HomeBuilder: As development forecasts slump, government announces red tape cuts 

HomeBuilder: As development forecasts slump, government announces red tape cuts 

Tradies, teachers and property agents will be able to work across the country – bucking a policy of state-bound licencing – in a plan designed to cut red tape and boost work opportunities as Australia’s job numbers contract. 

There’s currently 800 different licences in trades including carpenters, joiners, bricklayers, builders, electricians and plumbers that limit them to work in the state or territory they were obtained. 

But the mutual recognition regime is complex, costly and burdensome on businesses that conduct business across state lines, Treasurer Josh Frydenbgerg said, and is in need of reform.

“A uniform scheme will make it easier and less expensive for businesses, professionals and workers to move or operate within jurisdictions and across Australia,” he said, “thereby creating jobs, increasing output, competition and innovation, and resulting in lower prices for consumers and businesses.”

Commonwealth, state and territory treasurers agree the licences that tradies, teachers and property agents obtained should be recognised across other parts of the nation, and plan to pass legislation to see the reforms take effect on 1 January, 2021.

“It is vital to ensuring Australians, including displaced workers, can take up new job opportunities wherever they arise as the economy recovers and restrictions on movement are eased from COVID-19,” Mr Frydenberg said.

Keeping the construction industry chugging along

The announcement, made as states and territories restrict border access to prevent the spread of COVID-19 in Australia, is another measure spearheaded by the Federal Government to help stimulate the construction industry at a time when work is drying up and unemployment is on the rise.

The government’s HomeBuilder plan aims to stimulate the construction industry by offering eligible people grants to renovate or build homes.

The $680 million initiative offers grants of $25,000 to owner-occupiers spending from $150,000 to $750,000 renovating their home, or people building a new home on land worth no more than $750,000.

A fraction of people spent $150,000 or more renovating their home last year, according to Houzz and Home. Their survey of 4500 people found ten per cent met the spending threshold in order to be eligible for HomeBuilder. 

Development forecast slashed by more than 25 per cent

The national lobby group representing the $220 billion building and construction industry is forecasting the number of homes being built in the next year to drop by more than a quarter, and is calling on the government to spend billions more on stimulus packages. 

“We have downgraded our forecast for the housing sector by 25 per cent for 2020/21 so that we are now predicting a 27 per cent fall in homebuilding activity compared to 2019/20,” Denita Wawn said, chief executive of Master Builders Australia.

“Private sector investment is evaporating, and the Government must step in to save businesses and jobs.

“... Our industry is facing a bloodbath, there is simply no other way to describe it.”

The lobby group is calling on the Federal Government to extend the HomeBuilder grant from six to 18 months, pushing the cost into the billions – but they claim the investment would yield a return.

“A 12 month extension of HomeBuilder will boost GDP by between nearly $4 billion and $4.5 billion, create more than 4,500 new jobs and result in up to 6,200 new dwelling starts,” Ms Wawn said.

What about a ‘CommunityBuilder’ package?: Lobby group

They are also calling for a supplementary stimulus package – coined CommunityBuilder – that would offer grants to not-for-profit and local grassroots community organisations to help fund the construction of new facilities or renovations that’ll overhaul existing ones.

“CommunityBuilder … would employ the highly successful HomeBuilder model to kickstart work for the thousands of SME commercial construction businesses that employ hundreds of thousands of tradies around the country,” she said.

“Our modelling suggests that an investment of $3.8 billion will deliver a boost of $6.8 billion to gross domestic product and create 13,000 new jobs.”

The group is hoping the measure will be funded in the Federal Budget to be announced in October. 

Fewer than 250 HomeBuilder applications – so far

HomeBuilder is being heralded as a lifeline for the construction industry by developers and lobby groups, but it’s difficult to measure the impact it’s had two months after it was revealed.

A Senate COVID-19 select committee heard testimony on Friday that revealed 247 HomeBuilder applications had been formally lodged, according to The Guardian – of which 157 were from South Australia and 90 were from Tasmania.

“They’re the applications that have been received to date,” Vicki Wilkinson, the head of Treasury’s social policy division, told the committee. “To date no payments have been made.”

The majority of states and territories began receiving applications in July, while New South Wales began accepting them last week.

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How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

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Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

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Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

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Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How will Real Time Ratings help me find a new home loan?

The home loan market is complex. With almost 4,000 different loans on offer, it’s becoming increasingly difficult to work out which loans work for you.

That’s where Real Time RatingsTM can help. Our system automatically filters out loans that don’t fit your requirements and ranks the remaining loans based on your individual loan requirements and preferences.

Best of all, the ratings are calculated in real time so you know you’re getting the most current information.

Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.

Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.