Federal Register of Legislation - Australian Government

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Directions/Financial as made
This instrument amends the National Housing Finance and Investment Corporation Investment Mandate Direction 2018 to extend the First Home Loan Deposit Scheme by introducing the New Home Guarantee which enables qualifying first home buyers to build new dwellings or purchase a newly built dwelling to expand housing stock and stimulate the residential dwelling construction sector.
Administered by: Treasury
General Comments: This instrument was registered on 6 October 2020 at 7:32pm Australian Eastern Daylight Time.
Registered 06 Oct 2020
Tabling HistoryDate
Tabled HR07-Oct-2020
Tabled Senate08-Oct-2020
Date of repeal 07 Oct 2020
Repealed by Division 1 of Part 3 of Chapter 3 of the Legislation Act 2003
Table of contents.

 

 

National Housing Finance and Investment Corporation Investment Mandate Amendment (New Home Guarantee) Direction 2020

I, Michael Sukkar, Minister for Housing and Assistant Treasurer, give this Direction under subsection 12(1) of the National Housing Finance and Investment Corporation Act 2018.

Dated 6 October 2020

 

Michael Sukkar

Minister for Housing
Assistant Treasurer

 

 

 


Contents

1  Name........................................................................................................................................ 1

2  Commencement........................................................................................................................ 1

3  Authority.................................................................................................................................. 1

4  Schedules................................................................................................................................. 1

Schedule 1—Amendments                                                                                            2

National Housing Finance and Investment Corporation Investment Mandate Direction 2018      2

 

 

                                                                    


1  Name

                   This instrument is the National Housing Finance and Investment Corporation Investment Mandate Amendment (New Home Guarantee) Direction 2020.

2  Commencement

             (1)  Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

The whole of this instrument

Immediately after this instrument is registered.

 

Note:          This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this Direction.

             (2)  Any information in column 3 of the table is not part of this Direction. Information may be inserted in this column, or information in it may be edited, in any published version of this Direction.

3  Authority

                   This instrument is made under subsection 12(1) of the National Housing Finance and Investment Corporation Act 2018.

4  Schedules

                   Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

 


 

Schedule 1—Amendments

National Housing Finance and Investment Corporation Investment Mandate Direction 2018

1  Section 4

Insert:

New Home Guarantee means a guarantee issued under section 29IA.

newly built dwelling means a dwelling that meets the requirements of subsection 40-75(1) of the A New Tax System (Goods and Services Tax) Act 1999, other than a dwelling that, prior to sale, has been rented or leased, or made available for rental or lease, as commercial residential premises or residential premises (as those terms are defined in that Act).

unissued, in relation to guarantees that the NHFIC may issue under the FHLDS, means the difference between the number of guarantees that the NHFIC may issue in a financial year (worked out under section 29I or section 29IA), and the number of guarantees issued in the financial year.

2  Part 5A (box after heading)

At the end of the box, add:

New Home Guarantee

The New Home Guarantee is a part of the FHLDS that specifically relates to building a new dwelling or purchasing a newly built dwelling. The purpose of the New Home Guarantee is to support jobs in the residential construction sector and promote home ownership. It does this by allowing the NHFIC to issue up to 10,000 guarantees in the 2020-21 financial year under the FHLDS for loans to first home buyers to purchase a newly built dwelling or build such a dwelling. Any unissued New Home Guarantees can be rolled over into the 2021-22 financial year at the discretion of the responsible Minister.

3  Subsection 29C(2)

Omit “This”, substitute “Subject to subsection (2A), this”.

4 After subsection 29C(2)

Insert:

          (2A)       For a New Home Guarantee, the requirements in paragraphs (2)(a) to (g) must instead be satisfied at the time the borrower or borrowers make an application for a loan, or when the contract to which the loan agreement relates is entered into (as relevant).

Note:          The requirements in paragraphs (2)(h) to (k) must be satisfied at the time the loan agreement is entered into.

