HomeBuilder extension gives applicants extra 12 months to start building

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Tens of thousands of HomeBuilder applicants around the nation can breathe a sigh of relief after the federal government extended the construction commencement requirement from six months to 18 months.

It’s fair to say that the success of the HomeBuilder program caught a lot of people off guard and, as a result, contributed to a surge in demand for manpower within the residential construction industry.

In fact, more than 121,000 Australians applied for the HomeBuilder grant, which is expected to support around $30 billion worth of residential construction projects.

“The number of new houses that commenced construction in the December quarter was the second-highest level on record,” says Housing Industry Association’s chief economist Tim Reardon.

Long story short: the $25,000 and $15,000 grants incentivised so many people to build or renovate their homes that many builders were going to be unable to turn the first sod within the required six-month time frame.

So who exactly will the extension benefit?

Ok, so if you haven’t lodged an application for the HomeBuilder grant, then bad news, this extension won’t apply to you as the application deadline was April 14.

This extension will benefit those who’ve already applied and signed contracts during the HomeBuilder eligibility period between 4 June 2020 and 31 March 2021.

It means applicants now have 18 months – from the date an eligible contract was signed – for construction to begin on their property.

Treasurer Josh Frydenberg says the extension will help smooth out the HomeBuilder construction pipeline and support construction jobs over a longer period of time.

“It will also ensure that existing applicants facing difficulties in starting construction on their new builds and renovations are not denied a HomeBuilder grant due to circumstances outside their control,” explains Mr Frydenberg.

Need finance for your HomeBuilder project?

If you applied for finance while making your HomeBuilder grant application several months ago, get in touch with us today to double-check it’s still the most suitable option for you (much has changed in the past months!).

And if you’ve signed a building contract for HomeBuilder, but haven’t got around to exploring finance options just yet, then be sure to reach out to us soon – we’d love to run through some solutions with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How do you compare: how much of your pay goes to your mortgage?

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The property market is going through a boom phase, which means housing affordability is getting tougher. So how much does the average Australian household need to put towards their monthly home loan repayments in the current market? Let’s take a look.

You’ve probably noticed the housing market is going a bit crazy at the moment.

FOMO has taken hold and many properties across the country are selling well above their reserve.

As such, housing affordability has deteriorated, says Moody’s Investor Service, reversing the improving trend seen in 2020 during the peak of the coronavirus crisis.

So what percentage of a pay cheque goes towards a typical home loan?

On average, two-income households need to put aside a quarter (24.6%) of their monthly income to meet repayments on a new home loan, as of February 2021.

That’s up from 22.7% in June and July 2020, when new mortgages were the most affordable they’ve been in a decade.

The deterioration in housing affordability was evident in all capital cities over the five months to February 2021, with Perth remaining the most affordable and Sydney the least.

That said, housing affordability still remains better than the ten-year average of 26.1% and well under its peak of 30.7% in April 2011.

That’s because the average mortgage interest rate has nearly halved to 3.65% since 2011, according to Moody’s.

Want to know how much you can borrow?

Got your eye on an exciting new property and want to know if you can get a loan for it?

Get in touch today and we’ll help you crunch the numbers, work out your borrowing capacity, and discuss your finance options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

$15,000 HomeBuilder grant deadline fast approaching

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Thinking of building, buying a new home or renovating? The HomeBuilder scheme ends on March 31, which means you’ve got less than two weeks to take advantage of the $15,000 grant.

The Australian government scheme, which was initially due to end in December but was extended to 31 March, has led to a big spike in new home sales in recent months.

And experts are tipping HomeBuilder applications will continue to rise before the impending cut-off date.

“We expect a surge in sales in March,” says Housing Industry Association (HIA) Economist Angela Lillicrap.

“Record low-interest rates and rising house prices are sustaining market confidence into 2021. This strong level of consumer confidence combined with the demographic shift to regional areas is driving ongoing demand for new detached homes.”

What’s the HomeBuilder scheme again?

The current iteration of the HomeBuilder program provides eligible applicants with a $15,000 tax-free grant for building contracts (new builds and substantial renovations) signed between 1 January and 31 March 2021, inclusive.

Applications for the grant can be submitted to the relevant State Revenue Office by 14 April 2021, and construction must commence within six months of the building contract being signed.

There are a number of property price caps worth noting, too.

For new builds, the property value cannot exceed $950,000 in NSW, $850,000 in Victoria, or $750,000 in all other states and territories.

For renovations, the reno contract must exceed $150,000 and the value of the property cannot exceed $1.5 million (pre-renovation).

Properties eligible for the grant

Two weeks might feel like you’re cutting it a bit fine, right?

But rest assured there are a range of build and property types (including ready-to-go ones) that can be eligible for the grant if construction commencement deadlines are met, including:

– off-the-plan apartments
– house and land packages
– new home purchases
– new home builds (on vacant land)
– substantial renovations.

How to take advantage of the grant

With the HomeBuilder deadline now literally days away, it goes without saying that time is ticking.

So get in touch today for more information on how you can take advantage of this $15,000 grant before it ends.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Freedom to move: stamp duty reforms gain momentum

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Stamp duty: two of the most dreaded words in the world of property and finance. Fortunately, NSW and Victoria have unveiled some big changes to the inefficient tax this week, and there’s hope it’ll inspire other states to review their own stamp duty arrangements.

