By Tracey Rundle, Partner, Don Battams, Partner and Angie Coleman, Associate
The 2011-12 Queensland budget includes a $10,000 grant for a person or corporation buying or building a new home in Queensland where the value of that home is less than $600,000. The grant is for a limited time only (from 1 August 2011 and ending 31 January 2012).
Here, Partner Tracey Rundle and Associate Angie Coleman look at who can apply for the grant and the criteria that must be met for individuals and corporations to take advantage of the grant.
While the government has released a frequently asked questions fact sheet on their website for the Office of State Revenue to provide guidance as to how the grant will operate, the underlying legislation containing the grant has not yet been released. Once that occurs we will know the finer details of the eligibility criteria for the grant.
Whilst the government's intentions are to assist in the recovery of the housing section, unfortunately the short-term effect may be that entry into contracts for the purchase of qualifying homes will be delayed until at least 1 August 2011 (slowing down already slowed sales) until potential purchasers are certain as to whether they will be entitled to the grant.
Who can apply?
Anyone who:
- is over 18 years old or is a corporation or trustee;
- enters into a contract for the purchase of a 'new home' between 1 August 2011 and 31 January 2012 (with a price less than $600,000); and
- will occupy the new home as a place of residence (and will extend to others, ie tenants, occupying the home as a place of residence).
The building work for the new home must be completed by:
- 31 July 2013 - for an off-the-plan purchase;
- 18 months from the works commencing - if the contract relates to a comprehensive home building contract (on the basis that building work commences within 26 weeks of the date of the contract); or
- 18 months from the works commencing - for building work done by an owner builder.
We assume the requirement to enter into a contract does not relate to owner builder works - a detail which will be clarified.
What is a 'new home'?
A new home is one that has not been previously occupied or sold as a place of residence or is substantially renovated.
A new home will include a unit purchased pursuant to an off-the-plan sale contract (as long as the unit will be used as a home and the building work is completed by 31 July 2013).
For an off-the-plan sale, we assume an applicant must apply for the grant before 31 January 2012, however, we are unsure as to how or when the government will pay the grant (given that building work may not be completed until July 2013, after the closing date for the grant, and the home will not be occupied as a home until settlement has occurred and tenant located or the buyer moves in).
Is there a way to avoid buyers delaying signing a contract until 1 August 2011?
Unfortunately, if a buyer is aware of the grant and they reasonably believe that they will be entitled to the grant, there is little that can be done by a seller to prevent a buyer delaying signing the contract until 1 August 2011.
The government has indicated that if a contract is entered into before 1 August 2011 and is subsequently rescinded and a replacement contract is entered into to purchase that home after 1 August 2011, the buyer under the replacement contract will not be eligible for the grant. The government has also indicated that where an option to purchase a home has been entered into before 1 August 2011 but the contract under that option is formed after 1 August 2011, the buyer under that contract will not be eligible for the grant.
This means that replacement contracts and option agreements are not the answer to having buyers sign contracts now in order for the grant to be available post 1 August 2011. The government, in preparing the frequently asked questions fact sheet, have been focused on ensuring only contracts entered into during the defined period are eligible, which leaves developers in a difficult position in securing contracts in the lead up to August 2011.
We will issue a further Alert once the relevant legislation is introduced into parliament. In the meantime, if you have any queries or concerns, please do not hesitate to contact HopgoodGanim's Property Team.
Gold Employer of Choice - ALB magazine, April 2010
Finalist, Brisbane Law Firm of the Year, ALB Australasian Law
Awards 2010
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