5  Section 29D

Omit “A person”, substitute “(1) Subject to subsection (2), a person”.

6  At the end of section 29D

Add:

             (2) For a New Home Guarantee, the requirements in subsection (1) must instead be satisfied at the time the person makes an application for a loan, or when the contract to which the loan agreement relates is entered into (as relevant).

7  Subsection 29F(1)

After “paragraph 29C(2)(g),”, insert “for a loan that is not subject to a New Home Guarantee,”.

8  Subsection 29F(2)

After “price caps”, insert “in subsection (1)”.

9  After subsection 29F(2)

Insert:

          (2A) For the purposes of paragraph 29C(2)(g), for a loan that is subject to a New Home Guarantee, the price cap for the area in which a residential property is located is the amount set out in the following table.

 

Price Cap for an area

Item

Area

Price cap

1

New South Wales—capital city and regional centre

$950,000

2

New South Wales—other

$600,000

3

Victoria—capital city and regional centre

$850,000

4

Victoria—other

$550,000

5

Queensland—capital city and regional centre

$650,000

6

Queensland—other

$500,000

7

Western Australia—capital city

$550,000

8

Western Australia—other

$400,000

9

South Australia—capital city

$550,000

10

South Australia—other

$400,000

11

Tasmania—capital city

$550,000

12

Tasmania—other

$400,000

13

Australian Capital Territory

$600,000

14

Northern Territory

$550,000

15

Jervis Bay Territory and Norfolk Island

$600,000

16

Christmas Island and Cocos (Keeling) Islands

$400,000

10  Section 29I

Repeal the section, substitute:

29I Limit on guarantees in a financial year

Limit on guarantees in a financial year

             (1) For each financial year, the NHFIC must not issue more than the number of guarantees worked out under subsection (2).

             (2)  The limit on the number of guarantees for a financial year is the sum of:

                     (a)  10,000; and

                     (b)  the number of unissued guarantees from the previous financial year determined by the Minister under subsection (3).

             (3)  The Minister may determine, in a written notice given to the NHFIC, that any unissued guarantees covered by subsection (5) in a financial year may be issued in the following financial year.

             (4)  The power in subsection (3) applies to unissued guarantees from the 2019-20 financial year.

             (5)  For subsection (3), the unissued guarantees in a financial year are the number of unissued guarantees from the limit set out in paragraph (2)(a).

             (6)  In making a determination under subsection (3), the Minister must take into account the performance of the FHLDS, and any unique circumstances influencing the uptake of guarantees under the FHLDS.

             (7)  The total number of guarantees issued to major banks in a financial year must not exceed:

                     (a)  5,000; and

                     (b)  if a determination has been made under subsection (3)—50 per cent of the guarantees covered by that determination.

The NHFIC must notify Minister

             (8)  On the 100th day after the end of a financial year (or as otherwise directed by the Minister in writing), the NHFIC must notify the Minister, in writing, of the number of guarantees that were unissued in the financial year.

             (9)  The notice under subsection (8) must include a detailed breakdown of the unissued guarantees as assessed at the time of the notice, including:

                     (a)  the number that were unissued; and

                     (b)  whether the unissued guarantees related to a major bank or other eligible lender; and

                     (c)  whether the unissued guarantees are reserved, or lapsed or expired; and

                     (d)  any other information requested in writing by the Minister.

Counting of guarantees

           (10)  For the purposes of this section:

                     (a)  subject to subsection (11), a guarantee is issued in the financial year during which its issue is approved by the NHFIC, even if the arrangement relating to the guarantee is entered into in a later financial year; and

                     (b)  a guarantee issued in relation to a loan that satisfies subsection 29C(4) is disregarded.

           (11)  Paragraph (10)(a) does not apply to unissued guarantees that are the subject of a determination under subsection (3).

