HIA gains changes to HomeBuilder
In a major win, just two weeks after the scheme was launched, HIA was successful in gaining the first important changes to the scheme with the release of more details on 18 June. Since then, each state and territory has adopted these changes and provided further clarity on how the scheme will operate.
Definition of ‘building contract’
The preliminary details of the scheme made reference to a ‘building contract’ but did not provide a definition. It appeared that the two types of contracts commonly used in residential property sales – building contracts and real estate (property conveyancing) contracts – were not understood.
Based on feedback from HIA, changes were made to define a contract as both a building contract and a sales contract providing scope for off the plan sales to occur (this includes spec homes, house and land packages, apartments, etc.).
Preliminary details of the scheme indicated that a building project needed to commence within three months of signing a building contract. A definition of ‘commencement’ was not set out in the preliminary details.
HIA raised concerns about the ability to commence work onsite within three months of signing a building contract due to the steps that require completion before work can commence – including obtaining finance approval and building approval.
In a win for HIA, the federal government adopted HIA’s recommendation to provide scope for an applicant to request an extension of time for unforeseen circumstances, such as finance or building approval delays. Also significant is that HIA secured a definition of ‘commencement’ as site excavation and related works in all jurisdictions.
Each state that has released guidelines regarding the operation of the scheme has adopted this approach confirming that an extension of time of three months may be granted in circumstances, including for example, delays in obtaining council approvals, difficulties in obtaining construction materials and/or subcontractors, and delays in financial institutions assessing and approving finance.
Eligibility, payment and commencement
As more details of the scheme were released a further matter regarding the interplay between securing eligibility for the grant, lodging an application, and when the payment of the grant would be made, surfaced.
HIA expressed concerns that it appeared that an application to determine eligibility and the payment of the grant could only be made at commencement of the building work being site excavation. Quite obviously, this approach is problematic for a number of reasons, but was most concerning for the finance approval and understanding how the grant would be considered by the banks.
Based on HIA’s work with state governments, a two-stage process has been adopted in all states except Western Australia. Under the process an applicant may apply for the grant once a contract has been signed and secure eligibility subject to other criteria being satisfied at a later point in time, i.e. that building work commenced within three months.
Applying for HomeBuilder
In early August, all states and territories had opened an online portal to assist home buyers to submit their applications. Now that the scheme is running, HIA is monitoring its progress to determine whether any other changes are needed and we are continuing to brief the Australian Government on how industry is responding.