Episode 77: Get The Lowdown On The Proposed Reno Grants
On today’s episode,
Today we’ve got a very specific topic. We’re going to be talking about what the government’s position at in terms of the government builders bonus or homebuilders grant moving forward.
We are going to fill you in on the details that you need to know about the opportunities this grant presents for you.
Listen to Episode 77: Get The Lowdown On The Proposed Reno Grants
Podcast: Download (Duration: 23:58 — 24.09 MB)
- [01:19] Reno Bootcamp Tester
- [05:13] A more buoyant market
- [08:00] Government grants
- [10:26] Building equity
- [12:36] Research renovated homes
- [13:19] $150K minimum spend
- [16:28] Remaining 100% independent
- [16:58] First homeowners grant
- [18:06] Land vendors hiking up prices
- [18:20] Stocklands estates
- [20:05] Keeping the construction industry alive
- [20:23] Treasury Department fact sheet
Hello, renovators. So today's episode is a bit of a hotchpotch, to be honest. So Jo Vadillo, my occasional co-host and I recorded an episode earlier in the week speculating on what the government builders bonus or builders grant might look like and what the opportunities were for it.
However, the day after we recorded that episode, the details got published or released by the government. And so, of course, we had to do a really quick retake. And pretty much scrap everything that we had recorded previously, because while some of it was accurate, some we got completely wrong. And so today you are going to be getting the intro from the first take.
And then the remainder of the episode is the second take that we quickly recorded last night over a glass of wine. And it should fill you in on the details that you need to know about the opportunities this grant presents for you.
Now, before we get into that, I just want to let you know that the reno bootcamp our inaugural Online Reno Bootcamp doors are closing this weekend. So if you are wanting to really take advantage of the grants, jump in there and grab yourself a tester's spot where we provide you with an amazing incentive for being one of the first people through and giving a speed back so that we can make sure that it is absolutely top notch. On that note, I'm going to get right into the episode now.
Bernadette: Welcome, Jo. How are you today?
Jo Vadillo: I'm awesome. Bernadette, thank you so much for having me again.
Bernadette: No worries. Every now and again, it's really nice to have a co-host because I feel it's a bit hard talking to yourself sometimes. Plus, you bring that wealth of knowledge around the property market, what's happening and so on. And so today we've got a very specific topic. We're going to be talking about what the government's hinting at in terms of, well, some of it's been announced but in terms of grants moving forward. But before we do that, how's the lockdown, well, the loosening off of the lockdown working for you?
Jo Vadillo: It's going well, actually, I'm thinking even though I define myself as being an introverted extrovert, I'm sort of, you know, it's cold so I don't mind being home. If this is summer, I'd be really hopping and skipping down the beach but I don't mind some lazy days in front of Netflix and business has been really strong sort of on the pickup post-Easter when I think people suddenly get their confidence back. But also, this is just a new world, a new way of doing business and we're still moving and moving forward.
Bernadette: I really love some of the changes that have come around as a result of needing to keep distance to be honest with you. I bet you haven't either but I've had no time to watch Netflix.
Jo Vadillo: I've been reading again. That's an old hobby I forgot I had.
Bernadette: Yeah, It's funny, actually. I must have more time on my hands because of one of the issues that we have, because Stephen and I, it's just us. And all the babies have flown the coop, we have this thing where he will leave a little screw or something somewhere and then say to me, "Oh, do you know where that thing is?" And like I meant to just say, "Oh, you know. Yeah. I mean, that's where it is." And the other day, I thought, "You know what? I'm going to fix this." So what I'm doing is I'm going through every junk drawer, everything in the whole house and I'm categorizing everything down to the screw and putting it in a file. And I actually bought some mailing boxes for something I was doing and I bought 100 boxes in the wrong size. And so now I've got these perfect boxes so I've already gone through about 60 of them. So when he comes to me and he says, "You know, where will I find the earplug?” or “where will I find the key to this?” I can go to the list and say go there. I think that's proof that I have way too much time on my hands.
Jo Vadillo: Yeah, it's a little bit the same in my house. That is so good having things systemized.
Bernadette: I think we're the creative ones as well. So in terms of the market, you're saying things are a bit more buoyant?
