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Selling Your Owner Built Property
At some stage you may want to sell your dream home and move to something more suitable. It could be your family has left and the house is too big leaving you to a decision to downsize. It may be that your job has taken you to another location and you need to sell to fulfil your career aspirations. Perhaps you enjoyed the process so much you want to do it again! There are a few things you need to consider. Of course, if you are going to do another project, you will need to ensure you have met the requirements in respect to the prohibited (exclusion) period to gain another owner builder permit. But there are other considerations. If you need to sell inside the regulated time and inside warranty period, you will need to ensure you include a warning in the contract of sale that brings the attention of any owner builder works to the notice of the purchaser and advise them the works are not covered by a government backed Home Warranty Scheme. This always raises more questions than I have been able to satisfactorily answer in respect to the individual insurances and statutory warranties that are required either under building legislation or through common law practises. Most state legislation requires any works undertaken by a licensed contractor, in excess of a stated value, to be covered by insurance and warranties. So where does the owner builders obligation end and the contractors start? I wish the answer was easy. My best advice is to consider yourself as the owner builder to be required to meet the same legislative requirements in your capacity as the Principal Contractor. This means those obligations that would be required to be met if you were a licensed builder with the appropriate classification of license. Eg; General Builder, Builder Low Rise etc. This in most cases will require you to warrant the structural component of the construction for a period of 6 or more years and unlimited warranty in some areas. All this without the ability to effect Home Warranty Insurance under the applicable government scheme. Sounds daunting, and it is. So, our advice to all our owner builders is to take the time to consult with professional construction insurance providers, understand you relevant legislative requirements and always employ qualified and insured tradesman. You can mitigate against all the warranty and insurance pitfalls, but it takes diligence. Take care and Happy Owner Building Regards, Rick
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Owner Builders and Consultants
I always encourage our owner builders to take advantage of the skills and knowledge that professional and consultants can provide in support of owner builder projects. Very few individuals have an overall knowledge of all aspects of the building industry and the specific details or information that make projects more efficient and more importantly compliant. You may during the course of your owner builder project seek guidance on a number of varied matters that one person would not reasonably be expected to have a complete working knowledge. Of course, the use of consultants and the requirement to draw on external advice will be driven by the size and complexity of your project. A recent example that is quite topical as we come into this time of year, is the use of Bushfire Management Planners. If you happen to be building in a bushfire prone precinct, I can not stress enough, the important of good design and consideration of all of the factors that will influence the ‘survivability’ of your construction if the worst happens. This is a great example of where specialist skills and knowledge is required to determine the design and practicality factors that should be considered and incorporated in an owner built domestic dwelling. Lifestyle living is becoming increasingly popular as is the requirement to build in a sustainable manner. I am appreciating more and more the importance of good design and the requirement to keep up to date with the latest developments in sustainability and renewable energy. Unless you are dedicated to that area or design discipline, it is impossible to remain truly up to date and still maintain your day job. That is why, more and more, I am turning to professionals who focus only on energy ratings, new products and sustainable concept dwellings. It is not hard now to be truly ‘eco friendly’ and many owner builders are heading down this track. We have always maintained a contract/project management facility to assist owner builders and whilst it went through a considerable lull for around 5 years, more and more of our owner builder students are seeking this service. I guess what I am saying is, no person could be across all of the requirements and legislative considerations. Give some thought to seeking the advice of those who really know their industry and have the time to keep up to date with current trends and innovation. It may involve a cost, but the ultimate savings to yourself, your community and even the planet, are usually worth the investment. Happy Owner Building Rick So, I know I give NSW a hard time about the validity of their owner builder educational requirements not covering vital legislative information to ensure owner builders run their projects compliantly, but ....
One thing they have right, is they require owner builder applicants to provide proof of having completed General Safety Induction Training (White Card) before being issued a permit. Other states are still to make this a requirement and they should. The reason is, that whilst covered by separate legislation, as an owner builder, you have defined responsibilities in your capacity as the Principal Contractor or PCBU for your site. Last week, I was told of an owner builder in Queensland (one of our past students), who was paid a visit by a WorkSafe Queensland inspector. The owner builder was asked to provide the following:
The owner builder could not provide any of the required documents and was forced to cease all works on the site immediately till the shortcomings were addressed and rectified. I understand that the owner builder was fined for not having appropriate safety signage and for not providing the required amenities on site for the contractors. Now this might sound harsh, but I think the owner builder in question was possibly very fortunate. Had this site suffered a serious incident that resulted in death or injury, there exists a very real possibility that the owner builder may not have been covered by insurance. You could argue that the individual contractors should have workcover and other related insurances that cover themselves and their staff, but given the owner builders lack of attention to detail in other matters, I doubt they would have made the required checks to satisfy themselves that this was the case. So if you think I am trying to drum up business when I suggest that our owner builders complete General Safety Induction Training, you are right. However, it is also largely based on my knowledge that to complete a project as an owner builder without this training is both non compliant and carries serious risk. Abacus training provides access to all of our owner builder students, considerable resources to help you manage WHS obligations on your site. Take care out there and Safe Owner Building! Rick Wow, I cannot believe I have been asked that question again!
