Meeting your Commencement/Completion Commitments under your Contracts – Are They Reasonable?

It is so good to see so many contracts being signed as a result of the HomeBuilder grant here in the ACT.  There are, however, certain eligibility requirements that contracts must be met for a client to be able to make an application for the HomeBuilder Grant.

What is HomeBuilder?

HomeBuilder is an Australian Government grant for eligible owner-occupiers to build a new home, to substantially renovate an existing home or to buy an off-the-plan/new home.  Strict criteria applies as to the type of works to be undertaken, who must complete the works, the commencement and construction periods, just to name a few.

For contracts entered into between 1 January 2021 and 31 March 2021 (inclusive) the grant amount is $15,000 (prior to 1 January 2021, the grant amount was $25,000).

There is a number of criteria to be met for a building contract to be an eligible contract for the purpose of a HomeBuilder application, including but not limited to the following:

• be signed between 4 June 2020 and 31 March 2021, and
• the works are required to commence within six (6) months of the date of the building contract.

Further information about the HomeBuilder grant in the ACT, can be found here.

It is as important as ever to ensure that the commitments that you have made (or are making) under your contract, particularly when it comes to commencement and completion times, are reasonable and manageable.  The contract does make provisions where delays and extensions of time may be applicable where eligible circumstances arise, but careful planning and contract administration should be a priority.

Commencement of Works

Clause 6 of the ACT Home Building Contract provides for the commencement of building works, being on the latest of the following dates:

• the date specified in Appendix A, Item 9; or
• within twenty (20) business days of the owner complying with its obligations under Clause 3(a); or
• within twenty (20) business days of the Commencement Notice being issued in accordance with Part 3 of the Building Act 2004 (ACT).

Completion of the Works

Item A13, Appendix A in the ACT Home Building Contract allows the builder to insert information specific to the construction period for the works.  For example, the build might take 180 business days to complete the works from the commencement date.  The builder should be reasonable and practicable when calculating the anticipated construction timeframe.   This construction period should also take into account any holidays or shutdown period foreseen during the course of the build.

Item A10, Appendix A of the ACT Home Building Contract allows for the builder to insert an anticipated date for practical completion to occur.  This date should complement the construction period specified at Item A13.

We are aware of a number a pressure points in the system that the increased in demand is causing, for example with development approval timeframes, utility connections, and supply of materials and labour. MBA is currently working with the ACT and Federal Government’s to address these issues.

To help us with these discussions with Government, MBA Australia has a member survey running to collect evidence of industry’s experience. We encourage all members to respond to the MBA Australia survey.