CATCH-22 HITS HOME

NEW homebuilders hoping to win grants to kick-start work on their homes are missing out because of an approval process that catches them between banks and the state revenue office. The banks won’t tick off the loans without a grant and the state won’t approve grants without a bank loan.

THE new HomeBuilder grant will fail many firsthome builders because it has been designed to help only those who did not need the money in the first place, says the head of a Hobart mortgage broking firm.

Managing director of Rosny-based One Stone Finance, Jonathon Coleman, said his office had been inundated with requests for help from first-home buyers on how to access the new $25,000 federal government HomeBuilder grant as well as the extended $20,000 state grant.

With more details being released from lenders, Mr Coleman wrote to the Premier about his concerns around the timing of approvals, which he said was shutting out first-home builders who need the new grant to help make up their deposit.

“These are the people that maybe weren’t ready to go for another year or two while they built up their minimum deposit — they need the grants the most, but they have literally no chance of getting them,” he said.

“From the bank’s perspective, they will not provide approval of the home loan until they have formal approval from the State Revenue Office of the grants.

“But, the SRO will not provide approval of the grant until they have confirmation of approval from the bank plus proof the loan has already begun being funded.

“This presents a Catch-22 and neither the bank nor the SRO will budge.”

Mr Coleman said one solution would be if lenders could act as agents with the State Revenue Office on the applicants behalf, which already occurs with the state grant.

A government spokeswoman said individuals could consent to banks acting as their agent for HomeBuilder, but the grants needed to be administered carefully.

“Encouraging marginal buyers, who do not have a sufficient deposit, into the market may be counter-productive to their interests in the longer term,” the spokeswoman said.

“A number of factors mean the HomeBuilder grant cannot be verified ahead of time. There are timing milestones, completion of which can occur some time after entering into the contract.

“Providing payment before work commences cannot guarantee that building will commence.”

Mr Coleman said the best way to boost the building sector and stimulate the economy would be to make the grants more accessible.

“For those that could have used these grants as a way to achieve their dream of owning a home, unfortunately for many it seems the government has failed them on that front,” he said. “The government response confirms these grants are predominantly only of use to people who didn’t need the money in the first place and were going to build anyway.

“We have many clients that can demonstrate the minimum savings requirements for bank purposes, but still need the grants to be able to complete their projects.”

One first-home buyer, who wished to remain anonymous, said she had entered into a contract to buy a house off the plan in the Derwent Valley, but now she was not eligible for the HomeBuilder grant, she would either have to borrow the money from someone else or have her parents act as guarantor.

“It’s hard enough saving for a home deposit — the impression was given that the grant was supposed to be a catalyst to bring everything forward, but in practice that’s not possible,” she said.