10 weeks until HomeBuilder ends: Is it too late to apply?
More than 75,000 people have applied for HomeBuilder, far more than the government expected. Is it too late to apply now?
The HomeBuilder program, introduced early last year as the pandemic began ripping through the economy, is supporting $18 billion of residential construction projects, according to Federal Treasury modelling.
But with only 10 weeks left until the incentive expires on 31 March, is it too late to apply for a grant to build a new house or substantially renovate your existing home? What do you need to know before registering for a grant and how much is now available?
As of 1 January, the HomeBuilder grant dropped from $25,000 to $15,000.
Despite the fact that a record number of applications were received – especially in December, as the deadline for the $25k boost loomed at the end of the month – you can still apply for funding.
To be eligible, your contract to build or renovate your home must be signed by 31 March 2021. The Federal Treasury confirms that applications must then be submitted by 14 April 2021 and construction must begin within 6 months of signing the contract.
It's not just homebuyers who will be racing to gain access to the funds before HomeBuilder ends in 10 weeks: according to Westpac, 2021 could be a boom year for renovations, with nearly 1 in 5 (18%) Aussies either currently in the process or planning to complete within the next 12 months.
The top reasons to renovate are because:
- It's more affordable than moving or buying a new house (27%)
- To adjust to changing home needs (25%)
- A desire to stay in the same area (24%)
And more than a quarter (28%) are renovating for reasons relating to the pandemic:
- Accommodating working from home more (11%)
- Because they've had more time at home to consider upgrades (17%)
While we're likely to see a rush of applications for the incentive before the scheme expires in March, potential homebuyers should be careful of "being penny-wise and pound-foolish", says Lei Feng, founder and managing director of property development advisory business, PREER.
"People should always base their decision to purchase a property on the property itself, and they should treat any government incentive as an additional benefit," he says.
"For example, suppose you purchase the right property: one that has good design, is good quality, in a good location and is managed by a reputable developer or builder. In this case, you'll do much better over the years in terms of enjoying solid capital growth without any government incentive, when compared with buying the wrong property with government incentives that delivers poor growth and quality."
Considering lodging a HomeBuilder application in the next 10 weeks? Before you sign a contract to build a house, Feng says there are a few questions people often neglect to ask. These should move right to the top of your list:
- What additional costs could I incur as part of the construction process that are not included in the building contract? These could include authority fees, rubbish removal, landscaping and driveway, letterbox, asset protection, permits etc.
- Are there any provisional sums or prime cost items in the contract? This means a cost estimation that is set aside for materials/provision of service. If the actual cost of labour and materials goes beyond the allowance, the buyer has to cover the additional cost even though the contract is fixed price.
- Can you list all of the differences between my home's inclusions and the specs in the display home? Specifications, ceiling height, landscaping, facade, fixtures, materials, etc.
- Will my slab be waffle or raffle? The use of waffle slabs on soils like clad will tend to crack in the long run.
- Can you send me the soil report once done? It's a good idea to have a copy of this on file for future reference.
- Can you send me a list of past homes that you recently built and are similar to mine? This gives you an idea of the quality of the build you can expect.
- Who will supervise the property construction? Do you need to physically be on site every week to inspect it or will they give you progress reports?
- What other projects will you be involved with while working on my property? Demand for builders has surged with HomeBuilder, so be careful you don't work with someone who doesn't have capacity to complete your project.
- Do you have home indemnity insurance?