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moreWith the release of the HomeBuilder program nationally, the WA State Government has announced its own separate support package for the home building industry with the announcement of its WA Building Bonus Scheme and the extension of its single-tier strata scheme.
What is the scheme?
The scheme provides the owner with a $20,000 on the construction of a new detached home.
Who is eligible?
In short, any registered owner of vacant land is eligible including:
- Owner-occupiers and investors.
- Australian citizens and foreign persons (whether residing in or outside of WA).
- Natural persons, corporations and trustees.
There are some conditions on the building and the contract itself. These conditions include:
- The home must be a detached residence.
- The home cannot be for mixed-use, commercial purposes or short stay accommodation. However, investors in residential property will be eligible.
- The home cannot share walls or roof structures with other buildings.
- The land must be vacant.
- If a home is already on the property, no grant will be paid unless the home is demolished, regardless of the size of the land or the home. Unlike the HomeBuilder program, substantial renovations will not be eligible for the Building Bonus Scheme.
- If the home will be demolished, the grant will be paid only after the demolition of the existing home.
- The building contract must be in the name of the registered owner of the land, or otherwise, the arrangement is a bona fide arrangement.
- You must enter into a comprehensive home building contract to build a new home on the land, or enter into a contract to build a new relocatable home on the land, between 4 June 2020 and 31 December 2020. Construction must commence within six months of entering into the contract.
- If you are an owner builder, you must commence the construction of the new home on the land between 4 June 2020 and 31 December 2020.
- You must provide evidence that construction has commenced, which is when the foundations for the home is completed.
- You can only apply for the grant once the foundations have been laid and must apply for the grant by 30 June 2021.
Other criteria
Unlike the HomeBuilder program, the Building Bonus scheme is not means-tested and applies to the construction of each new detached home. As such, eligible participants may be entitled to more than one grant under the program.
The Building Bonus scheme will operate in addition to the HomeBuilder program which may provide up to $25,000 to eligible applicants.
The program will also operate in addition to the First Home Owners Grant, which provides eligible applicants with $10,000 plus duty relief in certain circumstances.
As such, there are opportunities for certain eligible applicants of all three programs, to receive up to $55,000 in cash grants on the construction of their first home.
Building a new home on a single-tier development
The scheme extends to the construction of a new home on a single-tier development, covering the purchase of houses off the plan.
Who is eligible?
Eligibility criteria is similar to the Building Bonus Scheme, with the following additional conditions:
- The contract cannot be for a completed dwelling that is held by the developer or another person.
- The contract cannot apply to a multi-tiered development (e.g. apartments) which are subject to a separate rebate.
- Whilst construction must commence within six months of the contract date, an extension may be provided by the Commissioner with the provision of evidence from the developer as to why construction did not commence within the required timeframe.
- You can apply when you are the owner of the property (registered on the certificate of title).
Building a new home in a multi-tiered development
A Duty rebate was already in place for purchasers who entered into a pre-construction contract to purchase a new residential unit or apartment off the plan. This scheme has been temporarily expanded in line with the Building Bonus Scheme to provide a 75% Duty rebate capped to a maximum of $25,000.
Who is eligible?
Three criteria must be met to qualify for the off the plan Duty rebate:
- The applicant has signed a contract to purchase a new residential unit or apartment in a multi-tiered structure where development has commenced. The contract is executed between 4 June 2020 and 31 December 2020.
- The applicant must be the buyer(s) named on the contract or an eligible transferee. As per the Building Bonus Scheme, it applies to all buyers who become registered on the title as an owner occupier or investor.
- Construction of the new residential unit or apartment must be completed within 36 months of the contract being entered into. The Commissioner considers construction to be completed when the strata plan is registered.
- An application must be lodged within 12 months of the date the eligible applicant is registered on the certificate of title of the unit or apartment.
What does it mean?
The building and construction industry is an important Australia’s economy and one that requires our support nationally. Whilst the grants may assist those who were already considering constructing a new home, in the current economic environment it will remain to be seen whether the grants go far enough to have a significant impact on the overall industry.
If it does result in a significant increase in construction activity, it will be interesting to see if the six month rule on constructions can be met in many cases where council approvals and financing can cause significant delays. It is not apparent that the Commissioner will grant additional time for the construction of a new detached home where construction commences more than six months after entering into the contract.
How can RSM help?
Prior to making any significant capital purchases, you should consider seeking independent financial advice to determine whether the investment is right for your circumstances. For more information, contact your local RSM office today.