Is The New HomeBuilder Scheme All It’s Cracked Up To Be?

We all know Covid-19 has turned the world upside down.

On Australian home turf, the Federal government has been super pro-active in delivering a wide range of grants to help people & businesses stay afloat, financially. I recognise the tough job they have which I truly applaud them for.

As we speak, newswires are spinning with news of Scott Morrison’s latest announcement in relation to the new HomeBuilder Scheme, aimed at stopping the hemorrhaging of the building / construction industry & all the associated trades & businesses that flow on from it. Everywhere right now, you’ll see headlines to the effect of: “How To Access $25,000 for Home Renovations”. At first glance, many property owners will be quick to jump into a falsehood that they’ll get a cool $25K for free reno upgrades to their homes. Unfortunately, not …


It’s so admirable to see our governments doing everything they can to help an AU $1 billion industry that employs over 1 million Aussies, stay strong. The Australian economy relies very heavily on the property industry to perform otherwise knock on effects such as declining property values have a flow on effect to other industries such as retail. But, I can’t help but wonder, did our government really think this $680 million scheme through in its entirety? For all its worth, here’s my summary on what this scheme really means & who I believe, the big winners are from this latest offering:

HomeBuilder Scheme Summary:
  • One-off, tax free payment of $25,000 to property owners who meet eligibility criteria.
  • Must be used to build a brand-new home or substantially renovate an existing home.
  • Only owner-occupier, principal place of residence properties only, (investment properties excluded).
  • Income is means-tested – up to $125,000 for individuals or $200,000 for couples combined (you’ll need to submit your 2018 / 19 tax returns to qualify).
  • New builds must not exceed $750,000 in value (inclusive of the land value) and must be your principal place of residence (not an investment property).
  • Renovations – work must have a contract value of $150,000 to $750,000.
  • The only renovations applicable must be works that improve accessibility, safety & liveability of your residence (e.g. no swimming pools, sheds, tennis courts, etc.).
  • A knock-down / rebuild qualifies as a substantial renovation therefore is eligible.
  • Renovations must commission a licenced builder only (excludes owner builders, DIY’ers & builders who aren’t a family member).
  • A building contract must be signed from 4th June to 31 December, 2020 & the work must commence within 3 months of your contract being signed.
  • For renovation works, your property cannot exceed $1.5 million in value.
  • Applications for the grant will be handled via the State or Territory revenue office in which you live.
  • You will be required to provide a copy of your building contract & other property documents such as your planning approvals to get the grant.

My take on all of this:

The real winners of this grant are the house & land package buyers who intend to make those properties their principal place of residence (PPOR). It will be easy for a lot of people to meet this eligibility criteria. These works will directly benefit a lot of tradies in the outer metropolitan & regional rings where land is more accessible for new housing estates to be built.

For homeowners wanting to do “renovation works”, the grant will prove problematic on many levels:

  1. Available Cash – This grant is not for “minor” or works of a cosmetic nature but for more substantial renovation works, to the value of $150,000 – $750,000 in contract value. One would have to assume that not too many Australians would be in such a financial position to invest those sort of funds, at a time when there is so much uncertainty in the world. The way I see it, this grant benefits those that probably didn’t need the cash anyway. If you can afford to do a $750,000 renovation, you don’t live on struggle street.
  2. Structural Works – The value of the works ($150,000 – $750,000) suggest that any planned works will need to be of a structural nature. Structural renovations typically only work well for properties with a higher property value otherwise you risk overcapitalising. There’s a risk that people may invest too much money into their property in an attempt to get the grant, where their property value doesn’t warrant that sort of financial investment …
  3. Finance Eligibility – in order to do structural renovations of $150,000 – $750,000 in value, most people will require finance approval. In order to get finance approval, you need to pass the banks serviceability criteria which has become more difficult yet again, due to Covid-19. Some of the big banks are now taking 3 months alone, just to get loan approval, further restricting the ability of many people to act immediately. For construction loans, the banks also won’t lend money without a signed building contract in place …
  4. Architectural & Council Planning Lead times – Even if you made the decision to jump on this grant today, there are often long lead times to face in waiting for the architectural community to get building plans finalised. You’ll then need to submit them to council for planning approval, the very thing that most structural renovations require. In my local council, the wait time for any D.A. approval is 9 to 12 months. For many people, by the time they get through the entire architectural & council approval process, the grant eligibility period may have lapsed …
  5. Builder Availability – Some people will be lucky enough to already have existing development & finance approvals in place. These will be the real winners on the “renovation” side. There’ll be an immediate demand for builders in all areas of Australia to pull all this work forward. You’ve got to remember, for the most part, builders can only take on a small number of jobs at a time, in accordance with their home warranty insurance limits. Even though someone wants to build, your ability to actually get a builder to do the work within these time limits, might prove difficult to achieve.
  6. Substantial Renovations Tax – the ATO has a tax that not too many people know about called the Substantial Renovations Tax. According to the Australian Taxation Office (ATO), substantial renovations occur where ‘all, or substantially all, of a building is removed or is replaced’. This includes removing or replacing ‘foundations, external walls, interior supporting walls, floors, roof or staircases’. This is a real grey area of the law to interpret but people shouldn’t be turning a blind eye to it. It’s something that could catch you when you sell so make sure you discuss this with your property accountant, before acting on any structural works. No-one likes a big, unexpected tax liability.

