WA Government Loan Facility Gives Boost to Builders

With a renewed slew of challenges in the WA housing market, property investors have limited avenues to consider, but with the new Cook government measures presented as of late, the market will be leveraged very soon.

Many residential builders in Western Australia struggle to finish the construction of homes and put them up on the market to the point where most of these buildings’ completion has been hampered for more than two years! The WA government’s solution was to boost these constructions financially through a loan facility scheme.

Does this scheme provide ample investment opportunities for property investors? Find out the answer below.

What Is the WA Government Loan Facility?

In early January, the Cook government announced a loan facility scheme; an interest-free loan aimed at builders in Western Australia who were struggling to finish the construction of their properties for a long time.

This government-issued loan should provide a great financial boost to builders who are most impacted by prolonged construction time-frames, namely builders with properties that have been under construction for more than two years.

These interest-free loans will be issued by the Builders’ Support Facility and are designed particularly for unfinished constructions which were launched before January 1st, 2022. As suggested, this should help finish any outstanding constructions in Western Australia, but it’ll also prevent further insolvencies.

Upon eligibility, a loan of up to $300,000 will be available to builders, with $60,000 available per property (maximum of 5 properties). Eligible builders will receive payments in instalments and will be able to repay the loan within a 5-year term. 

This will both leverage the residential market and the hopes of property owners to finish building their homes despite the steep price hikes in building materials.

“The Cook Government is acutely aware of the current housing market across the country and its impacts on many Western Australians – including those who have experienced construction delays in the face of a tight construction market,” commented Housing Minister John Carey on the loan facility scheme.

Loan Facility Boost Parameters

It’s worth mentioning that the loan facility scheme amounts to $10 million and its sole aim is to leverage the houses that have been under construction for more than two years in Western Australia.

The loan amount available per builder is $300,000 with $60,000 per property, so builders can only leverage 5 properties. Payments will be issued in instalments as this will encourage more construction completions.

Residential builders must be eligible to have access to the interest-free loan and must apply for the loan through a Registration of Interest (ROI) applied to the Builder’s Support Facility. It should be noted that loan submissions will close on January 31st.

Eligibility Criteria

Builders in the WA area must meet all of the following criteria:

• To be the owner of at least one class 1a residential building that has commenced construction before January 1st, 2022. The building mustn’t have reached completion by the application date.
• The builder must be the owner of a solvent residential building business in Western Australia; only businesses that have been in operation since January 1st 2020 are eligible.
• The builder must be a registered Building Contractor in WA who has been registered for GST since January 2020 with no interruptions. 
• The builder must have a valid Australian Registration Number (ABN).
• The residential buildings owned by candidates and subject to this loan must be located in WA.
• Builders must not be subject to any prior legal proceedings or actions by any other governmental authority.
• Note that further criteria may be applicable.

Documentation

According to Small Business, it’s highly advised that you prepare a for your application and have the following documents ready for every property you intend to get this interest-free loan for:

• A copy of the Building Approval, which can be obtained from the relevant government authority.
• A documented confirmation of the status of the company’s Home Indemnity Insurance facility, the annual turnover limit, restrictions on the policy, and the number of issued certificates.
• Copies of the Certificate of design compliance (form BA3), compaction certificate, Building permit (form BA4), and Certified application for a building permit (form BA1) in PDF form.
• A document breaking down all of the progress of your properties.
• A printout from the ATO portal dated around the date of your application evidencing your ATO payment status and lodgement for PAYG, GST and Income Tax. 
• Documented evidence of your organisational and financial capacity.

While there is no record of the necessity of these printed documents, they might come in handy throughout the application process.

How to Apply

As soon as you’re sure your properties are eligible for the Builder’s Support facility, and have soft copies of the necessary documents, you can head over to SmartyGrants and register your interest.

You’ll receive a confirmation email upon registration. Be sure to monitor your inbox as well as your web page, as this is where you will receive emails and updates on the necessary documents and final eligibility criteria before the applications’ opening date.

The Necessity of Loan Facility Boost

This ambitious loan government initiative is the by-product of a roundtable between the Cook Government (which mainly focuses on boosting housing supply), the housing construction industry, and HIA WA. 

These parties worked together to find an ingenious solution to leverage the market and provide more investment opportunities to property investors, and this initiative is expected to be a “consistent pipeline of new dwellings” that will match the rising demand for housing in WA, according to REIWA CEO Cath Hart.

“This $10 million loan facility will support eligible residential builders to complete unfinished houses to get more Western Australians into their new homes, and further bolster WA’s housing stock,” said Carey. “We’ve funded a range of new initiatives and reforms to support both the construction industry – as well as homeowners and renters – and this initiative further boosts these efforts.”

Interested to know how this Cook initiative will impact your dwelling choices in WA? Get in touch with HERE Property experts to learn more and better understand your options.