Jo Vadillo: They are. It's like this, there are low housing stock out there and the number of buyers are strong and therefore it is still, but it's still not in our hands to control prices. I'm still really trying to get it on the ground and I'm talking about people who are buying at a price point where there's a lot more competition. When I talk about your $5M budgets, that's trying to get into the housing market and things like that.
Bernadette: So have you noticed a drop in the higher end? Like in the $5M mark?
Jo Vadillo: I haven't actually had much to do with that in the business. And not since before Coronavirus really was an issue. So I don't actually know where those seats are but all the conversations I've had with a number of different brokers who I work with, they are running off their feet with inquiries, investors as well as owner occupiers, as well as first time owners. And I think a lot of people are seeing in the marketplace a small window of time where prices are probably stagnant to that extent. And so, competition is still there but they're not on the rise. I know some people are getting themselves ready and perhaps there is going to be a dip in the market prices. So they are doing the right thing and that is getting themselves pre-approved as well.
Bernadette: Exactly. Yeah, I think there'll be a lot of disappointment if there's no crash but I think there probably will be. But in saying that, I don't think the job keeper is going to stave off anyone getting into trouble with their properties. So I just really don't understand the market at the moment to be honest.
Jo Vadillo: It is, I mean, obviously for all of us involved. But I did read just in the media about realestate.co.au talking about even though a lot of the headlines and the clickbait is saying, 30% drops and all this drama, drama, drama, and they say, well, that's not reflective in the amount of searches they're seeing. And so there are a lot of people locked in doors still surfing the Internet, looking at properties. What can I do? What can I buy? And it's obviously, you and I are converted but he actually mentioned that the new housing market also has their record that this is their busiest month and has just passed in terms of searches. So the difference between the journos who were doing the headlines.
Bernadette: Exactly. And those things don't sell papers do they? Let the truth get in the way of a good story. So let's talk about the government grants. Let's talk about the new bill one for a start. Do you want to sort of expand on that?
Jo Vadillo: Yes, of course. By the time people are listening to this, we might have a bit more of a concrete understanding of what that means but the government is trying to stimulate construction in the industry and obviously jobs in that sector.
Bernadette: Jo and I actually recorded this episode on Wednesday. So we were getting in there because at that point we didn't have the details of the home builder grant but it was a speculative chat. But in between then and now, the details of it, well, some of the details have been released. They're still quite sketchy. And so that's required a bit of a retake because things that we didn't know, we're going to be in the detail we now know.
Jo Vadillo: It's good we can kind of go over where we were speculating but now we've got some real true details. What does that still mean for you as a renovator, as a homeowner? What can you do with this opportunity, with home buyers?
Bernadette: Well, I guess the first thing the first distinction we need to clarify is that it is for your principal place of residence. So it's not for an investment property and it's for renovations such as kitchens, bathrooms, substantial renovations, which I think is quite an interesting choice of words because that has a meaning. It's a terminology. That the ATO refers to a substantial renovation and it's not taxable as that money is tax free. So it's either for buying and building a new home or renovating an existing home.
Jo Vadillo: That's right. And the existing home is only up to %1.5M in value?
Jo Vadillo: So this will really speak to a lot of your audience who are renovators and perhaps they're looking for a project to do but perhaps that project is home. Maybe that's where you could start to add some serious value to your property. If you've got a budget allocation already, I think you need to have $150K of your own money. And you get a $25K bonus and as Bernadette said, it is in your own home. It's not adding a swimming pool and a deck and a Jacuzzi.
But this is an opportunity for you to put some equity and build some equity in your home. It is a time where it is a little bit of uncertainty at the moment. And so why not? It's a gift, so to speak, from the government. And the money is there to stimulate the construction industry. It's about bringing jobs. And so that is why this has been created. I know it's been met with some negativity from other sectors and especially where housing is so unaffordable for so many. But if you've got this period of time, it's a window that we can look at making the best of a situation.
Bernadette: Yes. I'm a little bit concerned about the minimum requirement and the spend of $150K. Because I think there could be the risk of people over capitalizing because they have to spend that money. So you really do need to be careful and make sure that the renovations that you do do actually add value to the home.
Jo Vadillo: Yeah, absolutely. That is true.