Why does a XXXXXXX (insert any qualified trade contractor) charge so much? It just amazes me that it is so poorly understood why a good tradesman, that runs a profitable business, that is compliant and reliable charges 100 plus dollars an hour. The fact is any owner builder needs to understand, if you engage a trade contractor, you should be prepared to pay the appropriate hourly rate. When you engage a contractor, you have a reasonable expectation that the traddie will be prompt, courteous, professional, competent, carry the appropriate insurances and be respectful of your needs and the requirements of the other trades he works with on your project. So lets take a typical small contractor that employs two or three tradesman. There business needs to comply with the relevant legislation and remain compliant against the provision of their individual or corporate licenses. Consider the following fees and overheads that must be met before they can even ‘open the doors’ these days:
Each week, month and year, these costs are there for trade contractors. These obligations need to be paid in full or the business cannot operate. After you consider the business expenses, think about what it is that you are paying for. Do you want safe and compliant services and finishes for your property or will you be satisfied with shoddy workmanship that does not really provide value and may make it difficult to realise a fair price for your property should you choose to sell? None of this even considers the time and effort that the contractor has expended to gain their qualifications. Most trades require considerable study and effort to demonstrate competency and be granted their license. So, if owner builders feel they cannot afford a fully qualified, registered, competent and insured contractor, I would argue they cannot afford not to! Happy owner building! Rick Since posting my update last night on the advances and enhancements to the NSW owner builder course, we have fielded several questions from our QLD students.
Fact is, the QBCC maintain an appropriate course that covers the relevant information on owner builder obligations, responsibilities and the legislation. That does not mean that we are not improving our QLD owner builder course offering. We are working on updated presentations which support the text resources. These will replace or at least compliment the current presentations hosted on the Learning Management System. Adobe Acrobat is not as well supported as it once was and we are seeing more and more issues and difficulties with student trying to view the SCORM packages. Whilst we can in 99% of cases solves these very quickly, it is not the most efficient delivery and we are trying to make all access and viewing as seamless as possible. To this end, each presentation for:
They will be accessible by password and will provide our owner builder students consistent and ready access to our learning resources and information during their course and throughout their construction project. We look forward to bringing these improvements to you. Best Regards and Happy Owner Building Rick Hi everyone,
In 2015 what was then Fair Trading NSW, (now Services NSW) made the decision to move away from the accredited short course for owner builders This change required owner builder candidates to complete 5 units of competency from the Certificate I in Construction to satisfy the educational requirements for the issue of a permit. I was against the move then as I still am, believing that whilst they provide a sound platform of learning, they miss several key points of knowledge which are truly vital to owner builders. This is becoming more and more evident whilst I field questions from our students that should be covered in any course that truly prepares you to understand your role and the responsibilities that go hand in hand with operating under an owner builder permit. We have decided to change this by providing additional resource materials and reading which will answer each of the most frequently asked questions. What is really exciting, is the way that we are going to present the resources and learning materials. They will be in a format that allows easy access via your phone, tablet, laptop or desktop regardless of the operating system you use. They information will be available from early January 2019 and the access link will be accessible from both the Learning Portal and our primary website. It will be interactive and include review questions to allow you to self check your knowledge. This mini course will in no way replaces the required learning, but simply and effectively allows our owner builder students to readily identify the legislative obligations of an owner builder in New South Wales. It is our intent that the current presentation content for the 5 Units of Competency which are hosted on our Learning Management System will also be delivered on the new platform. This is scheduled to be rolled out late first quarter, 2019. Stay Tuned and Happy Owner Building Recently I am getting a lot of questions from our owner builder course students about the legal aspects of building dual occupancy, specifically duplexes.