Guarantees may not be rolled over other than under subsection (3)

           (12)  To avoid doubt, unissued guarantees from a financial year may not be rolled over to a future financial year, other than as determined by the Minister under subsection (3).

11  After section 29I

Insert:

29IA New Home Guarantees

Additional guarantees for the 2020-21 financial year

             (1)  In addition to the guarantees that the NHFIC may issue under section 29I, the NHFIC may issue up to an additional 10,000 guarantees (New Home Guarantees) in the 2020-21 financial year, in relation to loans that meet the requirements of subsection (3) (as the case requires).

             (2)  The total number of New Home Guarantees issued to major banks in the 2020-21 financial year must not exceed 5,000.

Requirements for New Home Guarantees

             (3)  For subsection (1), the following requirements (as relevant) must be satisfied at the time the loan agreement is entered into:

                     (a)  the loan relates to the building or purchase of a newly built dwelling; and

                     (b)  where the loan relates to the purchase of an interest in land and the construction of a newly built dwelling on the land:

                              (i)  if it is more than 90 days after the eligible lender gave notice of approval by the NHFIC for the issue of a guarantee—the borrower or borrowers have entered into a construction contract; and

                             (ii)  if it is more than 6 months after the date the construction contract was entered into—the construction of the dwelling has commenced; and

                            (iii)  if it is more than 24 months after construction commenced—construction of the dwelling has been completed.

                     (c)  where the loan relates to the purchase of a newly built dwelling that is off-the-plan:

                              (i)  if it is more than 90 days after the eligible lender gave notice of approval by the NHFIC for the issue of a guarantee—the borrower or borrowers have entered into a contract of sale; and

                             (ii)  if construction of the dwelling had not commenced on or before the date that the contract of sale was entered into (the contract date), and it is more than 6 months after the contract date—construction of the dwelling has commenced; and

                            (iii)  if subparagraph (ii) applies, and it is more than 24 months after construction commenced—construction of the dwelling has been completed; and

                            (iv)  if construction of the dwelling commenced on or before the contract date, and it is more than 24 months after the contract date—construction of the dwelling has been completed.

Note 1:       The requirements in subsection (3) relate to the issue of a New Home Guarantee by the NHFIC. These requirements (as relevant) must be satisfied at the time the loan agreement is entered into and the New Home Guarantee is issued. Each requirement must only be satisfied to the extent that it applies in a particular case. The requirements do not affect the validity of a New Home Guarantee once issued (for example, if a requirement that had not arisen before entering into a loan agreement fails to be satisfied after the guarantee is issued).

Note 2:       Guarantees may also be issued under section 29I for loans that meet the requirements of paragraph (a) and paragraph (b) or (c) (see subsections (14) and (15)). However, New Home Guarantees are subject to a different price cap (see subsection 29F(2A)).

Roll-over to 2021-22 financial year

             (4)  The Minister may determine, in a written notice given to the NHFIC, that any unissued New Home Guarantees in the 2020-21 financial year, other than those to which subsection (5) applies, may be issued in the 2021-22 financial year.

             (5)  This subsection applies to guarantees that have been approved by the NHFIC relating to loans where, at the relevant time, all relevant requirements in paragraphs (3)(b) and (c) have been satisfied.

             (6)  In making a determination under subsection (4), the Minister must take into account the performance of the New Home Guarantee, and any unique circumstances influencing the uptake of New Home Guarantees.

             (7)  The total number of New Home Guarantees issued to major banks in the 2021-22 financial year must not exceed 50 per cent of the New Home Guarantees issued in the year.

The NHFIC must notify Minister

             (8)  On the 100th day after the end of the 2020-21 financial year (or as otherwise directed by the Minister in writing), the NHFIC must notify the Minister, in writing, of the number of New Home Guarantees that were unissued in the financial year.

