The Federal Government’s new HomeBuilder stimulus package was recently released to encourage the commencement of renovations and new home builds in order to assist the residential construction industry. The time-limited HomeBuilder grant of $25,000 can help first home buyers purchase a new home, but it can also help retirees who are thinking about renovating or down-sizing to a new home. But in terms of the HomeBuilder grant for retirees, who is eligible and how do you go about accessing it?
The criteria for retirees
To be eligible for the HomeBuilder government grant you must be:
- A natural person (not a trust or company);
- An Australian citizen;
- Able to meet one of the following two income caps:
– Individuals earning $125,000 per annum based on their 2018-19 tax return or later; or
– Couples earning $200,000 per annum based on both 2018-19 tax returns or later;
- Able to enter into a building contract between 4th June 2020 and 31st December 2020 to either:
– build a new home as a principal place of residence, where the property value does not exceed $750,000; or
– substantially renovate your existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of your existing property (house and land) does not exceed $1.5 million. Construction must also commence within three months of the contract date.
How it helps retirees
The retirement living industry is already benefiting from the increase in residential sales as the COVID-19 restrictions on auctions and open inspections ease — which is making it easier for older home owners to sell.
But financial experts believe retirees could be a key beneficiary of the HomeBuilder grant because it will provide a much-needed incentive for retirees to downsize by buying into new homes. In fact, the Property Council of Australia estimates it could stimulate a 44 per cent increase on retirement and land lease sales in particular between June and December this year.
The land lease community model allows for Australians to purchase a home (as an asset that can be re-sold), on land with a right to tenure, while gaining access to community facilities. Over 100,000 Australians are already choosing these types of communities and the HomeBuilder grant will allow even more to downsize out of the suburbs by constructing a new house within a residential community.
This will allow older Australians to have the security of independent living, lead an active lifestyle, and free up equity to otherwise spend on the economy. This equity is estimated at $150,000 per dwelling and close to $150 million across the retiree population.
However, there is still is a risk that the HomeBuilder grant might not apply to all downsizers buying into the land lease model. This is because these purchases have a different ownership structure from standard home ownership. Ultimately, they will be subject to interpretation by individual state governments who state revenue offices will oversee the program. How retiree home purchases are regarded under the HomeBuilder grant is also still under negotiation as part of the national partnership agreements.
But although enquiries about the grant have been slow, industry bodies believe they will increase as the eligibility criteria is finalised and the awareness of how the payment works and the benefits to retirees increases.
To find out more
To find out what the Homebuilder grant means for the construction industry, visit business.gov.au or phone 13 28 46. For State and Territory updates, visit business.gov.au. For answers to Frequently Asked Questions, refer to the Australia’s Government’s fact sheet.