FHLDS (New Homes)

In the 2020-21 Federal Budget, the Australian Government announced an additional 10,000 FHLDS places for the 2020-21 financial year, specifically for eligible first home buyers building or purchasing new homes. These additional places are known as the First Home Loan Deposit Scheme (New Homes) or FHLDS (New Homes).

Eligible first home buyers can use the FHLDS (New Homes) guarantee in conjunction with other government programs like the First Home Super Saver Scheme, HomeBuilder grant or state and territory First Home Owner Grants and stamp duty concessions.

The guarantee is not a cash payment or a deposit for your home loan.

Under the FHLDS (New Homes), first home buyers can build or purchase a new home, including:

• newly-constructed dwellings
• off-the-plan dwellings
• house and land packages
• land and a separate contract to build a new home.

Specific dates and requirements apply for the different property types.

There are particular requirements and timeframes which apply for each type of property.

For all types of Eligible Properties, a contract of sale and/or an eligible building contract must be entered into prior to the expiry of the 90 day pre-approval period.

Under FHLDS (New Homes), a newly-constructed dwelling refers to properties that completed construction on or after 1 January 2020 and:

• has not previously been sold as residential premises or previously been the subject of a long-term lease (i.e. 50 years or more). However, properties which have been substantially renovated by the vendor or built by the vendor to replace a demolished premises (i.e. a knock down and rebuild) are eligible;
• has not previously been rented or leased, or made available for rent or lease, as commercial residential or residential purposes;
• has never been lived in; and
• capable of being lived in from the date you settle.

First home buyers looking to purchase a newly-constructed dwelling must:

Note: First home buyers looking to purchase a property to do their own substantial renovations or knock down rebuilds are not eligible for FHLDS (New Homes).

An ‘off the plan’ purchase is where you enter into a contract of sale for the purchase of a property where, at that time of entering into the contract of sale:

• the title to the property has not yet been issued, or
• if title to the property has been issued, it cannot yet be legally occupied, for example the building of the property has not yet finished.

First home buyers looking to purchase off-the-plan must:

If you are not sure whether a particular property you plan to buy is an eligible ‘Off-the-Plan’ purchase under FHLDS (New Homes) or whether purchasing a property ‘Off-the-Plan’ suits your particular circumstances, then you should speak to a participating lender and/or seek your own independent financial and legal advice.

A house and land package is where you build a new home by entering into a contract of sale to purchase land from the same person (or persons within the same corporate group) as the person who you enter into a contract with to build your new home.

First home buyers looking to build a new home under a house and land package must (prior to the expiry of the pre-approval period) enter into:

• a contract of sale for the land; and
• an eligible building contract dated on or after 7 October 2020 to build a new home on that land.

First home buyers looking to build a new home under a house and land package must also:

Please note, Lenders will also require your land to be titled prior to any issuance of a Guarantee.

A land and separate contract to build home is where you build a new home by entering into a contract of sale to acquire land from a person who is different to the person you enter into a contract with to build your New Home.

First home buyers looking to build a new home under a land and separate contract to build a home must (prior to the expiry of the pre-approval period) enter into:

• a contract of sale to acquire the land under a contract of sale or, (in the Australian Capital Territory) a lease instrument; and
• an eligible building contract dated on or after 7 October 2020 to build a new home on that land.

First home buyers looking to build a new home under a land and separate contract to build a home must also:

Please note, Lenders will also require your land to be titled prior to any issuance of a Guarantee.

For a building contract to be eligible under the First Home Loan Deposit Scheme (New Homes), it must:

• be with a licensed or registered builder
• specify a fixed price for the construction of the dwelling.

Not all home loans are eligible for the First Home Loan Deposit Scheme (New Homes). The First Home Loan Deposit Scheme (New Homes) is restricted to ‘Eligible Loans’, which are home loans:

• made by Participating Lenders to singles or couples who are eligible first home buyers, and

• that are for the purchase of an Eligible Property that is to be occupied by you as the owner.

There are additional requirements that apply in relation to these home loans that rely upon the terms that agreed with a Participating Lender. These include that the home loan will need to:

• be for a term of 30 years or less
• have regular repayments of principal (with limited exceptions for interest only loans, which mainly relate to building loans)
• include a mortgage over the purchased property
• be in Australian dollars
• have appropriate lending limits to recognise the Scheme’s deposit requirements
• comply with relevant laws and the lender’s own policies.

The Participating Lender will need to ensure that the terms of any home loan arrangement under FHLDS (New Home) comply with these matters.

For more information, contact a participating lender for further detail.

If you are unable to meet the timeframes or requirements for eligible properties under the FHLDS (New Homes), you may be able to apply to build or purchase a new home under the existing First Home Loan Deposit Scheme.