             (9)  The notice under subsection (8) must include a detailed breakdown of the unissued New Home Guarantees as assessed at the time of the notice, including:

                     (a)  the number that were unissued; and

                     (b)  whether the unissued guarantees related to a major bank or other eligible lender; and

                     (c)  whether the unissued guarantees are reserved, or lapsed or expired; and

                     (d)  the details of any guarantees to which subsection (5) applies; and

                     (e)  any other information requested in writing by the Minister.

Counting of New Home Guarantees

           (10)  For the purposes of this section:

                     (a)  subject to subsection (11), a New Home Guarantee is issued in the financial year during which its issue is approved by the NHFIC, even if the arrangement relating to the guarantee is entered into in a later financial year; and

                     (b)  a New Home Guarantee issued in relation to a loan that satisfies subsection 29C(4) is disregarded.

           (11)  Paragraph (10)(a) does not apply to unissued guarantees that are the subject of a determination under subsection (4).

Guarantees may not be rolled over other than under subsection (4)

           (12)  To avoid doubt, unissued New Home Guarantees from the 2020-21 financial year may not be rolled over to the 2021-22 financial year, other than as determined by the Minister under subsection (4)

New Home Guarantees cannot be issued after the 2021-22 financial year

           (13)  The NHFIC must not issue any New Home Guarantees after the 2021-22 financial year.

Interaction with section 29I

           (14)  This section does not limit the types of guarantees that may be issued under section 29I.

           (15)  In circumstances where a guarantee could be issued under either section 29I or this section, the NHFIC may determine which section the guarantee is issued under.

Note:          A guarantee could be issued under either section 29I or this section where the loan meets the requirements of subsection (3), and the value of the residential property is below the price cap for the relevant area in subsection 29F(1).

12  Before section 29K

            Insert:

29JA Scheme Rules

             (1)  The NHFIC must, in writing, make rules and policies (the scheme rules) for the operation of the FHLDS, including separately providing for the operation of the New Home Guarantee.

             (2)  The NHFIC must consult the Minister before making or amending the scheme rules.

             (3)  For the purposes of consulting the Minister, the NHFIC must provide a copy of the proposed scheme rules to the Minister at least 15 business days (or a shorter period notified by the Minister to the NHFIC in writing) before the earlier of the rules:

                     (a)  coming into effect; or

                     (b)  being publicly released.

             (4)  If the NHFIC fails to consult the Minister before making or amending the scheme rules in accordance with subsections (2) and (3), the Board of the NHFIC must, within 30 days following the period set out in subsection (3), provide a written explanation to the Minister setting out the reasons for the failure to consult with the Minister.

Note:          The criteria and processes referred to in paragraph 29C(1)(b) include the scheme rules.

13  Paragraph 29K(1)(b)

After “owner-occupied residences”, insert “, other than where a person cannot use a residential property as an owner-occupied residence because of a posting required in the course of the person performing their duties as a member of the Australian Defence Force, other than as a member of the Reserves, as those terms are defined in the Defence Act 1903”.

14  Section 29L

Before “As soon”, insert “(1)”.

15 After paragraph 29L(b)

Insert:

                   (ba)  the NHFIC’s operating expenses for the FHLDS (including New Home Guarantees), including itemised details of expenditure on:

                              (i)  its directors; and

                             (ii)  its employees; and

                            (iii)  its consultants; and

                            (iv)  information technology systems; and

                             (v)  other significant expenditure; and

                   (bb)  the performance of loans in relation to which a guarantee has been issued, including information on:

                              (i)  the number of loans in arrears, and the amount of those arrears; and

                             (ii)  repayment progress; and

                            (iii)  applicable interest rates; and

16  At the end of section 29L

Add:

             (2)  A report under subsection (1) must separately include the matters listed in paragraphs (a), (b), (ba), (bb) and (c) in relation to New Home Guarantees.

17  Section 34 (heading)

Omit “$2 billion”, substitute “$3 billion”.

18 Subsection 34(2) (definition of cap)

Omit “$2 billion”, substitute “$3 billion”.