In the past, we have always responded that this is allowed in NSW but not Queensland and we have been very happy with our answer. More and more, we are being told that some certifiers are approving duplexes for construction by Owner Builders in Queensland. We have done considerable research and we confirm that the QBCC still has a restriction under the legislation that prohibits the construction or modification of multiple dwellings, dual occupancies and duplexes under an owner builder permit. If you are told by your Principal Certifying Authority that it is allowed, then our suggestion to our owner builder students, is to seek clarification from the Queensland Building and Construction Commission (QBCC) for a ruling before you expend any funds on the project. Failing ti do this may result in the owner builder being in breach of the legislation and be fined or sanctioned as a result. For those of you who have asked this question, I apologise for the slow reply on this forum, but we wanted to be certain of our facts. NSW owner builders continue to be able to construct duplexes. Hope this information is of value. Best Regards and Happy Owner Building Rick All,
I would like to share a recent blog that an unhappy student recently posted on the blog. Unfortunately it was placed as a reply to a previous post of mine that would make it very difficult to locate. Following is Sally's post: This course is designed for people outside of working hours but the back up service outside of working outs does not exists. The mobile is turned off and the email is not monitored so when you have an issue there is no support and you have to wait - so if you are planning to get the course done on a weekend be careful. I make no apologies for not being available 100% of the time. It is not practical or possible to run a business that way. I will point out the following however: Sally was responded to within two hours on a Saturday afternoon, not to bad in my eyes. The other thing I advised Sally of was that we are an RTO we are a college, because we offer the convenience of being able to complete online does not mean we simply throw information on line and leave the students to their own devices. If you want to truly develop skills and knowledge provided by an organisation that truly knows and understands the complexities of owner building, then study with us. If you simply want a quick tick and flick to get your permit then you should choose another provider. There are several out there who offer course that can be completed online in less than 3 hours. As I have covered in other posts, that is not the business we are in, We offer quality resources and learning material in a flexible way that lets you complete your course without attending one of our classes. Again, we make know apologies for that. Best Regards, and Happy Owner Building Rick Heaton Why Owner Builders need to Manage their Schedule I quite often get asked or more correctly told, by my owner builder course students that they are doing the majority of the works themselves so if they do not meet their estimated or established times for works as scheduled, it is no big deal!
Whilst I get their way of thinking, I often wonder if the owner builder has considered the cost of money. Now if you are one of the fortunate owner builders who are self funding the project, then this will not have as great an impact however if like most of us you need to borrow to complete you project then time is a significant cost. I will keep the figures very basic and easy to follow, and of course every owner builder project will be different and each of us will have different financial circumstances but you will get the idea. Lets consider you are building a new home as an owner builder and you your estimate the project cost, including land value, legals, insurance etc, to be a neat $500,000. With most banks only lending 60% to owner builders, it is likely you will may a loan in the order of $300,000. Lets assume the owner builder has estimated the timeline to run for 12 months from first turning soil to practical completion and has factored in the finance costs over that period. What is the cost of a 60 day overrun? If we take an average 5% on an interest only loan (typical of a construction loan), and assume 90% has been drawn down awaiting final completion, then the owner builder is paying an amount of $1125.00 in interest each month. 60 days will mean an overrun of $2250.00 in interest alone, but of course there are other associated costs such as rent until you can gain occupancy, extended project insurances, temporary fencing, hire gear and such. So even a two month delay is likely to have a negative impact approaching $10,000.00 and that is not taking into account the personal cost and stress that often is associated with building a new house. The figures I have provided are very basic and we are in a current low interest rate period so the cost of money is very low. Imagine the impact where interest rates are 10 to 12 % and higher. So if you think you can afford to let your project just amble along and do not keep a careful watch on your schedule and timelines, it can be a very expensive exercise. Best Regards and Happy Building, Rick Worker run over by forklift Whilst not an owner builder site, the following incident highlights the dangers of operating mobile plant at a workplace. In May 2018, a forklift ran over a worker who was standing in a loading dock where material handling was taking place. The worked suffered considerable injury to his legs and shoulder and requires intensive rehabilitation. Owner builders should always consider the movement and proximity of all persons engaged on their site when mobile plant is operating. Preventing a similar incident Where mobile plant is in use at your owner builder site it is your responsibility as the Principal Contractor to ensure a traffic management plan is implemented. Owner builders need to recognise the risk and ensure mitigating defenses such as physical barriers, bollards or railed walkways are installed to separate pedestrians and mobile plant Owner Builder Must Consider:
If you think these are isolated events, then as an owner builder consider the following: Compensation claims for incidents involving forklift alone have exceeded 400 since 2011. Forty per cent of these involve serious injuries with five or more days off work. Most common injuries are sprains and strains with the next most common injury being hit by plant or its load. During the same period, WHS have been notified of 137 incidents involving workers or bystanders being struck by, run over or trapped by plant and equipment. Two of these involved a death and 88 involved a serious injury requiring hospitalisation. Fines and Prosecution As the owner builder and Principal Contractor, worksite safety remains your responsibility. If you fail to ensure your workplace is safe, you may be fined, have civil or criminal proceedings taken against you. Maintain worksite safety plans, insist on accurate and complete Work Method Statements from your contractors and ensure they work in accordance with same. This post is certainly not meant to scare our owner builder students, but hopefully it will raise awareness of the hazards and risk associated with the use and operation of mobile plant. Keep Safe and Happy Owner Building, Rick |
AuthorRick Heaton is a Building and Construction Industry professional with formal tertiary qualifications in management and training. Archives
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