Can brokers benefit from the Homebuilder scheme?

The Homebuilder scheme is a double-edged sword in the current market, says Chris Hall.

While he thinks the grant is a positive move from the government, he says the challenge of meeting its eligibility criteria is heightened by the fact that several lenders have pulled out of construction finance due to COVID-19.

MPA spoke with the Sydney broker and managing director of Blue Crane Capital about whether the stimulus will have a positive effect on brokers and how they can target lead opportunities off the back of this.

Ticking all the boxes

While he believes that the Homebuilder grant will help people in regional areas and in certain states, Hall says the eligibility criteria makes it difficult for many city dwellers to take advantage of.

“The challenge we’re finding is it’s very difficult to hit those metrics in Sydney – particularly in the inner ring,” he says.

“Initially I had a lot of clients call me and say, how can we utilise this grant? But unfortunately, because there are so many variables and components to it, it’s actually quite difficult.”

Despite having an increase in enquiry since the grant, Hall has only written one loan off the back of it so far.

While the metrics could suit particular pockets in Sydney, including the south-west, high property values have meant most of Hall’s Sydney clientele are locked out of the deal.

The challenge of getting a loan

One of the problems for brokers doing construction finance is that lenders have pulled out of that space.

“A lot of the banks aren’t doing construction,” Hall says.

“Even some of the non-bank lenders have pulled out of construction at the moment.

“It’s twofold – you’ve got to meet the government’s guidelines and then you’ve got to meet the lender’s guidelines to then get it across the line.

“You can’t just do cash-out policies anymore, it needs to be fairly watertight around the building contract.”

While the grant could stimulate construction loan activity for brokers in non-metropolitan areas, he says it isn’t likely to have much of an impact on the majority of Sydneysiders who live within 25kms of the CBD.

How brokers can leverage the grant to generate leads

Brokers can target the opportunity for more business off the back of this grant by sussing out the areas where its metrics most apply, says Hall.

Striking connections with conveyancers and real estate agents that do house and land packages in areas such as south-western Sydney could bring about some good opportunities.

He says some developers are offering significant discounts on new home builds at the moment, meaning they could also be useful referral partners.

“It really comes down to sniffing out where they feel the opportunity would lie within those criteria,” he says.

“In the regional areas it will work as well. Because of what we’re seeing with the coronavirus with a lot more people working from home, we’re seeing them moving out to areas like Orange, Wagga, Albury and so on.

“There’s probably going to be a bit of a spike in construction out in those areas but I just don’t know what sort of impact it’s going to have on the Sydney market.”