At the end of the day, headlines like “How To Access $25,000 for Home Renovations” sound oh so exciting but the reality is, most everyday Aussies won’t be able to tap into this grant for the reasons I’ve identified above. Yes, I feel your disappointment …

But for those that can, it’s a great gift that will feed hundreds of thousands of tradies & construction professionals across Australia. Let’s all agree, that’s a great thing!

For further information on the new HomeBuilder Scheme, visit:

With Kindest Regards,
Cherie x

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  1. Thank you Cherie for the comprehensive overview.
    You have detailed all the necessary information we need to know.
    You are the Rock Star of renovations and this proposal leaves very little room for renovators to be involved in helping others.
    Kind regards
    Christine Donohoe
    ScoutAbout Property Services

  2. Maybe you should set up a service to come to wannabe reno properties and do the evaluation of what could be done; link the right people to the job (so no cowboys); so that the right build is done the right way by the right licences trades.
    My concern, is that like myself, as a senior I have been bitten by dodgy licences builders in the past. While I have major things to be done, builders see a mature disabled women and double the price.
    I don’t see this changing any time soon.

  3. Thanks so much Cherie. I am grateful for your careful analysis of the “boon” of this payment. The payment does not help the ordinary tradie but only larger building firms, as you have identified. I was initially excited- $25k towards a kitchen or bathroom reno- woo hoo! But no- $150k is more than a reno- it is a substantial change to a home- extra bedrooms, redesign of the living space and external landscape. The type of work usually requiring multiple tradesmen. Or a builder as the principal contractor. And how many people after buying a home in my area- over $1.5 mil have the extra to pay for $150k of works?
    Yes it is for house and land package builders. Sad..

  4. I don’t meet the criteria even though I do have plans all ready to go. My property is listed as an investment even though I’ve lived there previously and I don’t earn below the magical $125,000. As for wanting to spend a cool $150,000 on a Reno well I don’t want to spend that much. I do want to remove a couple of walls though. I’m not disappointed as I will find another way or perhaps not renovate not sure atm

  5. Great overview and commentary Cherie. Only a few homeowners and builders will benefit. As usual the small guy or gal misses out.

  6. Couldn’t agree more, sums it up perfectly, I’m single mum of three, purchased house December 2019 and slowly doing it up as I’ve got funds, I would love to put an extra room on amongst other things and the headlines drew me in free $25000. Until I read it, $150000 is a lot to come up with and would never get that back in profits if I sold.

  7. Hi Cherie, I agree this scheme has not been thought through .
    We are about to do some renovations which we have been planning for ages.
    I think the money should have been allocated to housing the thousands of homeless.
    They are the ones who need it.
    If you already have a place to call home then you are already doing ok.
    Cheers carla

  8. From my experience over the last 20 years, I have found when there is a Government grant on offer in the housing sector, it is normally swallowed up in price rises from everyone within the sector, RESULTING in no real end benefit to the consumer.

  9. Agree with many of these comments; the response to the building industry crises was too rushed without enough consultation and process to see the real impact of this complicated narrow focused scheme which I believe will unfortunately end up being a failure with negaliable upside for industry.

    1. Jason, a bit like stamp duty abolition flagged for Vic. i think. It’ll probably be replaced by something else, somewhere else! lol.

  10. I just don’t get it. Renovations are allowed upto $750K but construction of new built home is capped at $750k including LAND. So if land cost you 400k you are left with 350k to build the entire home. So basically allowance for building a new home is half of allowance for renovations. Shouldn’t it be other way around?.
    I don’t think people in Sydney / Melbourne and Brisbane will qualify with land prices close to half a million.

  11. I’m not in a position to buy even an extra can of baked beans,
    but having been made ‘redundant’ age 66 in 2019 from a business related to real estate, I still have an overview knowledge of partaking in the building process.

    Your breakdown of this current offer is great and helps me to retain and build on my understanding, just for the heck of it!

    Love your enthusiasm, tenacity and sharing of knowledge.

    Totally enjoy watching your Reno’s on TV, especially the US shows because I also get lessons in geography, terminology and regulationS that may differ from Aus.

    You deserve every success and longevity. Trish.

  12. Hi Cherie
    Thanks for this summary. Do you know if this $25,000 payment can be added to the $15,000 first home buyers grant (in Queensland)

  13. I’ve just spoken with Qld Treasury and they’ve confirmed that this $25,000 Homebuilder grant is in addition to the First Home Buyers Grant. So First Home Buyers can potentially get $40,000. The building contract needs to be signed between July and Dec 2020 but the building doesn’t have to start straight away. It can be commenced in 2021

  14. I get no help with replacing my kitchen and renovating my bathroom in my current house. In my last house a kitchen replacement cost me around $8000 and a bathroom replacement around $10000. Like many responses the people that this will benefit will only be those that don’t need it. I think a more appropriate response could be a rebate of say 20% on a renovation up to a maximum. Watch the builders start padding out their costs now.

  15. As a single person who has a beautiful queenslander to reno there is no way that on a salary of 120k (the criteria) I could also afford nor get a bank loan for 125k for reno works worth 150k! Thank you for spelling it out!

  16. THANKS Heaps Cherie, I was one of those really excited when saw the headlines, but being a pensioner homeowner, my bank might match the $25k.. & for $50 I could do wonders to my home.. but thanks so for much for your very Libra review of this, as it looked at it very fairly from both sides..I too agree, it will be a boon to those Aussie’s struggling in the Construction Industry.. I once helped put together & Worked for our SA Redundancy Scheme trust. So I know the struggles of hard times in the Building Industry.. cheers Debbie

  17. Thank you for all that information , your blog definitely made the offer from the government more clearer now . Good work 👍

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