Last month, the Morrison government announced that a $25,000 grant will be available to owner-occupiers “substantially renovating” or building a new home from 4 June to 31 December 2020, after it unveiled its new $688-million HomeBuilder package.
However, the grants are subject to eligibility criteria, with a national price cap of $750,000 set for new home builds, and a renovation price range of $150,000 to $750,000 to apply for renovations of an existing home with a current value of no more than $1.5 million.
The Labor opposition has criticised the thresholds for renovations, claiming that the $150,000 minimum set by the government would be out of reach for low to middle-income Australians.
But according to Prime Minister Scott Morrison, the threshold was put in place to prevent exploitation, pointing to misuse of the Energy Efficient Housing Package introduced by the Rudd government in 2010.
“We were not going to give rise to a situation where people passing themselves off as kitchen renovators were going to go and knock on the doors of pensioners, rip out their sinks and their dish washes and then seek to claim some government subsidy,” he said during a session of Parliament.
“That’s not the nature of this program. This isn’t for do-it-yourself home renovations, this is about approved work by certified builders of significant scale to enable people to bring forward projects that they have put off and can now proceed with.”
Prime Minister Morrison claimed that the government had based its threshold on the average size of finance approvals for the purpose of renovations.
“The average loan taken out for a renovation is $164,000, and I can tell you that’s the case because there are families around this country who cannot afford to go and build a new home,” he added.
“Their families are expanding, their children are growing up, they can’t afford to sell their house and go and buy a new piece of land and engage in a new construction.
“So, what do they do? They borrow money to expand their existing home and renovate substantially their existing home because they can’t afford to build a $300,000 or $350,000 new home.”
Despite the federal government’s efforts to curb misuse of the HomeBuilder scheme, some industry stakeholders, including director of Builder Finders, Lynette Manciameli, have warned that the program remains “vulnerable to exploitation” from “unscrupulous builders”.
“[As] we saw with the pink batts disaster following the [global financial crisis], even the best laid plans can have unintended consequences. Incentivised by the opportunity to make quick cash, several irresponsible operators delivered substandard work, scammed unwitting customers or placed untrained young workers at risk,” she said.
“What we are likely to see off the back of the HomeBuilder scheme is dodgy builders coming out of the woodwork. This is bad news for the consumer and bad news for the many reputable builders who are doing the right thing.”
Mrs Manciameli urged HomeBuilder applicants to “do their due diligence” when selecting a builder for their project.
“There are several builders out there who are doing the right thing and have a sterling reputation for quality,” she said.
“Consumers should do everything in their power to vet builders, including seeking out testimonials and checking credit scores. This will help them avoid being saddled with a dodgy builder before it’s too late.”
[Related: HomeBuilder scheme hotspots revealed]
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.