It’s been interesting to see that one of the market segments that has been recording strong growth during the Covid-19 pandemic is the demand for house and land packages in Melbourne’s suburban fringe. As we have commented on before, this spike in activity has largely been driven by the Government’s HomeBuilder program, which provides a $25,000 grant for people who are building a new home or purchasing a new home off-the-plan.
The grant applies to contracts signed between 4 June 2020 and 31 December 2020, with a requirement that construction must commence within six months of the contract date. There are also eligibility restrictions on the applicants’ income levels and the grant only applies to your own residence, not an investment property.
What many people may not have realised, however, is that there is another complication with the HomeBuilder grant that has only become clear once people have applied for the grant on recent months.
It has emerged that in some states, including Victoria, home lenders are not allowing buyers to count the $25,000 grant as part of their deposit when applying for a loan. In a form of Catch-22, the grant is not available until after construction has commenced. However, construction normally won’t start until after finance has been approved.
Some states have made arrangements to allow buyers to include the grant as part of their deposit. However, in New South wales and Victoria, some new home buyers have been forced to borrow money from family members or sell assets in the short term to cover the period until they receive the grant.
Additional challenges like this make it even more important than usual to seek our professional advice and assistance when buying a vacant homesite with the intention of building a brand-new home. So, don’t hesitate to give one of the team at Ian Reid Buyer Advocates a call on 9430 0000 to discuss your options.