Home Builders Grant Eligibility and Building without Title

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  [Deactivated] on 25/08/2020 - 15:48

  Off topic but how confident are you that you're going to get the federal grant? I can guarantee that you have a higher chance of not getting it than getting it.

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  djkelly69 on 25/08/2020 - 15:58

  +1

  Not sure about WA, but it is pretty common practice over east for building contracts to be signed at the same time (or thereabouts) as the land contract, for land which is usually still to be subdivided and titled.

  If you are buying vacant land with a building contract and the certificate of title for the land has not been issued at the date the building contract is signed, it must be issued in your name by the date that the foundations are laid.

  seems to be the answer (source).

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    kamac93 on 25/08/2020 - 18:04

    Hi, thanks for that!

    Additionally, the home loan manager notifies me that if I take out a loan for the vacant lot, that the bank technically owns the land until I pay off the loan, I'd imagine this wouldn't affect any qualification for the grant(s)? I'd imagine the Title for the Land would still be in my name?

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      djkelly69 on 25/08/2020 - 18:07

      Unless you are doing something very unusual, the bank doesn't own the land at all - you own it, and grant a mortgage to the bank for $XX over the land.

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        kamac93 on 25/08/2020 - 18:19

        Sorry, I believe the bank manager is telling me that my name is on the title, however they hold the actual title 'at the bank' until the loan is paid off.

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          xinyi on 25/08/2020 - 19:47

          @kamac93: If you are not sure, then don't proceed. You literally can't argue with the government if they point out to some technicality in the paperwork that you missed which disqualifies you from receiving the grant.

          Just try to argue with Centrelink and you will never bother wasting your time with the government again. The job of the government is to get you to pay taxes.

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          djkelly69 on 25/08/2020 - 21:04

          @kamac93: Yes, that is correct, the bank will hold the actual title until there mortgage is paid off.

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  TheBilly on 26/08/2020 - 17:33

  I have a family friend who is a small builder and would be ideal for a cost-effective build, as he himself deals with all trades and organisation of works, meaning less overheads to pay for compared to the larger common builders.

  If he is your mate, just get him to back date the contract a little when you know things are truly ready to get started?

  However, I am having an issue as I have been having mixed messages from real estate agents, settlement agents etc, that I cannot sign a building contract without the land title in my name, meaning I most likely wouldn't be able to sign a contract until Jan/Feb 2021.

  You can sign the building contract whenever you want it will just have to be modified to suit your situation i.e. site address will be kept blank among other things. However what you can't do is start applying for your construction approvals (DA or CDC) until you settle on the land and are the owner. Most builders will not sign the contract with you at this stage because what if your developer comes across an issue with titling of the land, for example come December the developer announces they are facing some issues and are not expecting to get the land titled till June - this is extremely common. All of a sudden, your builder has an open fixed price contract for another 6 months, can he even hold that price for that long, what if the land has usage restrictions that are new. So many variables at play here and things can change between August 2020 and June 2021.

  Alternatively, the seller of the vacant land is a developer, and is selling House and Land packages. Although I can imagine I would be paying at least $20k+ in excess due to pay for the company's overheads. I imagine as it is the land owner selling a house and land package, I am able to sign a building contract simultaneously with the contract for the land, meaning I will qualify for the grants, however as stated, will probably be paying 'overs' for the same build. This land is small on 225sqm and house 130sqm.

  This is extremely rare. In my experience I am yet to meet a land developer that is also the builder and signs contracts simultaneously. Almost every single house land package is marketed and advertised in a way as though it is one transaction, but when you place your deposit to start the process and you cannot pull out of the transaction because you will be $5,000 to $10,000 committed, they will make you sign the contract and you will very quickly see it is 2 contracts and 2 transactions where a builder has just partnered with the land developer and what you will be doing is buying the land from one and getting the building from the other. This is the most normal common practice. Most of the time you would not even know but there could be multiple builders partnering with a land developer on certain blocks and it is first in best dressed. Even if you ask them they will deny that it is separate, as it is such common practice in their eyes they see it as 1 transaction despite it being 2.

  Any suggestions or recommendations would greatly be appreciated. Thanks.

  Don't rush… Just go with the flow, negotiate your land sale and build price and treat it like any other transaction. There is a very good chance you are paying inflated prices anyway so if you wait till next year it is not a big deal, because if you miss out now and wait till next year to buy your land and the grant is not available, the manipulated supply and demand forces in the market will not affect you as much and you are likely to get a better price, right now everyone is scrambling and willing to pay anything. In areas that I look at frequently, the land that is available for building has become marginally more expensive. I'm surprised people don't see this, but I guess they would not if they don't monitor prices over a very long period of time.

  Imagine if you walked past a shop and they had a huge sign saying 90% off toaster. You walk in and the toaster costs $100 on sale but you never knew what its original price was, and the guy says yes this is marked down from $1,000. Your not really getting a good deal if the original price was $200. This is a very exaggerated example, but the point im trying to make is if you never knew what the price was historically, how can you eve confirm you are getting the financial benefit of the grant.

  One of my clients had negotiated the price on a block and house and signed contracts, just before they announced the grant. So everything was set in stone. Then the government announced the grant and they are cheering, because they are unaffected by market manipulation. Somebody walking into it today, is more than likely just going to pay an inflated price.