Home Loan Variable: 2.51% (2.53%*) • Home Loan Fixed: 2.99% (2.64%*) • Fixed: 2.99% (2.64%*) • Variable: 2.51% (2.53%*) • Investment IO: 3.05% (2.96%*) • Investment PI: 2.71% (2.73%*)

MAKING SENSE OF SCHEMES, REBATES AND GRANTS FOR HOME BUYERS

In response to the economic downturn caused by the Coronavirus, the Government has provided a tax-free grant program to stimulate the residential construction sector.

The MTM team are back in the office after almost 3 months of working from home. Some of us enjoyed being able to work from home while others felt socially isolated and couldn’t wait to get back to their desks. It was an interesting time that’s for sure, but it allowed all of us to rethink our work/life balance. We are most grateful that we were able to keep working when so many others were not. We hope you and your families made it through the lockdown safe and sound. With that said, let’s see what the government has done in an effort to improve the lives of Aussie home buyers.

HomeBuilder Scheme

In the wake of the Covid-19 pandemic, the property industry pushed the government to look more closely at residential construction. Before the pandemic, new construction was already at its lowest in 60 years, but according to the Housing Industry of Australia (HIA), there is likely to be another 50% drop in new home buildings, which could potentially put half a million jobs at risk over the next year.  
 
As a result, the HomeBuilder Scheme has been introduced to help the residential construction market recover more quickly.  A grant of $25,000 towards building or renovating a residential property is available for eligible home buyers (including first home buyers). The $25k grant is tax-free and is uncapped / time-limited.

HomeBuilder is being implemented in partnership with States and Territories but the application process for the grant has yet to be finalised and legislation has yet to be released.

To be eligible for the grant, you must meet the following criteria:

  • You are an Australian citizen 18 years or older
  • You apply for the grant as an individual or a couple – not as a company or trust
  • You enter into a signed contract between 4 June to 31 December 2020 (includes sale contracts for new builds where building commences after 4 June 2020)
  • If you sign the contract after 4 June 2020, but construction commenced before 4 June 2020, then you will be ineligible for the home builder grant
  • Construction must commence within 3 months of the contract date
  • Where construction commences on or after 4 June 2020 and no later than 3 months after the contract is signed, and provided the contract is signed between 4 June and 31 Dec 2020, then you purchase, you may be eligible
  • If you own land before or after 4 June 2020 and then build, the total value of the land and new build cannot exceed $750k
  • An existing home that has already been completed, or started construction before 4 June 2020 does not qualify
  • Your renovation contract must be between $150k – $750k. The value of existing property (house & land) must not exceed $1.5mil pre-renovation.
  • Your taxable income is less than $125,000 per annum for individual applicants, and $200,000 per annum for couples (based on your 2018-19 tax return).

The process for applying to receive the HomeBuilder grant will depend on the State or Territory you live in. You can register here: https://treasury.gov.au/coronavirus/homebuilder to receive updates on when/how to apply as more information becomes available and/or read the latest HomeBuilder factsheet.

As far as the banks are concerned…

Each lender is starting to send through information as to how the $25k will be allocated, with most lenders not including the grant into your deposit. Rather, they will treat it like a rebate that you will receive post-purchase/construction. This makes it more difficult for the consumer because typically it’s the deposit that most people struggle to come up with.

First Home Loan Deposit Scheme (FHLDS)

This FHLDS has been around for a little over 12 months now and allows a first home buyer to purchase a home with a deposit of as little as 5 percent, without having to also pay for lenders mortgage insurance (usually required for deposits of less than 20 percent).

As we enter the new financial year at the beginning of July, another 10,000 places have become available, so we encourage those interested in applying to make an appointment as soon as possible. We will help assess your eligibility for a place in the scheme and assist you in submitting your application through one of the scheme’s participating lenders.

For more information about the benefits and eligibility criteria of the FHLDS, you can check out our previous post on the scheme called Get your home loan with the first home loan deposit scheme. You can also check out the National Housing Finance and Investment Corporation website.

Stamp Duty rebate for home buyers in the ACT

The ACT Government announced in June that they will significantly reduce the stamp duty for owner-occupiers (not just first home buyers) on the purchase of:

  • New land single residential blocks to zero
  • Off-the-plan apartment and townhouse – purchases up to $500,000 to zero
  • Off-the-plan apartment and townhouse – purchases between $500,000 and $750,000 by $11,400

This stamp duty concession will be in place for any eligible purchase (i.e. contracts exchanged) in the ACT from 4 June 2020 until 30 June 2021. Contracts exchanged outside of this period are not eligible for the concession. This concession will only apply for eventual owner-occupier’s buying brand new. This is not available for established dwellings.

First Home Owners Grant (FHOG)

The FHOG is a national scheme that was established in 2000 to balance the impact that GST had on homeownership. The grant is funded and administered by the State or Territory relevant to the property.
 
For more information on what you might be able to receive under the scheme (provided you are eligible), you can click here and select your State or Territory.

The FHOG is typically only available for brand new dwellings, and varies in amount, depending on your postcode and state (some rural areas can receive up to $25,000).

Download our complimentary First Home Buyer Guide. Packed with 40-page of information it will start you on your journey.

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