Powered by MOMENTUM MEDIA
realestatebusiness logo

Subscribe to our newsletter

Tweaks to HomeBuilder scheme welcomed

The federal government has made key clarifications to its HomeBuilder package, which has been welcomed by an industry association.

 

The government has made three key refinements to HomeBuilder:

  • Allowing the necessary time for home buyers to arrange their finance approvals, building approvals, and meet other legal requirements before work is required to commence. This is a modification on the fixed three-month timeframe initially announced;
  • Clarification that a sales contract for a home purchased off-the-plan will be eligible in the same way as a building contract; and
  • Aligning the process with the current timing of payments for first home owner grants for new homes.

According to the update issued by the Treasury, construction pursuant to the contract must begin within three months of the contract date.

However, the update said that “states may exercise discretion where commencement is delayed beyond three months from the contract date due to unforeseen factors outside the control of the parties to the contract”. This could include delays in building approvals.

Advertisement
Advertisement

The update also states that off-the-plan apartments or townhouses are eligible for the HomeBuilder package.

If home buyers sign the contract to buy the off-the-plan dwelling on or after 4 June and on or before 31 December, and construction commences on or after 4 June and no later than three months after the contract is signed, then the property may be eligible for the scheme.

However, if they sign the contract to purchase the dwelling after 4 June, and construction on the home began before 4 June, then the home does not qualify for the scheme.

The HomeBuilder package is designed to complement existing State and Territory first home owner grant programs, stamp duty concessions and other grant schemes.

The Housing Industry Association (HIA) has welcomed the release of modifications to the HomeBuilder package, which it said will bring about certainty to the scheme.

HIA CEO, industry policy, Kristin Brookfield, said the additional detail will answer questions that builders and home buyers have been asking since the scheme was announced on 4 June.

“The HomeBuilder grant has already boosted interest in buying a new home or carrying out a renovation project,” she said.

“Builders are feeling positive about the next six months of activity and equally important is the potential the scheme has to generate activity in 2021. The new details will make this interest even stronger.”

She continued: “Recognising that a fixed three-month timeframe to commence building work did not reflect how dependent home builders are on other players like the banks, the councils, and building certifiers, is extremely important and a welcome update.” 

The new information addresses key concerns the HIA had raised with the government. State and territory revenue offices now need to outline the final details of how applicants will apply for the grant and timing of payment, according to the HIA.

“HIA has been working closely with state and territory revenue offices and we look forward to receiving these details soon, which will assist home buyer and builders begin taking full advantage of the grant,” Ms Brookfield said.

The federal government announced the $688-million HomeBuilder package earlier this month to reignite property market activity.

The package includes a $25,000 grant for owner-occupiers “substantially renovating” or building a new home from 4 June to 31 December 2020.

Prime Minister Scott Morrison was recently the subject of criticism for the package, with the Labor opposition criticising 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.

However, Mr Morrison defended the package, stating the threshold was put in place to prevent exploitation. He added that the government had based its threshold on the average size of finance approvals for renovations.

[Related: Home buying sentiment stabilises following COVID drag]

Tweaks to HomeBuilder scheme welcomed
mortgagebusiness

Malavika Santhebennur

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.

Latest News

Discover some of the top news stories impacting the mortgages space in this weekly wrap-up. ...

The central bank should have raised the official cash rate earlier than May given rising inflation, according to economist Stephen Koukoul...

In the face of ever-increasing competition from fintechs in the buy now, pay later space, NAB has nabbed its share by launching its first BN...

VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

What is the maximum proportion of income borrowers should use to service a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.