Answering your key questions around the new HomeBuilder scheme

The grant has generated controversy given it hands over cash to those who already can afford to buy or own their own property, or can afford expensive renovations.

The HomeBuilder grant is a $25,000 time-limited program to home owner-occupiers who are either building a home or substantially renovating one.

To be eligible, an applicant must be an Australian citizen building a new home worth no more than $750,000, or renovating their current home for between $150,000 and $750,000. The existing home must also not be worth more than $1.5 million.

HomeBuilder will be available only for building contracts signed between June 4 and December 31, 2020, and where construction or renovation starts within three months of the contract date.

All dwelling types are eligible but investment properties are not eligible, nor are owner-builders.

Treasury is forecasting a shortfall of 30,000 new dwelling commencements for the second half of 2020.

The grant is to help the housing construction market and residential building industry maintain momentum and to sustain its workforce after the COVID-19 pandemic restrictions ease.

Prime Minister Scott Morrison said the intent is to encourage investment from homeowners and boost the industry in the immediate aftermath.

"This investment isn't just about helping Australians bring their dream home to life, it's about creating jobs and helping support the more than 1 million workers in the sector including builders, painters, plumbers and electricians across the country," he said.

This scheme has a number of specific caveats. The key one is that the construction price of the new home must be between $150,000 and $750,000.

There's also the time limit which basically restricts eligibility to within the next nine months.

Furthermore, income limits apply. An individual applicant can earn no more than $125,000 per year and a couple can earn no more than $200,000.

Knockdown rebuilds are counted as a "substantial renovation" and are subject to the $750,000 cap but the value of the land and "renovation" cannot exceed $1.5 million pre-renovation.

Under the integrity measures to the scheme, any renovation "must be to improve the accessibility, safety and liveability of the dwelling".

Swimming pools, outdoor spas and saunas, tennis courts, sheds or unconnected garages are not eligible.

Initial Treasury estimates say that the total cost will be around $680 million.

Some are disappointed that the money is going to people who sit in a middle to high income bracket and that the cash feeds directly into the private housing market without providing some much-needed stimulus for lower income public housing or infrastructure.

Social and affordable housing has been effectively quarantined from the scheme.

Shadow Minister Tanya Plibersek compared the current situation to the global financial crisis back in 2007, arguing for further investment in public housing.

"It is great to help people buy or renovate their home but when we were last in government in the global financial crisis, we built 126,000 new public housing homes [and] we upgraded about 70,000," she said.

Home owners on low to middle incomes looking to to do a simple upgrade to enhance their existing home, such as a new kitchen or bathroom, and can't afford to spend $150,000 are locked out of the scheme which doesn't help small, struggling building and renovation companies with a handful of employees.

Building associations certainly have rallied around the HomeBuilder scheme, encouraging Australians to take advantage of the grants.

In the ACT, projections show 1890 jobs being created by the grants, and 493 new properties being built across the territory.

Chief Minister Andrew Barr is cautious in his assessment.

He said that "it's not how we would have designed the scheme, there are some challenges with it but we'll do our best to implement it as soon as possible."

Many residential housing construction companies that have planned well and successfully managed their way through the coronavirus pandemic are already committed to projects for the next six to nine months so people who want to contract a specific builder will need to move smartly to organise finance, talk to their builder and have contracts signed before the scheme's time limit expires.

A national partnership agreement is being drawn up, to which all states and territories will be individual signatories. The scheme won't start until the agreements are signed, but any applications received before that happens will be processed thereafter.

This puts the onus back on the states and territories to sign up and manage it.

Treasury says that any building contract entered into must be at "arm's length". This means the contract must be made by two parties independently of each other and without some special relationship, such as being a relative.

Only registered and/or licensed builders can be engaged and the terms of the contract must be "commercially reasonable".

To avoid contracts being artificially inflated in price, the builder must demonstrate the contract price is no more than a comparable product (measured by quality, location and size) as at July 1, 2019.