At any other time, building a house is already a substantial undertaking that can be costly, time-consuming and a lot of work. But in a country that’s taking its tentative first steps towards figuring out what the “New Normal” is after mostly flattening the COVID-19 curve, it may sound nigh impossible. So you might be wondering, considering what building a home in 2020 may entail, should you still proceed with your plans? It’s not exactly going to be a cut-and-dried answer, if we’re going to be honest. But, we should let you know that there are some benefits to building your home now.
Is there a way to lower the cost of building a house in 2020?
Admittedly, one of the most common concerns anyone might have surrounding home construction, pandemic or not, is how much it costs to begin with. Even if you can afford it, it’s still a considerable amount of money and honestly, almost everyone would welcome some help in that regard.
Enter the Australian Federal Government’s HomeBuilder Program. In case you haven’t heard of it yet, Homebuilder is a government grant that will be provided to eligible home buyers to incentivise residential construction and renovation projects. Basically, if you create jobs in the construction sector by having your house built and fixed up, you may get financial assistance to the tune of $25,000. Not too shabby for helping people bounce back from the negative effects of the coronavirus on employment, right?
And to ease your burdens even more, the grant is actually tax free.
How can I become eligible for the project?
First off, the State or Territory Government where you live should have entered into the National Partnership Agreement with the Commonwealth Government. Keep in mind that this grant will only be available from 4 June until 31 December 2020, and your residential project should start 3 months of awarding the contract.
For specifics, the owner-occupier should meet the following criteria to be in the running for the HomeBuilder grant:
- The applicant should be a natural person as opposed to a company or trust;
- The age of eligible individuals must be at least 18 years old;
- You should be an Australian citizen;
- You should either be earning $125,000 per annum based on your individual tax return from 2018-2019 or later, or if you’re applying as a couple, the amount should be $200,000 per annum.
- Your residential project’s building contract should be started between HomeBuilder‘s aforementioned inclusive dates and have either of the following goals:
- to build a new primary home with a property value equal to or less than $750,000
- to undertake a renovation on your existing home that costs between $150,000 and $750,000, under the condition that your current property (both the house and the land) doesn’t cost more than $1.5 million.
- You may be a first home buyer (Read more about the HomeBuilder program here.)
There are limitations to the HomeBuilder grant
We should stress the important detail that individuals or couples who want to access HomeBuilder should actually be building or renovating a house that they’re going to live in. If you’re planning to apply for the grant for an investment property, you won’t be eligible for the program.
And of course, you should meet the income and contract price caps we mentioned earlier. You’ll also note that the minimum cost of the contract is still a sizable amount, so it stands to reason that the HomeBuilder scheme targets people who have considerable savings or are unruffled by having to loan at least that amount.
While most types of houses are a go under the HomeBuilder program, you can’t spend your grant on expansions like swimming pools, tennis courts or detached sheds and garages. Any renovations you do should literally be connected to your existing home.
And finally, homeowners should work with licensed builders to improve their chances of being eligible for Homebuilder.
How do I make sure my house renovation plan stays within the limit?
In case a building a new house is out of the question for the moment, even if you’re eligible for HomeBuilder, you can always just spruce up your house to improve your living conditions.
After all, you may have noticed in the course of lockdown that your home feels so much smaller than it should be. You can probably add a few new rooms or expand to one or two more storeys. Additionally, you may consider fortifying foundations, replacing walls, fixing up the roof and remodelling staircases. These substantial renovations are perfect for the scheme’s contract caps.
That’s great, but I have some concerns about construction when the pandemic isn’t completely gone.
That’s understandable. The country’s mostly flattened the curve but as of this time, there’s no vaccine and surely construction sites will have so many people. However, it might assure you to know that the Housing Industry Association (HIA) has already put forth some industry guidelines to manage the coronavirus risk on jobsites.
This includes barring individuals who show virus symptoms, as well as those who have been overseas recently from entering the worksite, and pivoting most communications and payment processes to contactless methods (phone, e-mail, online transfers and credit cards). Physical distancing guidelines should also be followed in the site.
All-time low interest rates abound
For now, at least, we’re enjoying historic lows on interest rates ostensibly due to the impact of the pandemic. This is making purchasing a property less daunting for some than it would normally be. If you’re confident about taking out a loan at this time, then you may want to take advantage of this situation.
That said, we’re sure you have lots of questions about HomeBuilder, the “New Normal” home buying process, or “how much does building or renovating a house cost in Australia in 2020, during the pandemic?” Fortunately, at Upside, we’re more than equipped to help you figure it all out. Just get in touch with us and we’ll do our best to answer your queries!