Homebuilder Grant Scheme - Shocking outcome!!

An update to this. After many, many emails to politicians. I had a call from Treasury. I was told the rules were clear and I didn't qualify because of the multiple contracts. After this call is when I posted here. However I didn't give up. I went through all the literature on Treasury website. All the scenarios and then found this.

Example – multiple contracts for one renovation.

Nadine is project managing a refit of her house. Her budget is $200,000 and she intends to involve different contractors, including some licensed builders. The most expensive contract with an individual contractor is for $80,000.
Where there are multiple contracts for one substantial renovation, at least one contract with a builder must be for $150,000.
Nadine will not be eligible for the grant.


A substantial renovation with multiple contractors is permitted. One contract must be for $150,000. Therefore a knockdown rebuild is considered 'A substantial renovation' this is defined in Homebuilder literature. One of the contracts will be over $150,000 but not over $750,000 so check that box too. If you're doing a knockdown rebuild according to Homebuilder scenarios you do qualify if you have multiple contracts. You just can't be under $150,000 or over $750,000 and the total house and land value pre-renovation (the house you're knocking down and the land its on) can not exceed $1.5 million.

If you're having trouble with Homebuilder do some of your own research. Do not blindly trust that Treasury know every scenario put forward. They are only following the Federal Governments guidelines which are very narrow and have no wiggle room. However the scenarios are very important to run through and measure against your situation. I've called Treasury again to have this clarified but I do think my logic is sound and they can't fault it.

Further update. Spoken with Treasury just now. I am right, technically. However the Federal Governments administrative guidelines dictate you must have a knockdown rebuild contract with your builder. So even though you can have multiple contractors on a substantial renovation and a knockdown rebuild is defined as a substantial renovation. That all has to happen under the umbrella of a knockdown rebuild contract, because its a knockdown rebuild, even though a knockdown rebuild is a substantial renovation. Your builder has to contract the demolition, you can't separately contract the demolition. Get your head around that logic, hey.

How ridiculous is that logic. These Federal Government administrative guidelines were obvious written by someone 100% oblivious to real world situations. I was promised a call back this afternoon after this person has a meeting with national counterparts. He said you're not wrong, and laws can change but probably not in time to of any help to me.

After reading the guideline numerous times. IF you're doing a knockdown and rebuild you will need a substantial renovation contract. NOT a comprehensive building contract.

Comprehensive building contract puts you in the $750,000 cap.

A transaction that is a comprehensive home building contract is not an eligible transaction if the total of the following is more than $750,000
a. the consideration for the transaction;
b. the unencumbered value of the land on which the new home is built or to be built, before the contract commencement date for the transaction

A substantial renovation contract puts you in the $1.5 million cap.

A transaction that is a substantial renovation contract is not an eligible transaction if either or both apply:
a. the consideration is less than $150,000 or more than $750,000;
b. the unencumbered value of the land inclusive of all structures, fixtures and improvements before the construction commencement date is more than $1,500,000.

It does seem like Treasury is 100% hung up on the fact I am building a home. Not taking into consideration that knockdown rebuilds are considered substantial renovations which allows multiple contracts as long as 1 contract is between $150,000 and $750,000. I honestly think its a simple misinterpretation of the guidelines. And a massive source of frustration for me. Why the Federal Government has worded it this way is beyond me.

In my case IF I use a comprehensive building contract it puts me $30,000-$40,000 over the $750,000 cap. However a substantial renovation contract cap of $1.5 million puts me in the clear. You just need your builder to contract the demolition company under your substantial renovation contract.

It still could work out in my favour. If I sign a substantial renovation contract with my builder now. Then pay my builder and my builder pays the demolition company. It could work out. However its a long shot without a certain outcome. The Treasury could still say I'm ineligible because of the multiple contracts.

So if you're doing a knock down rebuild. Ask your builder for a substantial renovation contract. Let your builder then contract the demolition company. Everything must go through your substantial renovation contract with your builder, everything.

I strongly recommend reading the Federal Governments administrative directions on your State Treasury website. The State officials are trying their best to interpret these directives to fit real world scenarios.

IF you're doing a knockdown rebuild. Don't even think of canceling your current comprehensive building contract (if you have one) and trying to change it to a substantial renovation contract. This will make you ineligible because of the previous contract.

