Government to hand out $25k grants for housing construction, renovations to bolster industry

The Federal Government will give eligible Australians $25,000 to build or substantially renovate their homes, in an effort to boost demand in the construction sector and keep builders employed.

Industry bodies are painting a grim picture of the second half of this year, warning that the economic downturn associated with the COVID-19 pandemic could see the number of building projects in the pipeline plummet, putting hundreds of thousands of people out of work in a “valley of death” scenario.

In an attempt to boost new projects between now and the end of the year, the Government will give $25,000 grants to owner-occupiers for certain works on their homes.

But eligibility for the Government’s program, which it has dubbed “HomeBuilder”, will be restricted to substantial renovations and the construction of new homes, with recipients required to spend at least $150,000 before being eligible.

The grants will be means-tested to exclude couples making more than $200,000 per year and individuals making more than $125,000 per year, while limits will also be placed on the value of the property the grants go towards.

New builds will be capped at $750,000, while renovations can cost anywhere between $150,000 and $750,000, but will only be subsidized if the house being altered is valued at less than $1.5 million.

The scheme will not apply to investment properties or owners who intend on building or renovating on their own without the help of builders.

There has been concern from some in the industry that the Government money would incentivize “cowboys” to rush into the market with little regard for health and safety, which the scheme takes steps to address.

They include requiring that all eligible builders be licensed or registered before the Government’s announcement, keeping the timeframe for the scheme to six months, and having tighter eligibility for the program.

A head and shoulder shot of Prime Minister Scott Morrison speaking wearing a white hard hat and a hi-vis vest.
Mr Morrison said the scheme would encourage homeowners to invest in their properties.()

Prime Minister Scott Morrison said HomeBuilder would save jobs at a time when the industry was facing extreme uncertainty.

“This is about targeted taxpayer support for a limited time using existing systems to ensure the money gets used how it should by families looking for that bit of extra help to make significant investments themselves,” he said.

“If you’ve been putting off that renovation or new build, the extra $25,000 we’re putting on the table, along with record-low interest rates, means now’s the time to get started.”

Renovation work will not include structures separate to the main property, such as swimming pools, tennis courts and sheds.

Scheme could cost up to $688m

In recent weeks, Labor and the Greens have called on the Government to bolster the construction industry by investing in social and public housing, but the scheme does not address the issue.

Labor’s Tanya Plibersek said the program missed an opportunity to help those most in need.

“We also need to use this opportunity to invest in emergency accommodation that can be a refuge for our most venerable people — mums and kids escaping domestic violence, veterans sleeping rough in parks, it shouldn’t happen in Australia,” she told the ABC .

Federal Opposition Leader Anthony Albanese said he had doubts about how many people would want to take up new housing construction grants in the current economic climate.

“Most people don’t have $150,000 in the current climate,” he said.

“People are concerned about their economic security, we’ve just gone into a recession after 29 years of growth.”

Government wants owners to have ‘skin in the game’

To be eligible for the grants, homeowners will need to enlist a licensed builder to complete the works.

Asked why the Government would only deliver grants for renovation works costing more than $150,000, Housing Minister Michael Sukkar said “we want people to have skin in the game”.

“Our hope is that many thousands of Australians will use this as an opportunity,” he said.

“Our advice from the industry and Treasury is this will be the catalyst for many thousands of Australians to make that decision to embark upon a renovation.”

The Master Builders Association has vocally called for more support for the construction sector, warning that without assistance forward contracts could be expected to fall by 40 per cent.

Chief executive Denita Wawn said the package “provides a huge relief”.

“We’ve been receiving a large number of calls of very concerned small business owners that don’t want to put off employees, they don’t want to tell subcontractors ‘there’s no work’,” he said.

But he urged the Federal Government to keep an open mind on further support if the coronavirus economic crisis dragged on.

“The problem is that we all have a level of uncertainty of just how big the economic downturn is going to be, and how long it’s going to go for.”

But Opposition housing spokesman Jason Clare said the package was not big enough amid predictions hundreds of thousands of jobs could be lost in the sector.

“All the modeling indicates that a package like this is not going to reverse that downturn,” he said.

“That means a lot of people could find themselves in a lot of trouble, and [for] a lot of traditions, the only thing they’ll be building is a longer line out the front of Centrelink.”

The Government has estimated the HomeBuilder program could cost up to $688 million, which would translate to about 27,500 people or couples successfully applying for the grants.

However, like the Government’s JobKeeper program, HomeBuilder will be available to anyone who successfully applies, meaning no final costing has been given.

The grants are available from today and will run until the end of the year.

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