Building a house or renovating
is complicated and it's likely to be one of the biggest financial decisions
you’ll ever make.
Pft!
Piece of cake!
Unless you’re skilled enough - or crazy enough - to do it yourself
you're gonna need a builder to manage the project, the budget and the sequence of trades.
So if I’m using a builder, what can I do to protect myself?
Well
I can build your house mate.
Deal.
Don’t just say yes!
Choosing a builder is a crucial decision and it requires research
Talk to...
Architects or people you know who’ve used builders.
Make sure you meet with several potential builders.
Ask each for a list of former clients you can speak to.
Go right ahead.
My clients always end up with a smile on their face!
A good working relationship with your builder is the key to
avoiding problems in the long term. So take the time to get to know them and make sure you're compatible.
I didn’t even do that much research before I got married.
Get detailed written quotes from at least three builders.
I can build this for $29.99.
Deal.
Hang on, it’s not that simple.
To get a proper quote from a builder, you need to give them detailed plans.
This will include engineering documents and specifications for the materials and finishes
you want.
If you want, say, double glazing, or extra insulation or luxury finishes, this can make
a big difference to the final quote.
OK, so I build it out of lego bricks and the windows, plastic.
Um…
I’m trying to give you a thumbs up.
Getting more detail for your builder, from your architect or draftsperson, engineer and surveyor can cost
you more up front, but it reduces the risk of problems in the long run.
The more specific your plans are, the more accurate a builder’s quote should be.
You want to get a pool, hey?
With all the excavation it'll be about 70 grand.
No, I just want you to put a piece of blue lego on the ground!
Oh, in that case, three bucks?
Review each quote carefully.
Quotes for building work can vary hugely.
Choosing the cheapest option may be ok, but if one quote has much less detail, or a much lower
price, than the others… you should be asking why.
Oh, you wanted it made of Lego … not Leggo’s.
That does make more sense.
You'll need to check that the builder has the right licence.
And you are definitely a builder?
How else would I get this mug?
Don’t assume the license number they give you is legit.
You don’t want to end up like one Victorian who didn't check and ended up telling a Builders Tribunal:
He looked like builder.
He was short and stocky and came to the meeting dressed in bib and brace overalls.
You need to check that the name is exactly the same, the licence is current and that it covers the actual work that's being done.
Luckily all this information is available online.
And it's one simple website!
No it isn't.
Thanks to Federation.
Each state and territory has its own separate website and they all work slightly differently.
Great idea / Stirling / Hurrah / White Australia / Shhhh
Well your license checks out!
Well, you're wearing overalls
So let’s get to the contract!
Maybe we could shake on it?
No you can't
A written contract - with clauses designed to protect consumers - is mandatory for “major”
home building works.
Though helpfully the dollar value when work becomes “major” is, yep,
different in each state and territory.
True freedom is having very similar laws with tiny annoying differences.
Hear hear!
Let’s have different railways!
The same goes for building insurance,
It’s compulsory in every single state for work
over a particular - but slightly different - dollar value.
Not in Tasmania it’s not.
Go figure.
But no matter where you live in this stupid federation of ours, it is vital
that you thoroughly inspect the foundations upon which your whole building project rests
the terms of your building contract.
Wait what about the actual foundations?
Yeah, you should check those too.
NSW, Victoria and Queensland have a free standard form home building contract
you can download.
Each has plenty of warnings about pitfalls for consumers.
Building industry associations also have standard form contracts which you generally have to pay for.
Although your builder may provide their preferred one.
I use this Contract.
Even I'm concerned you've circled the word con.
A major building contract must set out the “contract price”
This is generally expressed as a “fixed price” which means
Which means the cost can’t go up?
No.
And here’s the first big risk with building.
The price can always increase.
But we agreed on the price and the builder has signed it.
Yes and for those quoted items the price is fixed, but the contract sets out many other
situations where price increases are allowed.
Some things, like tax hikes or new council regulations, you can’t do anything about.
But in two big areas you can control costs blowouts if you’re careful upfront.
Provisional Sums are cost estimates for items
a builder can’t give an exact price on, like ground works.
Hard to know what’s under here.
Could be tree roots, sewerage pipes, could even be a kids bedroom floor.
Builders have to use reasonable care and skill in making allowance for provisional costs.
Figures must be based on the available information.
Making that info available to your builder might cost you more up front…
I paid for a soil report, an engineer's report and a geotechnical survey.
I just kicked the ground a bit.
..but it can avoid expensive surprises.
Like the client who was charged an extra $120,000 when excavations hit rock.
WHAT!!
Don’t worry, the building tribunal decided that was too much.
