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HomeBuilder Scheme - Can this kick start a COVID-19 property and construction recovery?

The Federal Government has announced the HomeBuilder Scheme in an effort to stimulate demand within the property and construction sector. There are some important factors that developers need to keep in mind.

As part of its economic recovery plan in response to the COVID-19 pandemic, the Federal Government is giving eligible owner-occupiers a grant of $25,000 to build a new home or substantially renovate an existing home. Builders and developers have reported a surge in demand since the Federal Government’s announcement of the Scheme.

South Australia has now passed the First Home and Housing Construction Grants (Miscellaneous) Amendment Act 2020 (SA) to implement the Scheme with changes applying from 4 June 2020. RevenueSA has published the HomeBuilder Grant Guidelines which outline the key eligibility criteria.

Eligibility criteria

  1. Grants are only available to individuals (not companies or trusts).
  2. Income thresholds apply to individuals ($125,000 p.a.) and couples ($200,000 p.a.) based on either 2018-19 or 2019-20 tax returns.
  3. Applicants must enter into a building contract with a licensed builder between 4 June and 31 December 2020.
  4. Grants must be applied towards the construction of a new home or the renovation of an existing home.
  5. The value of any new home (including land) cannot exceed $750,000 and there are thresholds for renovating an existing home.
  6. Construction must commence within three months of entering the build contract (subject to some concessions).
  7. Properties must be owner-occupied (investment properties do not qualify) and applicants must not have previously received the Grant from another state or territory.

Commencement of Construction

The Scheme does not apply where construction commenced prior to 4 June 2020. Developers should be aware that this will operate to exclude purchasers of homes in off the plan projects that commenced construction prior to this date. The Guidelines state that commencement occurs when site works (including excavation to the top of the face level) are complete. Applications must provide supporting evidence such as a statutory declaration from a licensed builder as evidence of commencement of construction.

Discretion

The Guidelines state that the State Government may exercise its discretion to allow a Grant if the commencement of construction is delayed due to unforeseen factors outside the control of the parties, such that construction does not commence within three months from entering the build contract.

Contract with a licenced builder

Individuals will only be eligible for a Grant if they enter into a contract with a licenced builder. The Guidelines state that off the plan/new home purchases will still be eligible for the Grant if a sales contract exists in place of a building contract.

Applications and Objections

Applicants must complete the HomeBuilder Grant application and lodge together with any supporting documentation with RevenueSA. Unsuccessful applicants have the ability to lodge an objection with the State Treasurer, and if unsuccessful again they may seek a review with SACAT.

Payment of the Grant

Payments for successful applicants will depend on whether the application relates to a new build, renovation or off the plan contract. Payments will be made for new builds after construction has commenced and the applicant provides evidence that the first progress payment has been made to the builder. Grants for off the plan contracts will be paid after the applicant submits evidence showing that they are the registered proprietor of the property.

Audits

The Scheme is subject to RevenueSA conducting audits and issuing penalties if any applicant is deemed to provide misleading information or ought not to have received a Grant. If this is found to be the case, the applicant may be required to repay the entirety of the Grant.

Key Recommendations

We recommend that developers consider including appropriate clauses in their sale contracts requiring purchasers to acknowledge that;

  1. They have not entered into any contract on the understanding that they will receive a Grant;
  2. They have not received any representation from the vendor, developer, builder or other party that they will receive a Grant; and
  3. They will comply with all obligations in relation to the Scheme including providing all necessary information to all authorities.

Developers should be aware that some prospective purchasers may, during negotiations, seek to include the successful application for a Grant as a pre-condition to completion under a contract for sale.

If you have queries in relation to the Scheme and how it may impact you, please do not hesitate to contact Sam Richardson or a member of our Property team.


This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.

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