Home Builder Grant
Summary
Launched June 4th
Currently, HomeBuilder provides eligible owner-occupiers with a grant of $25,000 to build a new home or substantially renovate an existing home if the contract is signed between 4 June and 31 December 2020, and as long as construction commences within three months of the contract date.
As of the 30th of June the Treasury had received 35,000 expressions of interest.
The actual delivery will be via state agencies who must assess the applications to ensure they are within the scheme rules.
The reason for HomeBuilder was signs of rapidly rising unemployment and weak consumer confidence hitting the construction pipeline. This sector employs about 10% of the Australian workforce or 1.5m workers.
The Master Builders Association has warned the government of a 30-40% industry-wide slump in the coming months. The ABS reported that seasonally adjusted new loan commitments fell 4.8% for housing in April 2020, and 39.2% for business construction. Seasonally adjusted building approvals were down in 1.8% in April compared to March 2020, but this data was early in the pandemic and May data due in July will give us a clearer indication.
Limitations
Not yet operational.
Each state and territory is responsible for administering the scheme and according to Treasury, a national partnership agreement is still being negotiated.
So far only Tasmania and South Australia are signatories to HomeBuilder. Victoria is believed to be close to signing, but New South Wales and Queensland have expressed concern about the administrative burden it will place on the state departments that are already running state Covid recovery schemes, bushfire recovery scheme and first home owners grants.
The Queensland government support the intent of the policy and is seeking to resolve the remaining issues around administration and have expressed concerns about its design and implementation, but are continuing to work with the federal government to resolve those matters as quickly as possible.
There is no problem in signing a contract between 4th of June and the end of December. The issue will be starting construction within three months of signing the contract which will be tight for some people.
Another major question is at what juncture does the grant actually land in the account of the recipient. Its stopping people signing contracts because they want to know with some certainty that they’re going to get the grant.
If people can’t lock down a time for construction to start on their new home or renovation, then they could miss out.
Suggestions
While many homes desperately need renovations, the spend threshold is way out of reach for many.
The REIQ has queried how effective the scheme would be in Queensland’s housing market and believe more can be done to support the established housing sector beyond the Federal Governments HomeBuilder grant program. They believe broader measures that will sustain the property sector and stimulate economic activity and made the following suggestions to the Queensland Government:
a. Extend the First Home Owners Grant to established housing: Expanding the First Home Owners Grant beyond new construction will stimulate economic activity through the
introduction of increased numbers of first home buyers to the broader property market;
b. Implement a 50% reduction in development application costs across all Local Governments and introduce streamlined application processes: Removing barriers to development and reducing costs will assist to boost construction levels, increase
competition and importantly, reduce cost for the end
purchaser; and,
c. Deliver a 75% reduction in stamp duty for the period of the coronavirus pandemic: A short-term, but significant, reduction in stamp duty payable on property transactions will have a positive effect on confidence within the property market. This, in turn, will offset the predicted drop in real estate transactions expected during the immediate crisis period.
Additionally, in the 18 months following the end of the COVID-19 pandemic, the REIQ urgently seek the following further stamp duty related reforms to continue to support and stimulate the property market, which include:
a. Removal of stamp duty for persons aged 65+ years: This will encourage older Queenslanders to move into age appropriate accommodation by reducing the financial burden of such a move. A likely consequence of this would be greater
access to housing stock for younger Queenslanders;
b. A 50% reduction in stamp duty where residential investment property purchases are committed to the permanent rental market in Queensland for 3 years or more:
A significant reduction in stamp duty for residential investment properties will have the effect of stimulating property investment in Queensland; and,
c. A 40% reduction in stamp duty for all other residential property purchases: A significant reduction in stamp duty payable on non-investment residential property purchases will have the effect of instilling confidence into the property market
and provide incentive to individuals Australia-wide to consider migration to Queensland.
Conclusion
Queensland’s residential real estate sector is worth over $1 trillion and employs over 50,000 Queenslanders directly with many more employed in associated industries. Protecting and sustaining the sector is critical to safeguarding the property market and supporting our local economy. Our role as your area specialists is to be up-to-date with this information, and explain it in a way relatable to our suburb and your situation. If you would like to learn more about the current market and prefer a personal conversation about how the market may benefit you, feel free to reach out as it would be a pleasure for us to discuss this in more detail to you.