How do I determine if funding is assisting building work to proceed in relation to turnkey acquisitions of dwellings?
Guidelines for determining whether funding is assisting building work to proceed in relation to turnkey acquisitions of dwellings are provided below:
1. Was construction completed before the funding recipient entered into any purchase or leasing agreement in relation to the dwellings?
If yes, the funding is not assisting the building work to proceed and the Scheme does not apply.
If no,
2. Was construction started before the funding recipient entered into any purchase or leasing agreement in relation to the dwellings but construction was completed by the time a commitment for funding is provided? Note: Housing Australia funding is committed in respect of a project when the Housing Australia Funding Documents for that project are entered into.
If yes, the funding is not assisting the building work to proceed and the Scheme does not apply, provided that the purpose of the funding was not to fund building work.
If no,
3. Where the funding is for acquisition of dwellings where construction is ongoing or has not started, is there a pre-construction agreement between the funding recipient and a builder, developer or other party?
If yes, go to question 4.
If no, then the funding is not assisting the building work to proceed and the Scheme does not apply.
4. Does the funding facilitate the pre-construction agreement? (funding will not be regarded as facilitating the pre-construction agreement where that agreement was entered into before any commitment of funding and the agreement is not conditional on the provision of any funding, or a State or Territory has committed to fund a party’s pre-construction agreement to acquire or lease dwellings and Housing Australia funding is only sought for availability payments and/or for a concessional loan to maintain the dwellings).
If yes, go to question 5.
If no, the Scheme does not apply because any building work will occur regardless of whether or not Housing Australia provides funding (Housing Australia funding is not facilitating building work but rather relating to the post construction use of the dwellings).
5. Does the funding recipient’s entry into the pre-construction agreement facilitate building work (ie does the pre-construction agreement make a difference as to whether or not construction occurs)?
If yes, then Housing Australia funding is facilitating building work and the project is within the scope of the application of the WHS Accreditation Scheme (subject to any other applicable exemptions).
If no, then Housing Australia funding is not facilitating building work and the Scheme does not apply to the project.
Notes:
A pre-construction agreement means an agreement to lease or transfer land, a building or a part of a building on the condition, or on conditions that include the condition, that building work will be carried out on the land, the building or the part of the building.
In relation to resolving question 5 in relation to turnkey acquisitions of buildings, relevant factors include:
- whether construction has already commenced on the dwellings, or will commence prior to the commitment of Housing Australia funding, by the main works building contractor. Generally a developer or builder is unlikely to commence construction unless they intend to complete the construction;
- whether the main works building contract has been executed and is either unconditional, or any condition relating to obtaining construction finance or presales has been met, or this will be the case prior to the commitment of Housing Australia funding; or
- where the dwellings being acquired are an insubstantial or slight proportion of a much larger development (e.g. purchasing some apartments within a block of units).
How do I determine if funding is assisting building work to proceed where the funding recipient already owns or leases the land and is directly engaging a builder to undertake building work?
1. Will all building work be completed at the time Housing Australia makes a funding commitment?
If yes, as the building work has been completed before Housing Australia funding becomes available, the funding is not facilitating building work and the Scheme does not apply.
If no,
2. Will construction proceed regardless of whether or not Housing Australia funding is provided?
If yes, the funding is not facilitating building work and the Scheme does not apply.
If no, then Housing Australia funding is facilitating building work and the project is within the scope of the application of the WHS Accreditation Scheme (subject to any other applicable exemptions).
Notes:
In relation to resolving question 2 above in respect of funding recipients directly engaging a builder, relevant factors include:
- Whether construction had already commenced prior to the provision of any Housing Australia funding – construction generally will not commence unless it is intended to complete.
- Whether, prior to the provision of any Housing Australia funding, a building contract had already been entered into with a builder where the contract is either unconditional or any condition(s) relating to the obtaining of finance had already been met.
- Whether a State or Territory had committed to provide necessary funding for construction that was not conditional upon Housing Australia funding.