Finance Property HomeBuilder mired by application delays and widespread confusion

HomeBuilder mired by application delays and widespread confusion

Confusion around the HomeBuilder scheme has seen some buyers risk losing tens of thousands of dollars. Photo: Getty
Twitter Facebook Reddit Pinterest Email

Aspiring home owners popped the champagne in June when the federal government announced it would pay $25,000 towards the building of a new home.

But the party was over when they realised some banks were excluding the cash from their loan applications.

Although the $680 million scheme was announced by the federal government, state and territory revenue offices have administered the grants. And as a result, processes have differed between jurisdictions.

Banking sources told The New Daily the process in some states – including Victoria – was “clunky” and required borrowers to obtain a loan approval from the bank before they can apply for HomeBuilder.

This means buyers in these states have $25,000 less to put towards their deposit.

But other states – including South Australia and more recently, Queensland – offer “seamless” experiences, as buyers can receive a pre-approval on a grant while applying for a mortgage, which means they can put the $25,000 towards their deposit.

Various “time pressure” constraints are forcing some buyers to rush into an expensive new build. Photo: Getty

Buyers in no man’s land

Melbourne-based 36-year-old business support officer Sarah Billington has been in limbo for months trying to purchase a house and land package in Drouin (90 kilometres east of Melbourne).

The aspiring first-home buyer already put down a $1000 deposit with a developer to reserve a block of land, which she hoped would become the site of a $400,000 three-to-four-bedroom property.

After talking to a broker, she applied for a HomeBuilder grant to boost her house and land deposit and save $25,000 on her mortgage.

She heard nothing for six weeks after her home loan application was submitted.

And then her broker rang.

“He said the banks are putting applications that want to use HomeBuilder on hold and said the banks are only considering them as a rebate,” Ms Billington told The New Daily. 

“You can’t use it towards your house – which is what I believed was the whole purpose of the grant – and my broker said the [scheme] was the most ridiculous thing he’s ever heard.”

Some buyers have been forced to reconsider their plans after running into difficulties with HomeBuilder. Photo: Getty

In other words, she would have to pay a full deposit on a house and land package and commence works, without knowing whether her home loan would be eligible for HomeBuilder.

After being stung $10,000 for cancelling a separate contract in January, it was a risk Ms Billington was unwilling to take.

“I’m trying to set up my future, I can’t afford to buy in metro areas and that extra $25,000 would help me achieve that,” she said.

“I’m stuck and it’s really frustrating not knowing what I can afford, and it’s made even more confusing when builders are deducting the grant from their prices without it being common knowledge that the banks are considering it a rebate.”

Buyers forced into ‘cookie-cutter’ home packages

Investors Choice Mortgages director Jane Slack-Smith told The New Daily HomeBuilder’s design has created “time pressure” constraints that have seen applicants sign expensive building contracts before their grant is approved.

This is because, to be eligible for the scheme, buyers must have the land or property registered in their name and lay down slabs within three months of signing the contract.

And with buyers only able to engage a builder after receiving a loan – and lenders currently taking over 40 days on average to grant them – some buyers are now rushing into works that could fall over as builders are stretched, Ms Slack-Smith said.

Snapping up a cookie-cutter property in outer suburban estates could leave HomeBuilder recipients paying more down the track. Photo: Getty

Not only that, it’s increased the risk of buyers settling on a property that is not a “foundation for financial security”, with many purchases expected to be “cookie-cutter properties” in outer suburbs or regional areas.

“We could end up with inexperienced first-home buyers who are buying a property (using the HomeBuilder grant) believing that it will be a stepping stone up the property ladder,” Ms Slack-Smith said.

“Making a purchase decision based on a $25,000 grant could actually set you back hundreds of thousands of dollars by buying the wrong property. You’re potentially going to experience building delays and you may even be knocked back.”

Problems may be ironed out

Hero Broker founder Clint Howen told The New Daily that buyers had approached his firm with the false impression that HomeBuilder could be put down as a deposit.

But he said it wouldn’t surprise him if lenders changed tack and eventually factored in HomeBuilder during the mortgage approval process – provided the scheme is extended for another six to 12 months.

“It’s relatively new – everyone’s still figuring out how hard it is to get approved and how long it takes to get paid,” Mr Howen said

“We see banks take first-home buyers grants into consideration now but that’s only because they’ve been around for a long time, and right now, we’re seeing banks struggling with a high loan caseload.”


The confusion follows criticism this week over the limited number of construction jobs supported by the scheme.

Treasury revealed the scheme would only create 9600 direct jobs – far less than the 100,000 suggested by Housing Minister Michael Sukkar.

“This is concrete proof that the HomeBuilder scheme is too small and more action is needed to save the housing industry,” federal opposition housing spokesman Jason Clare told the AFR.

But the Housing Industry Association refuted Treasury’s findings.

It said new home sales in the three months to August rose by 61.3 per cent, and attributed that increase to improving buyer confidence and the implementation of HomeBuilder.

Got a tip? Contact the author at

View Comments