Disqualifying arrangements

9. A transaction is not an eligible transaction if the Commissioner is satisfied the contract forms part of a scheme to circumvent limitations on, or requirements affecting, eligibility or entitlement to the grant for an eligible transaction.

10. Unless satisfied to the contrary, the Commissioner must presume the existence of a scheme under paragraph 9 if the contract replaces a contract made before 4 June 2020, and the contract is:
a. to purchase the same or substantially similar home;
b. a comprehensive home building contract to build the same or substantially similar home; or
c. for the same or substantially similar renovation of the home.

11. Also, unless satisfied to the contrary, the Commissioner must presume the existence of a scheme under paragraph 9 if the parties to the contract have not dealt with each other at arm’s length.

That's partially the reason I wanted to pick my own demo contractor. Other part is I wanted a local demo company. Big believer in supporting local business. The list did come from my builder but I had each of them give me a quote. Wasn't going to blindly trust the lowest would be chosen by my builder. When it comes to money, I don't trust many people lol. However it did kinda screw me when it comes to Homebuilder. You'd think the Federal Government would make this easy if they really wanted to simulate the construction industry, but nope. Lots of hoops to jump through, definitely read the guidelines, wish I had.

I do have multiple quotes from Demolition companies. That list for those companies was provided to me by the builder I will sign a substantial renovation contract with, probably this week. All I have to prove that is an email though with the list of demo companies. Honestly if I'd just held off 3 weeks on the demo I'd be fine. I honestly didn't think it would screw me with Homebuilder.

There is a time factor here. I am selling off 1 of the lots on my property. Its 2 lots under 1 title. $450 for the title split and it becomes two independent lots. Sell that lot and it funds my build on the other. However to sell I had to demo the house. I tried selling it with the house on there but it wasn't selling after 3 months. And I have a lease on a rental property which runs out in March 2021. So I decided I needed the house gone, sell the land, build and move in all before March 2021. Very long shot I know, perhaps I can get an extension on my lease but I don't want 6 more months here.

It is how the Federal Government has worded the administration directions each State has to follow. 'A' contract is the sticking point apparently. It is being interpreted at only allowing a single contract on the 3 eligible transactions defined at the start of the document. Nowhere in the administration directions does it explicitly state multiple contracts aren't possible. The word multiple doesn't even appear in the document. It genuinely is a matter of interpretation that's caused this issue for me. Even though 1 scenario shows multiple contracts on a substantial renovation are allowed. The crux of the issue is the 3 eligible transactions all saying 'a' contract.

As for the new build option. That won't be possible in my situation. I will be $30,000-$40,000 over the $750,000 cap. I went into this thinking I'd be in the substantial renovation $1.5 million cap. So a substantial renovation contract is my only option. You see how 'a' contract is the issue. I do think my only option is to sign a substantial renovation contract with my builder, pay my builder for the demolition and the builder pays the demolition company. Hopefully that will make me eligible because payment was made under 1 contract.

I found the most annoying part of the "so called" homebuilder is the fact that it is house AND land value less than $750K! Considering the price of a reasonably decent size block can cost $400-$500K, that doesn't allow a very big house, or one with some nice features!

It's geared towards the small block tiny house market, unless you are renovating your $1.5M mansion, then that's OK!

I would have though that if it was only house price, then there could be more people employed building a bigger house than a smaller one. But with the limited time frame to get a contract and start building, then it's likely that many will miss out anyway!

Not everyone lives in a major city in Australia..House and land under 750K is very achievable in most places i would think..I live in what i consider to be an expensive place to buy/build in regional NSW and getting in under 750K is quite doable..
I guess the Gov feels that if you can afford to build a house with a value of more than 750K you don't need the assistance..

Final update. I've been assured that the inconsistencies I've pointed out regarding substantial renovations have been raised at the Commonwealth level (The Federal Government) I was told to test my eligibility and provide as much documentation as possible.

If you're thinking about applying for Homebuilder I'd suggest letting everything go through your builder still. Nothing will change overnight or any time soon. Bureaucrats don't act quickly, they talk and talk until someone sacks up and makes a decision.