Want to buy a fixer upper and renovate with the Homebuilder grant? Here’s what to look for

If you're on the hunt for a new home, last week's announcement of the Federal Government's HomeBuilder scheme may have shaken up your search a bit. The scheme means home buyers could be eligible for a $25,000 grant for either a new home purchase, or if you're doing major renovations.

Thinking of buying a fixer upper and using the grant for renovations? You'll only be eligible if you embark on renovations that cost between $150,000 and $750,000, and you must engage a licensed builder. You also have to pass a means test and abide by a few other conditions.

And there's plenty more to keep in mind if you're on your hunt for a home to do up. If you’ve watched any of the countless home renovation shows, it’s easy to have a rose-coloured view about the process. You find an unloved house which you can snap up way below market value, give it a bit of TLC, and a quick montage later, you’ve got a stunning, modern house. But not all fixer-uppers are created equal. While a bit of work and some updates can add thousands, some properties can turn into an absolute money pit.

Here are some things to keep an eye out for when you’re looking for your own fixer upper:

The location

There are many, many things you can do to update a property. You can even completely knock it down and start again with the block as your blank canvas (depending on government approval). But there’s one thing you can never change about the block - its location. Think about the needs of whoever is going to live in the property, whether that's yourself or a tenant, or even a future buyer. The perfect location is different for everybody, whether it’s close to schools, walking distance to shops, close to a university, easy access to the city, or easy access to escape the city.

Also check out the surrounding area - the other thing you can’t change are your neighbours. Does it seem like a well-kept area? Is it mostly families? Young professionals? Retirees? Particularly if you want to stay and live in your renovated property, it’s good to know who you’ll be sharing a street with.

The layout

Unless you plan to completely gut the place, one of the other more difficult things to change is the layout. Does the space flow well and is it conducive to the sort of lifestyle you’re planning for the space? Leaving everything where it is and just doing cosmetic upgrades will save a fortune on your renovation. Also take note of where things like the sink, stove, toilet, shower and laundry are. While most can be given a modern upgrade fairly simply and cost effectively, moving them can require major plumbing or electrical work.

The condition

Now for the bulk of the job. Buying a fixer upper obviously means that the property is going to be far from tip top condition. But some problems are far more costly than others.

Here you need to take into consideration your budget for the renovation, and your own skills. Are you an experienced renovator? Do you have a builder or tradesperson in the family who can do some of the more complicated work? Or will you have to outsource it all?

Fixing some of the more cosmetic issues can be fairly cost efficient, and many can even be completed by someone with basic DIY skills. These include stripping wallpaper and repainting, installing new light fixtures or switches, painting kitchen cabinets or installing new ones, refinishing floors, retiling, landscaping or even adding a deck.

Things like fixing the roof, replacing plumbing or electrical, adding or fixing air conditioning, complete kitchen or bathroom remodels, moving walls, or adding extensions to the existing property can be much more costly, and usually require getting professional help.

But remember, to be eligible for HomeBuilder grant, your renovation needs to cost between $150,000 and $750,000, and you must engage a licensed builder, so you're more flexible to find a place that requires major upgrades.

And make sure you get all the pre-purchase inspections to avoid hidden, costly, surprises.

The legalities

You might have big ideas and dreams, and already have the plans drawn up, but the local government may have very different ideas about what should happen on your property. And unfortunately, what they say, goes. If you want to make changes to the house, there are certain approvals you will need before you start. You can also check the contract of sale for any easements, which may restrict where you can build on the property. Properties that are heritage listed may also have stricter conditions when it comes to renovations - particularly keep an eye out for this in suburbs like Barton, Griffith, Forrest, Kingston, Ainslie and Reid.

And even if you’re not making changes to the physical house, you may also need to get approval if you’re building a fence, landscaping, doing work on a verge or nature strip, replacing, modifying or creating a driveway, or adding a swimming pool or spa.

Check with the ACT Government or NSW Government, depending on where you live.