|
VICTORIA is riding the wave of a renovation boom.
At least 2850 Victorians are investing in home improvements, with the value of these renovations estimated at some $210 million, according latest research from the HIA Renovations Monitor.
Renovation-related television shows, magazines and seminars are inspiring would-be renovators, and making people realise that investing in real estate does not necessarily mean buying an investment property. Many are unlocking potential in the family home, and benefiting from the tax-free windfall.
“Property renovation is one of the soundest investments you can make,” said Robert Caulfield, a former architect and managing director of Archicentre, which provides pre-purchase and renovating advice to home buyers, home builders and renovators. “When done properly, it can make you money – and have you living in style.”
Real estate agents agree, saying that over the last five years they have noticed an increase in the number of owner-builders undertaking sophisticated renovations and increasing their property’s value by tens and sometimes hundreds of thousands of dollars.
“As well as the Do it Yourself market, there’s also a very healthy Do It Together’ market,” said Harley Dale, chief economist with HIA. “A professional will be called in for some of the more complicated renovation work, while the rest is carried out by the individual.”
The Victorian Building Commission claims that although there’s been a reduction in owner-builder registrations since the market peaked in 2004-05, it’s still a popular method for building or renovating.
Building commissioner Tony Arnel claims new laws restricting owner-builders to carry out one home renovation in any three year period has contributed to this, as has more stringent laws requiring owner-builders to obtain a Certificate of Consent for building works.
This said, Archicentre claims that 28 per cent of building permits issued in Victoria are to owner-builders.
“People are also beginning to realise that their current home may increase in value by more than the sum of its renovations if done properly, and are electing to reinvest into it and enjoy the benefits,” said Mr Caulfield. People commonly renovate if their existing home is too small, too old or the interior has dated, he added.
Most owner-builders aim to add value without adding cost, achieve a stunning result and finish up with a house that offers a great renovation, said Mr Caulfield. “What they don’t want is cost over-runs, time blow-outs, dodgy builders or to overcapitalize.”
We get tips from industry experts on how to make the owner-builder situation work for you:
Avoid nasty surprises: Specify what you want and get it in writing
For your own peace of mind, and to give yourself a legal leg to stand on, it’s important to write down every detail of what your renovation is to include – from the number of power points to the number of coats of paint.
As well as limiting any nasty surprises that could arise in the renovation process, it also helps trades people give you an accurate quote.
Ask contracts to list start and finish dates, and progress points – known in the building industry as a Building Schedule - to see whether the time frame is blowing out. Use emails which can be printed or saved to confirm verbal agreements, and don’t start work until you’re satisfied every detail is clarified.
Get on the blower: talk to council and real estate agents
Local councils are a good source of information and should be contacted before embarking on any renovation, said Martin Coleman, president of Termite Action Victoria – a not-for-profit organisation leading the way for termite prevention strategies. “It’s important to give your property a clean bill of health before starting any renovation.”
“Council planning departments will also be able to answer any questions about planning and building permits,” said Mr Caulfield.
Building works of greater than $5000 require a builder to be registered. This information is available at the Building Commission’s web-site.
It’s worth talking to real estate agents too, as they can give you the best guide as to what your property will be worth after any renovation.
“There was a recent case in Box Hill where a couple demolished a third bedroom to put in an ensuite and walk-in-robe to the master bedroom,” said Mr Caulfield. “Though the renovation was stunning, the house went from a 3-bedroom to a 2-bedroom and actually dropped in value by $20,000.”
Don’t put yourself in jail: obtain permits
“Owner-builders must be aware of the requirements of being an owner-builder and fully understand their responsibilities,” said Mr Arnel. “The most important thing an owner-builder can do is be informed.”
“Permits need to be obtained any time you affect anything to do with the structure of a house,” said Mr Caulfield.
People are often surprised to learn permits are required for jobs such as a balcony, re-stumping, or removing a window to put in a wider opening such as a French door.
Skimping on permits might cost you down the track – especially as the law can track you down for a negligent renovation which may have injured or harmed somebody.
“Owner-builders take on all the responsibilities of registered builders including safety and insurance requirements,” said Mr Arnel.
Avoid cost and time over-runs: Build timeframes into contracts with builders and sub contractors
Avoid being fooled by builders who may offer you a discount on construction costs should you register as an owner-builder – this is one of the fastest growing tricks in the book. Doing so means they may be unregistered – and the onus of responsibility for their work falls on you.
If you’re registered as an owner-builder, it is up to you to provide warranty for the building works should you decide to sell.
It’s also important to shop around for prices.
“The price difference between builders for any one job can be huge,” said Mr Caulfield who adds renovators should get at least three quotes for every job proposed in the house.
“For one renovation job we were involved in, one quote came back at $331,000 and another at more than $580,000.”
Make builders come to you
A good place to start for recruiting builders and sub-contractors, according to Archicentre, is to advertise in the Tenders section of a newspaper. “Buyers regularly check this section for work and it’s one of the easiest ways to have them come to you.”
Make money don’t burn it: Choose your fittings and fixtures carefully to avoid overcapitalization.
Adding value, not cost – is the recipe for making money with a home renovation, according to insiders.
“Don’t be seduced by the thought of expensive fixtures and fittings,” said Mr Caulfield. He said valuers or prospective purchasers won’t realise the difference between an $8000 stove and a $2500 stove. “Make sure that any use of more extravagant and expensive fittings, is for your enjoyment only.”
Agents agree, saying overcapitalization is one of the biggest traps people fall into when renovating – and will eat into the pool of profit a renovator can make.
CASE STUDY
SONYA and husband John are about to undertake a renovation on their Brighton home.
After the arrival of Mitchell two weeks ago, joining brother Harrison, the 12 square house was not going to be big enough for the growing family.
They are planning to extend the rear of the house and build a second level. Two further bedrooms will be added along with a bathroom and an open play area. The renovations are expected to increase the size of the house to around 40 square.
Sonya and John are one of a large number of Victorians registered as owner-builders.
“We’d spoken to some builders about the job we needed and we didn’t feel we were getting enough architectural or design advice, or autonomy” said Sonya.
Sonya said that the most challenging part to the renovation now is hunting around for a builder to start the works. “We’ve know people that have renovated and the difference in building quotes was more than $100,000.”
Agents say Brighton is a very difficult area to over-capitalise in, particularly when going from a small home to a large family home. The renovation certainly gets green ticks for renovating, making money and living in style.
CASE STUDY
AN outside toilet, two bedrooms and tiny kitchen didn’t quite fit the bill for the Whitely family, who embarked on a major renovation of their Camberwell home last year as an owner-builder.
“We wanted a house comfortable enough for our two kids and two dogs,” said Pam Whitely. “We also wanted a kitchen big enough for the kids to learn to cook in, and to take advantage of the homes outlook over parkland.”
The Whitely family extended and renovated their 1890s Victorian cottage after enlisting the services of architect and building adviser Peter Mason. They added two bedrooms and a large open plan living area opening out to a new rear verandah.
The recipe for success, according to Pam Whitely, is to get quality advice from someone who understands your needs; find a quality builder who can explain all parts of the job and to take it slow - aiming for a good job, rather than a quick job.
Pam said it’s important to obtain several quotes for each job. “One of the quotes we got for the renovation was laughable.”
She added that it’s important to be comfortable with the consultant and trades people chosen.
Tags:
Related Items :
|
