The federal government announced on Thursday an extraordinary plan to boost the economy by giving people $ 25,000 to renovate their homes or build a new home.
Australians will be able to get the money straight into their bank account from Thursday through Scott Morrison’s new ‘HomeBuilder’ program, designed to save the country from the first recession in 29 years.
The scholarships are available for renovation works that cost between $ 150,000 and $ 750,000 and for new homes worth less than $ 750,000.
Scott Morrison (pictured under construction at Sydney Western Airport) will today announce an extraordinary plan to award $ 25,000 in scholarships for renovations
The scholarships are available for renovation works that cost between $ 150,000 and $ 750,000. Pictured: A house is being built in Sydney’s Cobbitty
Renovations should improve the ‘liveability’ of the house, that is to say that swimming pools, tennis courts, outdoor spa and saunas and detached barns or garages do not count.
The home to be renovated must not be worth more than $ 1.5 million and must be the applicant’s primary residence, meaning investment property is not eligible.
To get the money, applicants must earn less than $ 125,000 or be a couple earning less than $ 200,000.
The applicant must pay a licensed builder the first installment to begin work and can then apply to their state or area tax office for the $ 25,000.
Once all criteria are met, officials will transfer the money directly to the bank account chosen by the applicant.
Prime Minister Scott Morrison said, “If you’re putting off that renovation or new build, the extra $ 25,000 we’re putting on the table, along with record low interest rates, is now the time to start.”
In total, the policy is expected to cost $ 688 million and generate work for 140,000 traditions and another 1 million workers in the supply chain.
“This investment is not just about helping Australians bring their dreams to life, it’s about creating jobs and supporting the industry’s more than a million workers, including builders, painters, plumbers and electricians in the whole country, ”said Morrison.
The scheme runs from June 4, 2020 to December 31, 2020.
Australians Can Get $ 25,000 Directly into their Bank Account as of Thursday under Morrison’s New ‘HomeBuilder’ Scheme
What you need to know about Homebuiler: who is eligible and what can be built?
To access HomeBuilder, owner-users must meet the following criteria:
You are an individual, not a company or trust;
You are 18 or older;
You are an Australian citizen
You earn less than $ 125,000 or in a pair that earn less than $ 200,000
What can be built?
A new home as a primary residence worth up to $ 750,000 (including land);
A renovation of an existing home as the primary residence, with renovations valued between $ 150,000 and $ 750,000, with the property not worth more than $ 1.5 million before the renovation.
The renovation works must be aimed at improving the accessibility, safety and liveability of the home.
Swimming pools, tennis courts, outdoor spa and saunas and detached barns or garages do not count
The renovation can be a combination of works (ie kitchen and bathroom renovation), but must be supervised by a registered or recognized builder
Construction must commence within three months of the contract date
Who can do the building?
Renovations or construction work must be carried out by a registered or recognized construction contractor ‘contractor’. They must be in possession of the building permit or the approved building permit before 4 June.
The contract must be made by two parties freely and independently of each other, and without a special relationship, such as a family member.
The terms of the contract should be commercially reasonable and the contract price should not be too high compared to the fair market price.
The government has set strict criteria for who can do the work after the Rudd government’s so-called “pink blow” scheme has led to disaster.
The scheme, which allowed owners to install better home insulation after the 2008 financial crisis, saw 10,000 new businesses emerge to take advantage of the new work.
Hundreds of subcontractors and workers did hazardous work for which they had been insufficiently trained and four young men died, three from electrocution and one from dehydration.
To prevent this from happening again, the government has determined that only construction companies that were licensed before June 4 are allowed to do the job.
To minimize fraud, builders should not be related to the homeowner and should offer the work at market value. This is upheld by state and territorial officials.
“You should try to avoid people being sorted and people taking advantage of it,” Morrison told Sydney Radio 2GB on Monday.
“While Australians have been great during this crisis, there are still people who will do the wrong things.”
The government has decided to target the construction industry because it has been hammered by the coronavirus downturn.
Half of new home construction and renovations have been canceled or postponed because Aussies decide to keep their money.
This is much more than the 17 percent reduction during the global financial crisis.
And housing investment will decline by about 20 percent through June.
Treasurer Josh Frydenberg said, “The housing and construction industry is vital to the Australian economy with residential investment worth over $ 100 billion or about five percent of GDP.
Australians can get their hands on $ 25,000 from Thursday to renovate their homes
Pictured: a new house under construction in the western suburbs of Sydney
Homebuilder: Winners and Losers
Tradies: The scheme provides 140,000 direct jobs and another 1,000,000 related jobs in the residential construction industry, including businesses and sole proprietors, contractors, property developers, building material manufacturers, engineers, designers and architects
Low and medium earners: The policy is available to people who earn less than $ 125.00 or a couple with less than $ 200,000
New builders: The scheme is a great incentive to build a new home
Huncle handymen: The renovations must be carried out by registered builders.
The rich: The plan is not available to anyone who makes over $ 125,000
Livers of the city: Any home worth more than $ 1.5 million is not eligible for the Renovation Scholarship, and new homes must be valued at less than $ 750,000. Even small houses in the country’s largest cities cost more.
Investors: The scheme only applies to residents
Mr. Frydenberg added, “The HomeBuilder program supports housing activities and industry-wide jobs at a time when the economy and industry are most in need.
