New HomeBuilder guidelines reveal 2022 timeline, buyer beware
Homebuyers after the $25,000 HomeBuilder grants could wait years to see the money, and risk being penalised for shonky building practices. See what new guidelines mean for you.
National
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Australians hoping to get the $25,000 HomeBuilder grant could be waiting years for the cash after guidelines for the scheme were updated Tuesday.
In one of the biggest updates since the program was announced over a month ago, the Victorian State Revenue Office released key updates and a few warnings.
Buyers risk missing the grant if their builder takes on more work than is “reasonable” or they quit contracts signed before June 4 hoping to cash in.
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With the scheme being administered by State Revenue Offices around the nation, it is expected the guidelines could be applied across the country.
They also confirm applicants will be shelling out thousands of dollars in their own money before they receive the grant and indicate off-the-plan unit buyers will wait until their name is on the title to be paid.
As a result, the federal government could still be making HomeBuilder payments to buyers at large-scale developments and apartment towers until October 31, 2022.
The HomeBuilder grants are on offer for those building a new home for under $750,000 or renovating their existing home for between $150,000 and $750,000, subject to income criteria. They are only available for buyers who sign contracts between June 4 and December 31 this year, and construction must start within three months of the contract being signed.
WHEN DO YOU GET THE MONEY?
- HomeBuilder payments will be made directly to an applicant’s nominated bank account at different points, depending on the project:
- New house builders receive the funds after the foundations have been laid and a first progress payment is made to a builder.
- Renovators will get the cash after they submit evidence of payments covering at least $150,000 of the contract price.
- Off-the-plan project buyers will not be paid the $25,000 until their name is registered on the certificate of title, with a deadline of October 31, 2022, now in place.
WARNING ON DELAYS
The SRO has now defined commencement as “excavation and site preparation works” for any new builds, and works “under the renovation contract” for existing homes.
An earlier promise of extensions if delays were encountered has now been clarified, with the SRO Commissioner “unlikely” to be lenient if the delay is caused by a buyer failing to “undertake appropriate due diligence when entering into a contract”.
This includes if the builder contracted to build the home has more work lined up than could be “reasonably expected” to be finished in the three months, and if a developer has set pre-development sales targets that have not been met yet.
They are “likely” to be covered for delays caused by council approvals, obtaining materials or subcontractors, bad weather or industrial disputes.
Natural disasters and serious illness or death in the construction team could also lead to an extension.
The guidelines also appear to slam the door on homebuyers who cancelled contracts signed before June 4 this year in a bid to access the grants, warning such applicants “you may not be eligible to receive the HomeBuilder grant”.
INDUSTRY ADVICE
Urban Development Institute of Australia Victorian chief executive Danni Hunter said the October 31, 2022, timeline for off-the-plan developments to complete construction was “entirely reasonable”.
“We welcome the more than 24 months, as it also means they will probably have less need to exercise discretion around extensions,” Ms Hunter said.
She also advised buyers and developers both needed to have a “fair understanding” of time frames before contracts were signed.
Ms Hunter said she was not aware of any buyers who had already ditched contracts, but warned if land values were to fall in Melbourne there would be some who looked to abandon contracts in order to buy at a reduced price.
“So there needs to be a balance to customers having access to the best and most balanced prices, and that parties respect contracts that they enter,” Ms Hunter said.
Master Builders Association Victorian chief executive Rebecca Casson flagged builders warranty insurance requirements should stop any builder taking on too many projects and welcomed the greater clarity provided about construction commencing.
“A builder’s assessment for Warranty Eligibility includes limits on the projects that they can take on,” Ms Casson said. “This assessment includes criteria such as the builder’s experience and financial security, which assists in protecting the homeowner.”
She also said the industry supported the SRO’s push to cut off buyers who had cancelled pre-June 4 contracts.
“Whilst this will be disappointing to some, the government has always been clear about this intent,” she said.
STILL TO COME
Only Tasmania and South Australia are currently allowing applicants to get started using a paper application system, with the rest of Australia awaiting an online portal’s construction.
Despite the government commencing work on the digital platform that will be accessed via State Revenue Office websites in June, industry sources believe it is still potentially weeks away from being made available.
The industry is also still lobbying the SRO and commonwealth to provide a system of pre-approving HomeBuilder applicants so they can show lenders they have met the eligibility requirements when requesting a loan.
Ms Hunter said it should be possible for the HomeBuilder portal currently under construction to “pop out” a yes or no response to applicants after their submission is made, and that this could be subject to formal approval. This could lead to buyers being able to approach a wider array of lenders in order to proceed with their purchase.
