Blog

Up to $23,500 grant for New Home Buyers

If you are thinking about building in South Australia there has never been a better time than right now with a new home grant of up to $23,500

Premier Jay Weatherill said yesterday that nearly all buyers of newly built homes in South Australia will be eligible for a State Government grant of up to $8500. This amount will be applied on top of the First Home owners grant which means first home owners will be eligible for up to $23,500.

The New Housing Construction Grant will be introduced to boost the ailing building construction industry and provide a supply of new homes to improve housing supply and increase house affordability.

Mr Weatherill said the global instability had affected the local economy and required 'urgent responses'. Residential construction had been particularly badly hit with new home sales down more than 18% since last year.

With large overheads and wage costs the financial strain currently being experienced by builders are further highlighted when considering that in South Australia the decade average new home sales are down more than 43%.

This reaction from the state government is essential as although the building industry is in difficult times of more concern is that in the 3 months leading up to January 2012 seasonally adjusted building approvals were down 35% compared to the same period the previous year. If building approvals are anything to go by the government could see tough conditions for the years ahead for builders

The new grant will replace the current arrangement where first home buyers can apply for a First Home Bonus Grant - for a new house they are ordering or which has been newly built.

The new grant forms part of a package of reforms, under which:

* The New Housing Construction Grant is created for all buyers on properties worth up to $400,000. It will then phase out from $8500 to zero on houses worth $450,000 or more. The new grant will be available until June 2013.

* The First Home Buyers Grant will be increased from $7000 to $15,000 for first home buyers purchasing a newly built home.

Bankrupt Builders Broken Dreams

With 2 builders going bankrupt each day across Australia nowhere is the effects of the 2 speed economy more evident than the building industry.

Similar effects are being witnessed locally with the construction of new homes in South Australia down almost 20% from last year with some builders down more than 30%.

For some the building of their dream home has turned into a nightmare with builders unable to pay their contractors to finish off the home leaving their clients in limbo with a half finished house and no prospect of completion.

Young couple Stephen and Tina purchased a block of land in April 2010 and signed up to build their new home in May 2010. Now almost 2 years later after endless excuses from their builder to justify the delays they have finally been told their builder has gone bankrupt .

With a partially completed home ?for over a year and the costs eating away at their savings Stephen and Tina approached Darren Standish from Property Prosperity to assist them with trying to pick up the pieces and finally complete their home.

"It is essential that we get their home completed as quickly as possible by finding them a reliable builder who can finish the project" says Darren. "However things he must consider include who will cover the warranty of the home once the property is completed. Since half the home will be built by one builder and the other half by another if structural problems exist in the future it is essential that these will be covered by the builder."

Darren's first task is to engage a building inspector to confirm the quality of the work completed is adequate and then liaise with the clients insurance and finance company to ensure adequate funds will be available to complete their home. Property Prosperity then assists with negotiating with builders to ensure they get the best quality at the best possible price.

As an experienced Builder Broker for many years Darren has many clients come to him after signing with a builder only to discover too late that the builder has underquoted resulting in cost blowouts and short cuts being made on the quality of the completed home. It is essential if you are considering building that you get expert advice before signing the contract as once you have signed up it can be very difficult to get out of the contract.

With large overheads and wage costs the financial strain currently being experienced by builders are further highlighted when considering that in South Australia the decade average new home sales are down more than 43%.

Although the building industry is in difficult times of more concern is that in the 3 months leading up to January 2012 seasonally adjusted building approvals were down 35% compared to the same period the previous year. If building approvals are anything to go by we can expect tough conditions for the years ahead for the South Australian new home building Industry.

Now is the time to get some great bargains from builders, says Darren. However now more than ever it is essential that you know exactly who you are dealing with before you sign the contract. Without the industry knowledge and experience of a building expert new home buyers are just playing Russian Roulette.

