Brendan Coates

Brendan Coates

What you need to know – HomeBuilder

The Federal Government announced the HomeBuilder stimulus package on 4 June 2020.

The full details of the scheme are not yet available. This information sheet provides details based on the current publicly available information regarding key aspects of the package.

Q. What is the HomeBuilder stimulus package?

HomeBuilder is a time limited, tax-free $25,000 grant for owner occupiers who build new homes or carry out substantial renovations projects.

HomeBuilder is available for building contracts signed between 4 June 2020 and 31 December 2020, this includes sales contracts for new builds where building commences after 4 June 2020 (Contract).

An existing home that has already been completed, or started construction before 4 June will not qualify for HomeBuilder.

Eligible Home Owners

Q. Who is eligible for HomeBuilder?

To be eligible for HomeBuilder, your client must:

  • Be a natural person (not a company or trust);
  • Be over 18;
  • Be an Australian citizen; and
  • Meet one of the following two income caps:
    o $125,000 per annum for an individual;
    o $200,000 per annum for a couple.

Q. Are owner builders eligible for the grant?


Q. My client is an investor, are they eligible?

No, those seeking to build a new home which will be used as an investment property, or renovate an existing home which is an investment property, are not eligible for HomeBuilder.

Eligible Building Work

Q. What type of building work is eligible for HomeBuilder?

To be eligible for HomeBuilder, you must enter into a Contract between 4 June 2020 and 31 December 2020 to either:

  • Build a new home as a principal place of residence on new land, where the property value (house and land) does not exceed $750,000;
  • Build a new home as a knock down rebuild renovation project, where the value of the existing property (house and land) does not exceed $1.5 million pre-renovation;
  • Purchase a yet to be commenced new home ‘off the plan’ that does not exceed $750,000. or
  • Substantially renovate an existing home as a principal place of residence, where the Contract is between $150,000 and $750,000, and where the value of the existing property (house and land) does not exceed $1.5 million pre-renovation.

(together called the ‘contract price caps’)

Q. What is considered an eligible ‘new home’?

Your client will be building a new home if:

  • They already owned vacant land before 4 June and they want to build a new home on it and the total value of the land and new build does not exceed $750,000.
  • They bought land after 4 June and want to build a new home on it and the total value of the land and new build does not exceed $750,000.
  • They bought a house and land package where the home is yet to be constructed and the total value of the house and land package does not exceed $750,000.

Q. What is considered an eligible renovation?

An eligible renovation includes building work that involves a substantial renovation of an existing home as a principal place of residence, where the Contract is between $150,000 and $750,000, and where the value of the existing property (house and land) does not exceed $1.5 million pre-renovation.

To be substantial, the renovation does not need to involve removal or replacement of foundations, external walls, interior support walls, floors, roofs or staircases. However the renovation must improve the accessibility, liveability and safety of the property.

HIA understands that standalone granny flats, tennis courts, swimming pools and structures that are not connected to the property (i.e. outdoor spas and saunas, sheds or standalone garages) will not be eligible.

An eligible renovation project also includes a ‘knock down rebuild’ home where your client owns the property (house and land). The value of the work must be between $150,000 and $750,000, and the value of the existing property (house and land) does not exceed $1.5 million pre-renovation.

Each State and Territory will determine the evidence required to demonstrate the pre-renovation property value.

It is expected that your client will continue to live at the property (as their principal place of residence) for at least 6 months. However this will be confirmed by the relevant State or Territory authority.

Q. I carry out speculative work, are my clients eligible?

Speculative home building work may be eligible for HomeBuilder if:

  • Construction work commences on or after 4 June; and 
  • the Contract is signed between 4 June 2020 and 31 December 2020

If a Contract is signed with a client prior to the commencement of construction on a speculative home then construction work must commence no later than three months after the Contract is signed.

An existing home that has already been completed, or started construction before 4 June, is not eligible for HomeBuilder.

Q. I build granny flats, are my clients eligible?

The Government has indicated that standalone granny flats are not eligible renovations for HomeBuilder.

Q. I build pre-fabricated homes, are my clients eligible?

Yes, provided that the construction is undertaken by a registered or licensed building services ‘contractor’ who is named as the builder on the building license or permit and all other eligibility criteria are met.

Q. I build off the plan apartments and townhouses, are my clients eligible?

Yes, provided that:

  • your client signs a Contract to buy an off the plan dwelling between 4 June 2020 and 31 December 2020; and
  • construction commences on or after 4 June 2020 and no later than three months after the contract is signed.

However, if your client signed the Contract to buy the dwelling after 4 June 2020, and construction commenced before 4 June 2020 your client is ineligible.

Q. Who can carry out the building work?

The new home or renovation work must be completed by a licensed or registered builder (depending on the State or Territory). The client may be asked to provide a copy of your license or registration details on the application for the grant.

The builder must comply with all laws that apply to the proposed residential/domestic building work.

Q. Are there any limits on who I can carry out the work for?

Yes, you must make sure that your client does not have a close relationship with you, meaning your dealing are at arm’s length.

  • This means the contract must be made by two parties freely and independently of each other, and without offering favour for some special relationship, such as being a relative or contracting as an individual with your own building company.
  • The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market price.

Further details will be provided by States and Territories.

HIA recommends using the HIA new homes or renovation contracts appropriate to your State or Territory.

Q. Can I split up my contracts, or exclude certain works to meet the contract price caps?

HIA does not recommend that you split up the building work, or exclude works that would normally form a part of the project, in order to meet the contract price caps.