Bernadette: Because otherwise you're adding like close enough to $200K to the asset base. So making sure of that, but if you're needing to do an addition to add another bedroom or add a living room and another bathroom, it's an excellent opportunity.
Jo Vadillo: Yeah. And I do see it as that, if you're in a position, if that's what you've been considering doing, this is the time to make your 3-bedroom home a 4-bedroom one. Look around you and see what the area calls for as well. And if you've been in your home for 15 years, maybe now is the time to do some other upgrades, cosmetic upgrades as well.
Bernadette: Exactly. The other thing to be mindful of is that the property value is capped at $1.5M. So if your property’s worth more than $1.5M, which particularly in Sydney is not hard to do, then you don't qualify. But there are plenty that are worth less than that. So a great opportunity for them to bring the standard of their home up and hopefully the value. It might be worthwhile just giving people some tips on if they want to do this, how to really go about figuring out what to do with the home?
And one of the things are, like the first thing I would suggest is actually doing a little bit of research on renovated homes in your area. And just like having conversations with the agents and figuring out what it is that people in your area look for when they're looking for a renovated home. So that you make sure that you hit the mark in terms of getting the renovation to be profitable and add value to the home, even if you're not planning to sell. You can then refinance and hopefully tap into some of that equity.
Jo Vadillo: Yes.
Bernadette: What about the new builds, Jo? Because that's one of your areas of expertise. Do you have many people wanting land for a new build?
Jo Vadillo: Yeah, we do. Absolutely. We've got people in Sydney. So the cap you said is for $150K?
Jo Vadillo: It means if you're based in the capital city, you're looking at a further field build. So you really are talking that I'm going to quote Sydney here but Jamous Park, Gregory Hills areas which, you know, that would mean you're going to be able to get in, but it's not going to be the cap what your decision is, and I do believe that some of the terms and conditions are you need to sign a build contract within a 3 month window?
Bernadette: Yes. It's not. It's actually from the 4th of June to the 31st of December. So it's 6 months. But that's the contract. The building contract. And you need to have commenced within 3 months of signing the contract. So you sign the contract and that makes you eligible to claim the grant. But then you need to have started because I guess otherwise people would be signing contracts and then rescinding them just to get the money.
Jo Vadillo: So just be mindful if you're looking to do something like this when the land you are negotiating on. First, we want to make sure that the house you want matches up to the land you've got what you want to do can be built on it. So you got your house and land package. Make sure that the land is registered. And even if the builder or developers say, "let's get that council to be registered in the next 2 to 3 months" I know what those 2-3 months can sometimes blow out to. So just be really mindful of that. So the land registration date is something you really need to be aware of because otherwise you could find you've committed to a property that you will not be able to get a break, so to speak.
Bernadette: Actually, that's such a good point. So the other thing that you probably should mention about your service. I think that that's something that really is a no brainer because you negotiate your fee from the builder don't you?
Jo Vadillo: That's correct. A lot of builders we work with we'd have a margin allocated there for people like myself. So there's no fee to our clients and a lot of the builders we work with are the wholesale builders, so they don't have the big display homes and heavy overheads and sales teams. They rely on people like myself to introduce customers to them. While I'm very discerning about who we do business with because I don't want my clients to be paying that heavy of marketing overheads that some of the more commercial builders do apply to because they've got the reputation of the TV commercials.
Bernadette: Yes. And a couple of things that I really like about how you operate is, one, that you're transparent so people know exactly where they stand. And the other one that you're not married, for want of a better word, to any particular builder like there's no - because often those sort of situations where they are sort of in one another's pockets don't turn out well for the client, do they?
Jo Vadillo: Yeah, that's right. So remaining 100% independent is really, really important to my business. And look, this I mean while this is all about the home ownership and it's wonderful it doesn't apply just to the first home owners. And I understand that you can blend if you qualify for the first home owners scheme, you might be able to tap into both of these. So what an opportunity for someone who is just starting out to actually really act like it's a big step up for many others who are starting now.
Bernadette: How much is the first home owners grant?
Jo Vadillo: I think it differs in each state. So under $750K in New South Wales, and please don't quote me on this. There is movement there on the stamp duty, whether it's completely removed.
Bernadette: So there's a threshold for getting it completely free. And then it reduces. I might just do a little bit of research while we're talking. So is there anything else people should know about?