“The government’s economic support measures, including HomeBuilder, are designed to be temporary, targeted and proportionate to the challenge we face so that we can ensure that Australia on the other hand returns stronger and without the structural integrity of the budget undermine what Australians have worked so hard for.
Master Builders Australia CEO Denita Wawn said the package would save small construction companies from a potential catastrophe.
She said that including renovations in the plan bypasses “the red tape” of requesting approvals.
Gross domestic product, also known as GDP, declined 0.3 percent in the March quarter as a result of COVID-19 and summer forest fires, official data from the national accounts showed. Depicted is Treasurer Josh Frydenberg in Canberra on June 3, 2020
It comes after Mr. Frydenberg was the first federal treasurer on Wednesday in three decades to confirm that Australia is in recession – warning COVID-19 remained a threat to prosperity.
Gross domestic product, also known as GDP, declined 0.3 percent in the March quarter due to COVID-19 and the summer forest fires, official data from the national accounts showed.
Should the economy shrink again in the June quarter, Australia will be in recession for the first time since 1991, ending a world record of uninterrupted growth.
Mr Frydenberg confirmed that Australia was probably already in a recession.
“The answer is yes,” he said.
“That’s based on the Treasury’s advice on where the June quarter is expected to be.”
Mr. Frydenberg is the first Australian treasurer to confirm a recession since Labour’s Paul Keating said memorablely in late 1990, “This is the recession Australia must have had.”
Official figures do not confirm a recession until September, when GDP data for the quarter of June is released by the Australian Bureau of Statistics.
How the scheme works for renovations: an example
Cassidy signs a contract to major renovate her home on December 31, 2020, with renovations worth $ 400,000. Her home’s value is $ 900,000 based on an independent appraisal.
Cassidy pays the builder $ 10,000 to start renovating her home on February 2, 2021. Cassidy then applies directly to her state’s tax authorities or an equivalent agency for the $ 25,000 HomeBuilder grant.
The tax office conducts the fitness checks and confirms that Cassidy owns the property, is an Australian citizen, over the age of 18 and has a taxable income of less than $ 125,000 based on her 2019-2020 tax return.
The tax office also confirms that the value of the renovations falls within the price cap of HomeBuilder renovations (between $ 150,000 and $ 750,000), the valuation of her home is less than $ 1.5 million, and Cassidy has the first progress payment for the renovations done.
The tax office approves the application and releases the $ 25,000 HomeBuilder grant directly into Cassidy’s designated bank account.
As Cassidy already owns her own home, she is not eligible for the First Home Owner Grant, the First Home Loan Deposit Scheme or the First Home Super Saver Scheme. Cassidy, however, may qualify for stamp duty concessions or other subsidies, depending on the state or area in which she resides.
The March contraction marked the first quarterly decline since early 2011 and only the fourth outside the last recession in 1991.
“We are not through this crisis and there will be some difficult days ahead,” said Mr. Frydenberg.
Liberal Party deputy leader Mr. Frydenberg said the fact that the Australian economy shrank by only 0.3 percent in the March quarter was remarkable in itself, amid the COVID-19 crowd and the forest fires.
“Looking back on the March quarter, there wasn’t much good news,” he said.
“The fact that the Australian economy shrank by only 0.3 percent shows the remarkable resilience of the Australian economy.”
The treasurer was confident that the economy would recover if COVID-19 restrictions were eased, despite government predictions of a recession in 2020.
“As the restrictions ease, people can go to the pub or to their mall,” Frydenberg said.
“I think we’ll see consumption come back in line with the improvements we’ve seen in consumer confidence.”
An apprentice carpenter on the Holmesglen TAFE Chadstone campus in Melbourne, Monday. The policy creates more than a million jobs
Master Builders Australia CEO Denita Wawn said the package would save small construction companies from a potential catastrophe
Bruce Hockman, the chief economist for the Australian Bureau of Statistics, said Australia’s annual growth rate of 1.4 percent was the slowest since the GFC.
“This was the slowest growth during the year since September 2009, when Australia was in the midst of the global financial crisis and only marked the beginning of the expected economic effects of COVID-19,” he said.
Most ABS data was collected before the closing of non-essential businesses on March 23, ranging from gyms to movie theaters and restaurants.
Social distance measures are taking consumer spending, which fell 1.1 percent in the March quarter.
Australia’s national border was also closed on March 20 to slow the spread of the coronavirus.
How the scheme works for new housing construction: an example
Emma and Liam will enter into a $ 550,000 house and land contract on September 25, 2020. Emma and Liam’s bank applies on behalf of the couple to their state’s tax office or an equivalent body for a federal government grant of $ 25,000.
The state tax office conducts the eligibility checks and reviews the couple’s documentation and confirms that both Emma and Liam are Australian nationals, over the age of 18, with a combined taxable income of less than $ 200,000 based on their 2018-19 tax return and the value of the contract falls below the price limit of $ 750,000 for homes.
The state tax office approves the application and will provide the couple $ 25,000 when they make the first progress payment (noting that construction must commence within three months of signing the contract).
Emma and Liam will start building their new home and make their first progress payment to the builder on November 2, 2020. The state tax office will release the $ 25,000 HomeBuilder grant directly into their designated bank account once they have verified that the pair have their first has made progress payment to the builder.
Since the pair are both first home buyers, Emma and Liam may also be entitled to the First Home Owner Grant and concession contracts for their state, as well as the Commonwealth First Home Loan Deposit Scheme and First Home Super Saver Scheme.