If you’re unfamiliar with stamp duty, it’s basically a state/territory government tax you pay on certain transactions, such as a car or piece of real estate.

How much it costs depends on what state you’re buying in, the value of the property you’re buying, and whether you’re eligible for a first home buyer concession.

The problem is that it’s often regarded as an inefficient tax because it requires a large upfront sum (usually tens of thousands of dollars) from home buyers and therefore disincentivises people from buying and selling property.

It particularly tends to restrict young families who want to upgrade from their first home, and downsizers who want to move into a smaller place.

So why does it still exist?

State governments have been slow to overhaul the current system because it’s their biggest source of revenue.

In fact, stamp duty raises about $21 billion a year, including $7.5 billion for NSW and $6 billion for Victoria.

However, with the economy in need of a rebound due to COVID-19, the state governments of NSW and Victoria have made some big stamp duty announcements in their 2020/21 budgets.

NSW has flagged a complete overhaul of the system with a shift towards a property tax, while Victoria has announced short term discounts.

“Reform of the inefficient stamp duty system could create and support thousands of jobs to boost the economy and kick-start our recovery for a prosperous, post-pandemic NSW,” explained NSW Treasurer Dominic Perrottet during the announcement.

And make no mistake: this isn’t just good news for NSW and Victoria.

As the two most populated states in Australia, a move in these property markets may put pressure on other state governments to follow suit sooner rather than later.

Below we’ll outline the announcements in NSW and Victoria, as well as the current state of play around the nation.

New South Wales

The NSW state government will open for public consultation a property tax model that it says will make homeownership more achievable.

NSW Treasury says stamp duty adds $34,000 to the upfront cost of buying the average home, and takes an average 2.5 years to save (compared to one year in 1990).

The consultation will begin with a proposed model that would include giving property purchasers the choice between paying stamp duty upfront or opting to pay an annual property tax.

Victoria

The Victorian government announced it will be waiving 50% of stamp duty on newly-built and off-the-plan homes valued below $1 million.

Existing homes will also be eligible for a 25% stamp duty discount.

The discounts will apply to contracts signed on or after 25 November 2020 and before 1 July 2021.

Elsewhere around the country

The ACT has already started phasing out stamp duty and replacing it with a land tax as part of its 20-year tax reform program.

And in Queensland, the Property Council of Australia says it’s time to review property taxes following NSW’s bold move.

Queensland Treasurer Cameron Dick, however, has ruled out announcing a similar scheme ahead of this year’s state budget on December 1.

In the meantime, most states are offering concessions and exemptions for first home buyers, and some may even follow Victoria’s broader discount waiver over the short term.

Here’s where you can go to find out more about first homeowner concessions and exemptions for NSW, Victoria, Queensland, Western Australia, and Tasmania.

Get in touch

If you’re interested in further exploring some of the stamp duty exemptions, concessions, waivers or discounts, please don’t hesitate to reach out.

Obviously, the less stamp duty you pay, the more of your money you can put towards a home loan deposit.

So for a hand figuring it all out, please get in touch – we’re happy to help you crunch the numbers.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

HomeBuilder sparks surge in home loans, new builds and renos

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Thousands of families across the country who had been thinking about a new build, or tackling an overdue renovation project, have rolled up their sleeves and committed to it, according to latest ABS data.

And to be honest, we’re not overly surprised. The federal government’s $25,000 HomeBuilder grant is nothing to sneeze at.

But the Australian Bureau of Statistics’ (ABS) Lending Indicators data makes for very encouraging reading nonetheless.

It shows the total value of new loan commitments for housing rose 12.6% in August to $21.3 billion.

There was also a big increase in people seeking to renovate their homes. ABS building approval data shows the value of alterations and additions to residential buildings (‘renos’) increased by 7% to $784 million in August.

That’s the highest level recorded since April 2016.

But before we get into HomeBuilder, let’s look at the home lending figures in a little more detail.

Borrowers seeking new home loans

Of that $21.3 billion in new housing loan approvals we mentioned earlier, $16.3 billion was comprised of owner-occupier home loans, and there was $5 billion worth of investor loans.

That means owner-occupier home loan commitments increased by 13.6% in August, which is the largest month-on-month rise recorded by the ABS, and eclipses the previous record of 10.7% set in July.

The Housing Industry Association (HIA), which is the official peak body of Australia’s home building industry, says that HomeBuilder is to thank for the surge in demand.

They point out that in August the number of loans for the construction of a new dwelling increased by 22.9% to 4,679 – the highest level in over a decade.

“The short-term stimulus from HomeBuilder is emerging in the housing finance data released by the ABS,” says HIA’s Chief Economist, Tim Reardon.

“There has been a substantial improvement in sentiment and confidence in the housing market.”

So, what’s the HomeBuilder scheme again?

The federal government scheme aims to assist owner-occupiers (including first home buyers) who want to buy a new home, or begin work on eligible renovations, by providing them with a $25,000 tax-free grant.

It’s available to people building a new home for less than $750,000, or to those who spend between $150,000 and $750,000 renovating an existing home, subject to certain eligibility criteria.

You can find out more about the scheme and eligibility here, but here’s the big catch: applications for the HomeBuilder grant must be received no later than 31 December 2020.

So if you’re interested in applying for the scheme, you’ll want to get in touch with us asap.

Not only can we walk you through how to apply for it before the deadline but, just as importantly, we can assist you when it comes to applying for finance.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.