Jo Vadillo: The other thing I was just going to say is if you are looking to invest and buy, looking at whether it's a house and land project or a dual-key property or duplex or something like that, if that's on the cards and this is an investment property for you, just be mindful of the fact that this scheme, this bonus is going to push up the land prices. So ultimately, as an investor, it could affect you. So if this is something you're thinking of doing for a long term investment strategy, be aware that you've now got a bit of competition and it is going to mean that the land vendors will hike up prices.
Bernadette: Yeah. Was it you that was saying the other day that a lot of the land vendors had taken their price list down off the Internet in anticipation?
Jo Vadillo: Yeah. And look, I spoke to Stocklands estate. Now Stocklands, they've got a really good reputation as developers. They really do master plan estates. And they've got very high expectations on the properties and the term covenants and requirements. So you leave a beautiful legacy estate. Now, I spoke to them today and it's really hard to get someone on the phone. She said since the beginning of May they've been running off their feet. So this is just gonna add to that. And once they've sold out the land, they move on to the next. So, look, it's just one of those things. Be aware that the stock will move because this incentive is making people who have maybe have been sitting around waiting and not making a decision. This is gonna be what pushes them.
Bernadette: The other thing that I noticed in the qualifications is that it's a builder that you have to contract with? So that sort of means that you have to do all your trades through the one builder, which is a shame that it's not a project manager. So I think as time goes on, there will be more detail that comes out and we'll get a full understanding of how restrictive it is.
Jo Vadillo: Yeah. Now, the asterix that I notice is that the builder can't be related to you. You got a brother-in-law who's a builder?
Bernadette: Well, actually, I do have a son-in-law but we don't qualify anyhow. So that ship has sailed. And the other thing is that you need to be at an age, which is obvious but you can't be an entity, it needs to be an individual. So it can't be a company or a trust that applies for it as well.
I personally think it's a stroke of genius on the government's part. So basically what they're doing is incentivizing the public to keep the construction industry alive. I wish they'd work on a few other industries as well.
Jo Vadillo: I'd agree with that.
Bernadette: And what I want to say now is that there's a fact sheet produced by the Treasury Department and I'll include a link in the show notes so people can go, because there are quite a few scenarios that they've actually mapped out there. And it'll help you to understand the circumstances under which and the limitations of the grant. And I'll also include Jo's details, because, as we mentioned, if you need help to source some land to build a property, Jo can help you. And it's not going to cost you anything.
Jo Vadillo: Yes, that's right.
Bernadette: But it is an incredible deal. And like I feel very confident recommending her because she looks after me. So I know she'll look after you as well. And Greg, of course, the wonderful Greg.
Jo Vadillo: Wonderful Greg. Yeah. My better half.
Bernadette: Well, listen, I think that's probably as much as we can share at the moment if you want to ask any questions. If you go into the She Renovates Facebook group, Jo and I both have access to that so if you want to tag us, if you have a specific question, we'll be more than happy to answer it to the best of our ability. And as time goes on, we will develop a better understanding of what the grant means for you and for us. And I think that's it.
Jo Vadillo: Yeah, that sounds good to me, Bernadette. And let's hope that we've got listeners out there that are going to be able to make this a starting point for themselves to move forward.
Bernadette: Just a quick story and then I'll go. I was talking to a lady today, and she is a single mum. She's just in her early 60s, worked her life, like a Trojan. Brought up her daughter on her own and really struggled to educate herself, university more than one degree and really feels unappreciated in her work. So I feel fairly certain that she's going to be able because we were talking about how she can because the one thing, well, she's done lots of things right, but one thing she's done really right is bought a home for herself and managed to keep it and pay it off. And that is going to be her ticket to the life that she deserves. And I'm really thrilled that someone like her may be able to, I say may because we never know until we've got down to the nitty gritty, be able to use that to help them to go to that next step in the next chapter in our life. And I think that's where that money is going to be really transformative.
Jo Vadillo: Yeah. A hundred percent.
Bernadette: Okay. We're off. Thursday night. So we'll dash off now. And thanks, Jo. And I'll see you on the Facebook page.
Jo Vadillo: Will do. Thank you.
Bernadette: Take care. Bye.