HomeBuilder construction starts extended

In a joint statement, Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar said that the extension will bring the total level of expected government support for the construction sector under the HomeBuilder program to $2.5 billion.

The government’s decision to provide existing applicants with an additional 12 months to commence construction has followed unexpected delays in the construction industry caused by supply constraints as a result of the coronavirus pandemic.

This includes delays in global supply chains and recent natural disasters (such as the floods in NSW and Queensland, and a cyclone in Western Australia), the government said.

The HomeBuilder grant provides eligible owner-occupiers (including first home buyers) with a $25,000 or $15,000 grant to build a new home or “substantially renovate” an existing home.

For the $25,000 grant, applicants had to enter into a building contract on or after 4 June 2020 up to and including 31 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 their existing home as a principal place of residence, where the renovation contract is between $150,000 or $750,000, and where the value of the existing property does not exceed $1.5 million (pre-renovation).

For the $15,000 grant, applicants had to enter into a contract on or after 1 January 2021 up to and including 31 March to either build a new home as a principal place of residence, where the property value does not exceed $950,000 in NSW, $850,000 in Victoria, or $750,000 in all other states, or substantially renovate an existing home as a principal place of residence, where the renovation contract is greater than $150,000 and does not exceed $750,000, and where the property value does not exceed $1.5 million (pre-renovation).

The government has now extended the construction commencement requirement for all applicants from six months to 18 months from when the eligible contract was signed (that is, contracts signed 4 June 2020 to 31 December 2020, and contracts signed 1 January 2021 to 31 March 2021).

HomeBuilder applications closed last week (midnight Wednesday, 14 April), with applicants being given until 30 April 2023 to submit all supporting documentation (such as invoices for work done, and proof that construction has started) to their state or territory revenue office.

The government said that the supporting documentation will allow for the payment of the HomeBuilder grant, with timing depending on whether an application relates to a new build, substantial renovation, or off-the-plan/new home purchase.

For new builds, grants will be paid after the construction has commenced and the first progress payment has been made to the builder. For substantial renovations, grants will be paid after construction has commenced and at least $150,000 of the contract price has been paid related to the renovation.  

More than 121,000 Australians have applied for the grant, which is expected to support around $30 billion of residential construction projects, the government said.

Commenting on the extension, Mr Frydenberg said: “Extending the construction commencement requirement will smooth out the HomeBuilder construction pipeline, support jobs in the construction sector, and 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.”

Mr Sukkar – who is also Minister for Housing, and Minister for Homelessness, Social, and Community Housing – said the demand for HomeBuilder has demonstrated that it has “achieved its goal” of encouraging those who had retreated from undertaking a new build, or substantial renovation due to the COVID-19 crisis to enter the housing market.

“The swift introduction of HomeBuilder gave Australians the confidence to build or rebuild a home during a period of great uncertainty. In doing so, the Morrison Government has successfully protected the more than 1 million jobs dependant on the residential construction sector,” he said.

Industry welcomes extension

Speaking after the government’s announcement, Masters Builders Australia chief executive Denita Wawn said that a survey from the industry body showed that 70 per cent of builders have been affected by delays and cost increases for key trades and building products.

“This also created the risk that thousands of HomeBuilder applicants could miss out on the grants because builders could not meet the construction start date requirements,” Ms Wawn said.

“Thanks to this move by the Federal Government, thousands of HomeBuilder applicants around the country can now breathe a huge sigh of relief. This will help builders and tradies maximise and manage the extraordinary success of HomeBuilder.”

Housing Industry Association (HIA) managing director Graham Wolfe said the extension is “welcome news” for the housing sector, the economy, and for HomeBuilder applicants, adding that the grant has created a “lifeline” of work for tradies while supporting FHBs in purchasing a home.

He said: “Yet members have been severely impacted by global supply constraints and labour pressures. Builders and their clients have also been juggling delays in finance approvals, planning and building approvals and land title.

“HIA has been working closely with the government since Christmas providing on the ground data and up to date information on home sales, building activity and supply chain issues impacting the industry’s capacity to deliver on the enormous success of the HomeBuilder program.”

Mr Wolfe said that the grant’s role in stimulating the economy and retaining jobs will be “fully realised”, with builders now able to continue progressing the contracts they have in an “orderly” manner.

“HomeBuilder had an immediate impact from the day it was announced. It has injected confidence in the housing industry – for builders, trade contractors, manufacturers, suppliers and into the retail sector – at a time when hundreds of thousands of jobs were at risk,” he said.

“That confidence supported, saved and retained existing jobs and created new jobs across the housing industry throughout Australia.

“Workers in jobs that were disappearing early last year were reinstated as the pipeline of work from sales, design and client engagement through to construction expanded. The HomeBuilder program will support these jobs into 2022 and beyond.”

[Related: House commencements at 20-year high: ABS]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.