HomeBuilder, FIRB and the Commercial Tenancy Relief Scheme update
The HomeBuilder scheme is extended
The Commonwealth Government recently announced that the HomeBuilder scheme has been extended to 31 March 2021 but with some changes. So, it’s important for buyers to know when and how they can tap into the modified scheme.
We published a summary of the HomeBuilder scheme in the last edition of The Lot. You can access that here.
Time to sign the contract extended to 31 March 2021
The HomeBuilder program is extended to apply to contracts signed up to 31 March 2021. This date is extended from 31 December 2020. This extension is projected by the Commonwealth Government to support the construction and renovation of around 15,000 extra homes in Australia. This is in addition to the 27,000 homes expected to be built or renovated under the original scheme.
Decrease in the grant amount from 1 January 2021
Although the time for signing contracts is extended, the actual amount of the grant will fall significantly. The grant amount for contracts signed between 4 June and 31 December 2020 (inclusive) is $25,000. The grant for contracts signed between 1 January 2021 and 31 March 2021 (inclusive) will be $15,000. As a result, we expect that buyers will be keen to sign contracts before the end of the calendar year.
Price cap for new builds increased from 1 January 2021
For contracts signed from 1 January 2021, the price cap for new builds will be increased to $850,000 for Victorian properties (up from $750,000). For properties in New South Wales, the new price cap is $950,000 (also up from $750,000). The price cap in all other States and Territories is unchanged.
Also, the price cap for substantial renovations is unchanged across Australia (maximum pre‑renovation property value of $1.5 million).
Time to commence construction for all contracts
The deadline to commence construction throughout Australia is now 6 months from the date the contract is signed. This was already the case in Victoria. So, this change brings all the other States and Territories in line with Victoria.
Application deadline extended for all contracts
The application deadline has been extended to 14 April 2021 (extended from 31 December 2020). This new deadline applies to all eligible contracts, including all those signed so far.
This is a more practical deadline. Before this change, both the deadline for signing the contract and for applying for the grant were on the same day (31 December 2020). So, to be eligible for the grant, buyers were required to sign a contract on, for example 31 December 2020, and lodge their applications on the same day – otherwise, they would miss out. The new time frame allows buyers to sign contracts up until 31 March 2021 and then they have until 14 April 2021 to lodge their application for the grant.
Licence and registration requirements change from 29 November 2020
Until 28 November 2020, builders and developers needed to hold a valid licence or registration dated before 4 June 2020. From 29 November 2020, that date has been extended to 29 November 2020.
This means that the clients of builders and developers who obtained their licence or registration between 4 June and 29 November are also eligible to apply for HomeBuilder. This only applies if they sign contracts from 29 November 2020 and assuming all the other criteria are met as well.
What hasn't changed to the HomeBuilder Scheme?
Other than the changes listed above, all other eligibility criteria are unchanged.
Will more information be available?
This section is based on the information made available by the Commonwealth Government on 29 November 2020. The Government may provide further details in the coming weeks.
Could there be a further extension to the HomBuilder Scheme?
The Commonwealth Government’s media release extending the scheme said that HomeBuilder is a key part of the Government’s economic recovery plan. Any further extensions are therefore dependent on how the economy progresses in the first quarter of 2021. So, we need to wait and see.
FIRB thresholds reinstated
The Commonwealth Government recently announced that the temporary COVID-19 measures, which reduced all of the FIRB monetary thresholds to $0, will end on 1 January 2021.
When COVID-19 hit, the threshold amounts which determine whether FIRB approval is required for particular investments by foreign persons were temporarily reduced to $0. This meant that FIRB approval became necessary for certain transactions that previously did not require FIRB approval where they fell under generous monetary thresholds.
The temporary threshold reduction added an extra layer of complexity and cost for a range of transactions, from sales and purchases or leases of commercial property to stand alone sales of car parking spaces, as well as timing issues as a result of extended FIRB processing timeframes.
We look forward to this extra layer of complexity, delay and cost being lifted for many of these transactions when the preCOVID‑19 monetary thresholds are reinstated on 1 January 2021.
If you have any queries about FIRB requirements in your projects or transactions, please let us know.
Victorian Commercial Tenancy Relief Scheme is extended
The Victorian Government has announced that the Victorian Commercial Tenancy Relief Scheme will be extended to 28 March 2021. The scheme was due to end on 31 December 2020.
In April 2020, the National Cabinet agreed that the commercial tenancy relief provided to tenants across Australia would last as long as JobKeeper. This was contained in the National Cabinet Mandatory code of conduct - SME commercial leasing principles during COVID-19. JobKeeper was extended to 28 March 2021, so this proposed new date lines up with the extension to JobKeeper.
At the time of writing this, the Victorian Government has announced the extension but has not yet provided more details. By the time you read this, more information may be available. Contact us if you need further details. We expect that the extension to the scheme will be made by regulation.
Want more information about the HomeBuilder scheme, the FIRB thresholds or the extension to the Commerical Tenancy Relief Scheme?
Get in touch with the Development Team.
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