Legal Update for Owner-Builders
New laws, the Home Building Amendment Act 2014 and the Home Building Regulation 2014, concerning owner builders have been in place for just over a year. If you are planning a renovation to your property this year make sure you understand the legal requirements of being an owner builder so there are no nasty surprises further down the track when the property is marketed for sale.
Who is classified as an owner builder?
An owner-builder is a person who has received a permit through completing an approved owner builder course and is the owner of the land where residential building work is to be conducted. An owner builder permit is required when the reasonable market cost of the labour and materials involved in the project exceeds $20,000. The property where the building/renovation is to occur must be a single dwelling-house, dual occupancy or secondary dwelling with development consent from the local council.
As an owner builder you will be responsible for the work covered by the development application. It is important to understand that the permit is not a builder’s licence. As a permit holder you cannot conduct specialist work such as electrical, plumbing, gas fitting, air conditioning and refrigeration work.
Are there limitations on me when I go to sell my house?
Under Home Building Act 1989 Section 95 now provides that an owner builder will no longer be required to obtain a certificate of insurance from the Home Building Compensation Fund to enter into a contract for sale of the property.
In lieu of the reduction in red tape experienced property lawyers who are preparing the contract will annex a special condition in the form of a consumer warning stating that the work which has been completed at the property was conducted by an owner builder with the builders permit number identified and that insurance is not needed under the updated Home Building Act 1989.
However, any work that exceeds $20,000 and was performed by contractors or licenced tradespersons in the last 6 years will still need a certificate of insurance from each respective contractor or licenced tradesperson for the benefit of purchaser who continues to be covered by the insurance in the event of a claim.
When I sell my house and buy another to renovate can I become an Owner-Builder again?
Section 31 now allows only one owner builder permit to be issued to a person on an individual property every 5 years. Permits must be in the name of all landowners registered on title. So you cannot send your spouse to get an owner builders permit for the other property that you both own.
The amendments to the Home Building Act 1989 have reduced red tape for owner-builders when conducting work on their property and selling their property but at the same time has tightened the rules regarding issuing of permits to all landowners on the title.
This article is general information only and should not be relied on without obtaining further specific information.
By John English