Q. Can I use a cost plus contracts?

Other than existing State or Territory requirements regarding cost plus contracts, as long as there is a building contract in place (and all the other criteria are satisfied) cost plus arrangements for the carrying out of residential/domestic building work are permitted.

However, it is foreseeable that any intention to manipulate the contract price, through a cost plus contract, to satisfy the contract price caps will not be looked on favorably.

Time limits

Q. When does construction have to commence?

To be eligible, construction must commence within 3 months of the date of the Contract.

Q. What if I cannot commence work within 3 months of signing the Contract?

States and Territories may exercise discretion where commencement is delayed beyond three months from the contract date due to unforeseen factors outside the control of the parties to the contract (e.g. delays in building approvals or finance approvals). 

However, if you know that you will be unable to commence construction within three months of the date of the Contract HIA suggests discussing the matter with your client and:

  • In those States where it is permitted, consider entering into a preliminary agreement with your client to provide sufficient time to complete the necessary steps required before signing a building contract.
    A preliminary agreement or preparatory work agreements address preliminary or pre-construction works, for example obtaining a soil report and foundation data, or to develop design, plans and specifications for the construction or renovation of a home. Some may also ask for an initial fee. Please speak to your local Workplace Adviser for more information.
  • Ask the client to wait to sign (and date) the building contract until all necessary steps are taken to allow the contract to be confirmed and ensure work can then commence within 3 months of the contract being signed.

Q. What if the Contract is dated before 4 June 2020?

Your client will not be eligible for HomeBuilder.

Q. What should I do if my client wants to terminate and re-enter into a Contract after 4 June?

While it is understandable that your client may want to seek access to HomeBuilder, before terminating any building contract you should carefully consider this request and determine whether your state or territory office of revenue has provided any specific direction for or against this approach.

  1. Just pause…This is a new scheme, just announced, we are all still awaiting further details from State and Territory offices of revenue regarding its operation and implementation. Terminating today, as opposed to waiting to understand what rules will apply in your state or territory is unlikely to make a significant difference to you or your client. The final scheme rules may make this option impractical or other requirements in the scheme may mean the client is not eligible.
  2. Uncertainty regarding compliance frameworkCurrently there is no information indicating that you cannot terminate a contract and then sign a new one for the same or substantially the same building work to obtain access to HomeBuilder. Therefore, as is generally the case, parties can mutually agree to terminate the contract.Some jurisdictions also mandate a cooling off period within which a homeowner can terminate the contract for ‘change of mind’.However, as the grant will be administered by State and Territory revenue offices, their response to this approach is currently unknown.Again, until the final scheme rules are clear, it is uncertain what rules may be applied to projects where the parties move to cancel and recontract.
  3. Ensure the homeowner and the project will qualify for HomeBuilderThe eligibility criteria for HomeBuilder mean that not every client will be able to access the scheme and not every project will be eligible. Before any decision is made about further actions, these details should be checked.
  4. Check currency of planning and building approvalsGenerally there should be no connection between the building contract and statutory approvals, but if terminating the contract, you should check to ensure that there are not potential future problems with respect to continuing to rely on planning or building approvals already received for work to be completed under a new building contract. It would also be prudent to check if this approach may incur any additional fees.
  5. Has the deposit been paid?If a deposit has been paid it will need to be refunded as part of the termination.
  6. How secure is the client?You need to consider that, once the contract is terminated the client could explore other options regarding the carrying out of the building work.
  7. FinanceBefore terminating the contract your client should talk to their bank to ensure ongoing approval for any finance that may have already been secured will not be jeopardised.You should seek assurances that they will still be able to get the already approved finance on a new building contract. There may be delays and/or, depending on when approval was given, the bank may require further and more detailed information from your client.
  8. Warranty InsuranceWhere Warranty Insurance is required, a number of jurisdictions require that this be in place before any money (including the deposit) can be taken, or within a very short time frame after the contract is signed. It is therefore likely that a warranty insurance certificate will have been issued and, if the contract is terminated, this certificate would also have to be cancelled.HIA strongly recommends talking to your broker before cancelling the warranty insurance with the intention of having the insurance reissued for the same building work but under a new contract.Generally to cancel Warranty Insurance you will need to complete an application/request and/or attest to the following:
    • That the building contract has been terminated;
    • No work has commenced onsite;
    • No monies are owing to any party to the contract; and
    • There are no disputes between any party to the contract.
  9. How to terminate the contract?Terminating a contract should be done carefully and cautiously.Obtaining legal advice is recommended as is entering into a written agreement with your client that absolves both parties of all of their rights, responsibilities and obligations that may have arisen under the (terminated) contract.If you and your client decide to proceed with this step please speak to a Workplace Adviser for further information.

Payment of HomeBuilder

Q. Who will make the payment?

The grant will be administered by each State and Territory office of revenue.

Q. When will the payment of the grant be made?

The grant will be paid directly to the owner occupier by the office of revenue.

For new builds, grants will be paid in line with the timing of payments for first home owner grants or at the discretion of the State and Territory if there is no home owner grant scheme in place.

For substantial renovations, grants will be paid once at least $150,000 of the contract price has been paid in relation to the renovation.

Access to other Government measures

Q. Can I access other pre-existing State and Territory programs?

Yes, HomeBuilder is designed to complement existing First Home Owner Grant programs, stamp duty concessions and other grant schemes, as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.

Are there any penalties associated with HomeBuilder?

HIA expects that the State and Territory offices of revenue responsible for implementing the scheme will use existing mechanism to mitigate the chances of fraud occurring.

At this time, HIA is unaware of any specific penalty or anti-avoidance measures associated with HomeBuilder.