If you are currently building and experiencing difficulties or you are considering building you can contact Darren Standish from Property Prosperity on 0422 510 027 for a free no obligation consultation to ensure that the building process is hassle free.

Why steel framing?

Timber framing has been the traditional choice for house frames in Australia however there is now a trend in selecting steel as an alternative material. This trend is given by factors such as

Its lightweight construction and the assurance of continuity of supply. Advanced joining systems and low cost screw and nail fasteners have made construction easier, cheaper and more reliable for builders.

Due to the fact that steel frames are manufactured millimetre perfect, they remain straight, true and flat with no warping, twisting or buckling.

As well as a strong durable framework the steel frame offers protection in termite prone areas, however consideration must be given to other areas of the house to determine whether termite protection treatments are required.

What you should know about building contracts

When entering into a Building Contract for construction of a new home it is very important to read the building contract thoroughly and ensure you fully understand all of the details.

The building contract may be complex document and is generally made up of 3 parts

1.Building contract (including a Schedule of Particulars, Addenda or Appendix)

2.Drawings

3.Specifications.

The law in South Australia requires that building contracts contain a cooling off period when entered into by an individual. The cooling off period allows the client to pull out of the contract without giving justification to the builder. The cooling off period is generally 5 full business days.

Laws vary between states such that a cooling off may or may not apply to your building contract. You should always enquire as to whether a cooling off period applies to your contract.

If the contract does not include a cooling off period, you cannot get out of a building contract because you have changed your mind.

The terms of the building contract outlines the general rights and responsibilities of the builder and the homeowner.?

It is important to remember that the salesperson you speak with before signing the contract is generally not the builder, so make sure any promises made by the salesperson are in the contract.

If you have any queries with any of the terms of the building contract, it is very important to you have any queries clarified before you sign it.

Contracts that allow the costs of the project to be calculated as a 'running tab' are called 'cost - plus' contracts. Such contracts must be titled 'cost-plus contract'. As it is difficult to monitor and control the ongoing costs of a building contract, it is recommended that you think very carefully before entering a cost-plus contract and seek expert advice.

For most building contracts, a figure can be calculated (including certain estimates explained under 'Payment details') for the total cost of the building project. Such contracts are called 'lump sum' contracts.

As most people have not had prior experience with building and building contracts it is important that you engage the services of a Qualified Building Consultant to ensure that you are fully informed of the contract you are signing.

What warranty do i have when building?

The building contract that the builder has with the owner promises that the builder will perform the work properly and use good materials. If the builder breaks this obligation they are in breach of contract. However there are also other warranties which apply.

The Building Work Contractors Act contains some statutory warranties which are imposed on the builder by law. The difference between these warranties and those imposed by the contract is that these apply to whoever owns the house (not just the original client) for five years from the date the work is completed. At the end of these 5 years no further claims can be made under statutory warranties.

As well as contractual and statutory warranties the builder also has a duty of care to the owner of the house they built. The duty of care is to do the work properly and to use good materials. The minimum benchmark for quality of workmanship is stipulated by the National Construction Code of Australia (NCC) which applies to all states and has been called up by legislation to be law.

Duty of Care differs from the other warranties because the owner can make a claim up to six years after the date on which it was reasonable for the owner to detect the defect. So if the owner doesnt detect the defect for 10 years then they may have another 6 years to make a claim i.e. 16 years after the work is completed.

Fortunately the builders the Development Act was amended in the 1990's to limit claims for defective building work for a period of 10 years after the completion of the work.

Although all these legal protections are in place to ensure that the builders obligations are fulfilled the difficulty with any of these options is that to seek compensation for any damages inevitably involves going to court.

Whether you are in the right or wrong when you go to court no one wins except the lawyers. Also it is probably likely that the builder will be in a much more powerful position than the client due to their experience and financial backing.

Rather than relying on warranties the safest bet is to ensure that you go with a builder who is unlikely to take shortcuts and who customer service is a priority.