The Federal Government has announced $25,000 cash grants for people to renovate their properties or build new homes, but analysts say the scheme has some major flaws.

The new HomeBuilder scheme is designed to stimulate activity in the construction sector, propping up one of the biggest employers in the country.

HomeBuilder provides a grant of $25,000 to build a new home or substantially renovate an existing home, if applicants meet eligibility criteria, including income caps of $125,000 for singles and $200,000 for couples based on their latest assessable income.

A national dwelling price cap of $750,000 will apply for new home builds, and a renovation price range of $150,000 up to $750,000 will apply to renovating an existing home with a current value of no more than $1.5 million.

This means that a person cannot access the grants if they earn over $125,00 a year, or if their renovations are worth less than $150,000.

It has been criticised as being too narrow, and appearing to focused on new home builds.

“While off-the-plan apartment sales are eligible, the short timeframe of the program suggests that detached house building, rather than multi-unit dwellings, will be the main beneficiary,” ANZ economist Felicity Emmett said in a note to clients this week.

The Australian Council of Social Service (ACOSS) says the scheme is a wasted opportunity.

“There is no argument that the construction sector needs a shot in the arm, but this money will not go where it is most needed,” ACOSS chief executive Dr Cassandra Goldie said.

“It will largely benefit those on middle and higher incomes undertaking costly renovations, without any related social or environmental benefits.

“We have a massive shortfall of social housing and there is clear agreement from Master Builders Australia, the CFMEU and community groups for a national social housing construction program of about 30,000 homes.

“We must work together to get out of this recession, not leave people behind and out in the cold without a home.”