What a relief.
So they reduced it to a hundred and ten thousand dollars.
Once you’ve spent years getting your plans through council, arranging quotes and arguing
between Toffee Fingers or Blind Date?
Toffee Fingers.
… you may not be ready to specify every item in your house.
Do you know exactly which model number of toilet you want?
I DON’T CARE, IT’S JUST A TOILET!!! (sobs)
Not knowing the exact price can be fine, but you should definitely check that the allowances for Prime Cost Items
are enough to cover the level of luxury that you're gonna want
when you finally go out to buy something.
We only allowed for $2.50 for toilets.
You said you didn’t care.
Yes! But now that I’ve seen this magical toilet, I must have it.
You can change your mind…
Ooooo, bidet!
Or even add something totally new.
But remember, as well as paying the additional cost of that new item, you’ll also have to pay the builder’s
margin on top of that.
The what what?
For any cost not covered by the original
contract, builders are entitled to add a percentage - or “margin” - to cover their overheads,
supervision and profit.
How much is it?
The builder's margin must be included in your contract…
Here’s mine!
which you definitely would have read by now
Oooh, is that a heated toilet seat?
Make sure you check the Builder’s Margin in your contract
As a guide
Fair Trading says you should question any builder's margin that exceeds 20%.
So pay attention to “Provisional Sums”, “Prime Cost Items” and the “Builders
Margin” when negotiating your contract.
And stay alert once building starts.
Costs can escalate quickly.
But all variations have to be in writing and signed by both parties
Stay across this otherwise you'll get bill shock later on.
Wait, one million dollars!!
You do remember when you asked me to put on an extra story, and add a heliport right?
Oh yeah
Your contract will set out how much you have to pay at defined stages of your build
For instance, the base stage, the framing, the lockup
This helps ensure you'll only pay for work that has been completed
and don't find yourself out of pocket if the builder doesn't finish the job.
It's also your responsibility to get an accredited certifier to inspect the work done at certain stages
Failure to do this might mean that you don't get a permit or certificate to occupy your house.
But I haven’t even approved the slab yet!
You should not be paying for part of your house if it hasn’t passed its inspection yet.
You’re starting to get annoying.
Uh what should I do if there are… um... defects?
I just said that.
When the builder says the house has reached “practical completion”,
you should inspect it and inform them in writing of any defects you find.
I don't think this is complete.
And don’t make the final payment until they fix those defects.
Even after you've moved in and made your final payment and the builder has disappeared
They still have a statutory obligation to fix any defects after completion
although how long that lasts for depends on where you live.
It’s 6 or 10 years in most states, but only 2 years in NSW and 6 months in QLD for minor
or non-structural defects - so if you want to build something crap, do it in Queensland!
OI!
Depending on what work’s being done, building is also covered by the consumer
guarantees in the Australian Consumer Law.
If so, services have to be done with due care and skill, and goods must be of
acceptable quality and fit for the described purpose.
This is not acceptable quality!
Well at least you’re in.
But I missed Christmas!
There’ll be another one.
When??
Oh yeah, that’s another source of conflict.
The contract will have a start date and a length of time for the build
even though it always seems to take longer
Even for me.
Builders are entitled to reasonable extensions of time for things like weather,
lack of availability of materials or changes to the plans.
If this happens, the builder has to notify you in writing
We lost 6 days to rain and 10 to a kid stepping on the house.
If you think a delay is not legit, formally dispute it at the time.
I don’t accept “Dog ate my building supplies”.
This is especially relevant if the contract includes a
costs penalty for delay.
Woohoo!!
But cost penalties can cut both ways.
Check if the contract imposes penalties on you for delays you might cause.
But I’m not the builder?
Sure but some owners try to save money by taking on part of a job themselves,
like supplying tiles or putting in the kitchen.
If delays occur because of jobs you took on, or variations you made, you could
end up being liable.
All those delays were because you wanted to change the whole house to mechano!
I’ll see you in… the appropriate dispute resolution body.
If you can’t resolve a disagreement directly
with your builder, contact your local consumer affairs department or fair trading body
If they can’t mediate a resolution, they can point you to the builders tribunal in
your state or territory.
Hey, I’ve just discovered that my house is made of plastic bricks.
But isn’t it just covered by building insurance?
Sadly building insurance is only a last resort.
It only covers you if your builder goes broke, disappears or dies.
Except in Queensland
Why?
I don’t know.
I’ve been dead for 100 years.
Building is a complex and expensive undertaking.
So take care when you choose your builder, make sure you know your statutory rights, and be careful
and read their contract really carefully
It’s just like on the box.
Can I live in the box?