HomeBuilder Scheme – Victorian Guidelines Announced
Following on from the HomeBuilder Scheme announcement by the Federal Government in June this year (see our initial article here), the State Revenue Office of Victoria (the SRO) has now clarified the guidelines and criteria for persons wishing to access the HomeBuilder grant (the grant) with some definitions and eligibility criteria being extended in the process/
1. Personal criteria
Applicants must be aged 18 years or older and an Australian citizen at the date of application.
Applicants must be registered on title and own the property by certain dates/times:
- For contracts to build – no later than the laying of foundations and the first progress payment (i.e. instalment) being made to the builder. The grant will be paid at this point.
- For substantial renovations – at the time they enter into the contract for the renovation works. The definition of ‘substantial’ renovations has also been extended (see below). The grant will be paid after construction has commenced and evidence is submitted showing payments of at least $150,000.00 of the contract price have been made to the builder.
- For off-the-plan/new homes – when the building is completed and occupancy can commence. This date must be no later than 31 October 2022. The grant will be paid following registration on title.
The grant remains unavailable in respect of investment properties.
‘Substantial renovations’ are either a substantial alteration of an existing home or a demolition and construction of a new home. As an example, if your home was destroyed in the 2019-20 Victorian Bushfires and you are rebuilding on your existing land, this is considered a ‘substantial renovation’. To be considered ‘substantial’, renovations must improve the accessibility, safety or liveability of the property and be connected to the main dwelling.
3. Income cap
The initial income caps ($125,000.00 per year for an individual, $200,000.00 per year for a couple) still apply with the relevant income periods being the 2018-19 and 2019-20 financial years.
4. Residency requirements
Each applicant must:
- Live in the property as their principal place of residence for a continuous period of at least six (6) months; and
- Occupation must commence immediately following completion of construction, renovation or settlement.
5. Eligible contracts
The grant is only available in respect of contracts signed between 4 June 2020 and 31 December 2020. The SRO has warned against cancelling contracts dated outside this range in an attempt to take advantage of this grant. Parties should respect contracts already entered.
In negotiating contracts, parties must deal with each other at arm’s length. This requires the deal be made freely and independently, without the parties sharing a special relationship (eg. relatives). The contract price should reflect fair market value.
Spending and value caps are as follows:
- For build contracts – where a new home is built, the combined value of the house and land must not exceed $750,000.00 (including GST).
- For substantial renovation contracts – the cost of renovations must be between $150,000.00 and $750,000.00 (including GST), and the value of the combined house and land must not exceed $1.5 million.
- For off-the-plan/new home contracts – the contract price must not exceed $750,000.00 (including GST).
In all cases, construction must not have commenced before 4 June 2020.
6. Builder requirements
Construction must be undertaken by a registered builder or licenced building contractor named on the building licence or permit. Building contracts signed with developers are eligible for the grant. Owner-builders are not eligible for the grant.
7. Construction commencement
Construction must commence within 3 months of the contract date. ‘Commencement’ is defined as follows:
- For new builds – when excavation and site preparation works commence.
- For substantial renovations – when works anticipated under the renovation contract begin.
- For off-the-plan builds – when excavation and site preparation works commence.
The Commissioner has broad discretion in allowing for or rejecting extension requests.
Note regarding the Victorian lockdown: With the introduction of Stage 4 lockdown restrictions in metropolitan Melbourne, and Stage 3 restrictions in regional Victoria, the Commissioner will exercise their discretion to provide a blanket extension of 3 months for the construction commencement criterion for grant applicants.
This means Victorian applicants now have six (6) months from the contract date to commence construction.
For a comprehensive list of supporting documentation required in applying for the grant, see the table at the following link.
If an application for the grant is rejected and the applicant does not agree with the Commissioner’s decision, they can lodge an objection within sixty (60) days of the date of the letter advising of the rejection. The objection must include reasons for why they believe the decision is incorrect. Objections however can only be made on the ground that the Commissioner has come to the wrong decision on the facts and not on the grounds of perceived unfairness. Our office can assist with this process where required.
The SRO audits ALL applications for compliance with the eligibility criteria outlined above and Applicants when contacted must provide all information and documentation requested. Applicants must also notify the SRO within fourteen (14) days if they cease to use the property as their principal of residence.
They may be required to repay the grant if:
- They do not provide all information requested during an investigation;
- The information they provide is false or misleading; or
- If they have received the grant but do not meet the principal place of residence requirement.
As advocates for developers, first home buyers and investors our team is ready to assist you wherever required. Note that the above does not constitute legal advice and is general in nature but we invite you to contact us on 03 9691 0200 for further information or if you require clarification on any of the points previously outlined.