the residential construction industry. It’s early days but here is what they're proposing.
THE HOMEBUILDER PROGRAM
Homebuilder provides a grant of $25,000 for those eligible that are building a new home or renovating an existing property. Those that believe they are eligible can apply once their State or Territory signs the National Partnership Agreement with the Commonwealth Government and it's noteworthy that some states are still in negotiation. Hence, early days.
If things do proceed the finer details currently look as follows:
- The applicants must be over age 18 and Australian residents .
- The applicants income must be below $125k (singles) and $200k (couples) for the 2019 financial year.
- The application must relate to an owner-occupied property.
- A building or renovation contract must be signed between 4th June 2020 and 31st December 2020.
- The work must begin within 3 months of the contract date.
- New builds must cost no more than $750,000.
- Renovations must cost between $150,000 and $750,000.
The grey areas
Each application will be considered "case by case" and a very important aspect of the scheme is that a renovation must be to "improve the accessibility or safety or liveability of the dwelling". As such it cannot just be putting in a swimming pool or a tennis court or any other such luxury.
The scheme will complement all the other various First home owner grant programs which differ depending on the State or Territory. This includes Stamp duty concessions for example. It also includes the other recent Commonwealth schemes, which are:
The First Home Loan Deposit Scheme
This is whereby the Government will support first home buyers by working with the bank providing the loan and ensuring the buyer doesn't pay Lenders Mortgage Insurance, even if they have less than a 20% deposit and instead they can potentially use as little as 5%. This scheme was limited to the first 10,000 applicants, however as of 1st July 2020 another 10,000 places will be released.
The First Home Super Saver Scheme
This has existed for 3 years now and allows potential first home buyers to make pre-tax contributions into their Super, but then ultimately pull these funds back out again for use as a deposit for a first home. This includes the associated earnings.
All in all the above schemes are a great opportunity for first home buyers to leverage into the market. Maybe it's time to encourage your children to book their first appointment with a Hudson financial planner for a complimentary financial health check and to see if they can benefit from any of the above.