UDIA National Update on Federal HomeBuilder Stimulus for New Housing

The Commonwealth Government has today released some updated information on the detailed design and application of its stimulus “HomeBuilder” package to support the housing and construction sector recover from the economic effects of COVID-19.

Over the past two weeks, UDIA has been in liaison with the Housing Minister’s office outlining a range of practical issues that needed to be addressed based on our assessment of the eligibility criteria and feedback from the industry.

The new guidance – available at https://treasury.gov.au/coronavirus/homebuilder – seeks to clarify some of the issues relating to the eligibility rules applying to the package.

Unfortunately, substantial risks remain that the eligibility criteria exclude large sections of the industry and gaps in the level of information required – plus a potential level of discretion left to the states.

The main three new elements dealt with in the guidance include:

  • Greater clarification around the eligibility of spec homes under the scheme, with homes commencing post June 4 potentially eligible where a contract is signed within the appropriate window (between 4 June and 31 December 2020)
  • Expansion on the mechanisms applying to off-the-plan sales of apartments and townhouses – though it is still likely to apply to a very limited range of projects given the limited timeframe in which construction needs to commence
  • Some information suggesting the states will have discretion to waive the three months construction commencement window where planning delays occur

Apart from the above, there is still an absence of critical information on the design and application of the scheme and how it affects large parts of the housing and construction sector – from different housing types, to contractual arrangements, and other issues.

Some of the key areas that still need to be addressed include:

  • Absolute clarity that the criteria articulated on off-the-plan apartment and townhouse projects fully recognise the common practice in the industry where the homebuyer has a contract with the developer, but not the builder;
  • Ensuring the timeframes are sufficiently flexible to capture projects which were on the verge of being commenced, or notionally commenced – but may technically fall foul of the June 4 start date;
  • Extending the 90-day timeframe to recognise that the spectrum of housing products in the market – from house-and-land to multi-unit apartments – won’t all easily meet the 90-day timeframe requirements;
  • Providing clarification on the definition of ‘commencement of construction’
  • Ensuring the provisions around spec housing don’t have the unintended effect of disadvantaging projects already under development for products that remain unsold;
  • Removing the risk that buyers break existing house-and-land package contracts for building contracts entered into prior to 4th June;
  • Understanding limitations on the price thresholds will make eligibility difficult in some major capital cities.

There are also a host of other issues requiring resolution and clarification.

UDIA National is disappointed this feedback has not been dealt with and will be writing to and discussing with the Commonwealth to make clear what is needed to resolve both constraints in the scheme’s design, as well as gaps in technical information and definitions.

We will also be reinforcing to Government the urgency of resolving these issues to ensure there is no unintended logjam of decision-making across industry and homebuyers.

Simon Basheer

UDIA National President