consumer afffairs building guide

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Building & RenovatingA Guide for Consumers

Revised and updated

September 2007


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Additional copies

This guide is available from Consumer Affairs Victoria. You can

attain additional copies by calling 1300 55 81 81 (local call) or

visiting www.consumer.vic.gov.au.

To order more than five copies at a time, fax a request to

(03) 8684 6333 or write to:

Consumer Affairs Victoria

GPO Box 123Melbourne Victoria 3001

Disclaimer

Because this publication avoids the use of legal language,

information about the law may have been summarised or

expressed in general statements. This information should not

be relied upon as a substitute for professional legal advice or

reference to the actual legislation.

Copyright State of Victoria 2007

This publication is copyright. No part may be reproduced by

any process except in accordance with the provisions of the

Copyright Act 1968. For advice on how to reproduce any material

from this publication, contact Consumer Affairs Victoria.

ISBN 1 921079 12 6

Authorised by Hon Tony Robinson MP

1 Macarthur Place Melbourne 3000

Published by Consumer Affairs Victoria

121 Exhibition Street Melbourne 3000

Printed by Vega Press 274 Ferntree Gully Road Notting Hill 3168

Printed on recycled paper.


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Foreword 1

Building or renovating a home is often the single most expensive

exercise a family can undertake.In most cases, people who carry out a domestic building project have apositive experience. However, each year around 2000 consumers makewritten complaints to Building Advice and Conciliation Victoria (BACV) a Victorian Government service established to provide advice and helpresolve building disputes.

The most common complaints relate to contracts, delays and qualityof work.

Building and Renovating: A Guide for Consumers has been designed as anessential reference tool to help you avoid such pitfalls while planningand completing a building and renovating project.

The guide explains building laws and contains hints that will assist youto successfully plan and complete each stage of your building project.It also contains important tips, such as using a registered builder andhaving project details clearly stated in your contract.

I hope that you findBuilding and Renovating: A Guide for Consumersuseful. I encourage you to hold onto the guide and refer to it throughoutyour entire project. Of course, if you have queries or if problems dooccur, you can always contact BACV at Consumer Affairs Victoria on1300 55 75 59.

HON TONY ROBINSON MPMinister for Consumer Affairs

Foreword


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2 Building and Renovating

ContentsIntroduction 3

Avoiding common pitalls 4

Finance 6

Building or our environment 12

Choosing your block 15

Choosing a display home 16

Extending and renovating 18Becoming an owner builder 22

Buying o-the-plan 24

Your plans 26

Choosing your builder 29

Your contract 32

Your building surveyor 36

Construction 38

Managing a dispute 40

Completion 41

Fences 42

Keeping your home sae 44

Building defnitions 46

Useul contacts 52


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Building and renovating your

home can be an exciting, expensiveand complex experience. Beforeyou even start to build, there is alot of information to collect andimportant decisions to make.

If youre considering building anew home you can choose to:

buy a house and land package

build a house based on a displayhome on your own land

build a home through a sales

agentuse an architect or designer anda smaller building company

use a small design and buildcompany

become an owner builder

buy a home being constructedoff-the-plan.

If you are extending your home

you can:use a larger extension companythat manages your plans,council and building permitsand construction

use an architect or designer anda smaller building company

use a small design and buildcompany

become an owner builder.

If renovating, you may need to:

engage a range of tradespeople,or

engage a builder to supervise theentire project and coordinatesubcontractors for you.

The level of your involvement inthe project will vary according tothe option you choose. Volumebuilders, large extension companiesand architects or designers maydesign and draw up the plans

and get permits on your behalf.Architects may also help youfind the right builder at theright price and provide contractadministration during construction.But regardless of the size or styleof your building project, it paysto know what you are signing upfor when applying for permits andsigning contracts and to get advicefrom a building lawyer.

Most homeowners are keen to

get started with their project sothey can enjoy the benefits oftheir new, extended or renovatedhome. Doing the research to makeconfident and informed choicescan be time consuming andsometimes seem overwhelming.

But this could be one of the largesttransactions youll ever make, so itpays to take your time. Knowing inadvance exactly what you want andwhat you can afford, and placingthe details and price clearly in yourcontract are the foundations forall satisfying home building andrenovating experiences. It also paysto seek independent expert help.

If youve never experienced a homebuilding project before or if itsbeen a while since your last project,this guide will help you to makeconfident decisions before you signa contract.

In addition to reading this guide,

we encourage you to research,shop around, negotiate and takeyour time in making decisions.If you have any questions, pleasecall Consumer Affairs Victoriaon 1300 55 75 59. For the mostup to date information visitwww.consumer.vic.gov.au.

Introduction

Introduction 3


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Every year over 80,000 Victorians

use a builder to complete a homebuilding project. While themajority of homeowners do havea satisfying experience, each yearConsumer Affairs Victoria assistsan average of 2000 people withdisputes. Among these disputes,the most common complaints areabout:

poor workmanship, such ascracks in tiles, plaster, flooring,cabinets and bench tops, leakingplumbing and rooves andpoorly laid paving or concrete

builders who fail to start,complete or fix works ortake larger deposits and stagepayments than allowed by law

delays in starting or completingwork

price increases resultingfrom continual changes tocontract details after work hascommenced.

We have also found that somehomeowners run into troublebecause they misunderstand theirrights and responsibilities andthose of their builder and buildingsurveyor.

Contracts, warrantyinsurance andregistered buildersFor all building works regardlessof the size and price it is wiseto have a written domesticbuilding contract that includesplans and specifications for worksand items to be supplied. Allbuilding contracts include impliedwarranties stating your rights togood workmanship and work that

is fit for purpose. The contractbecomes a crucial document insettling any conflict that may laterarise about what you can rightfullyexpect and what the builder isobliged to supply.

For all building projects over$5000 you and your registeredbuilder must sign a majordomestic building contract. Andfor all contracts over $12,000 yourregistered builder will need to takeout builders warranty insurance forwork at your home. Only registeredbuilders can enter into a majordomestic building contract andobtain builders warranty insurance,so it is vital to use a registeredbuilder. You can check a buildersregistration online at www.buildingcommission.com.au or bycalling the Building PractitionersBoard (BPB) on 1300 36 03 20.

Builders warrantyIn Victoria, builders warrantyinsurance covers costs of up to$200,000 for fixing structuraldefects for six years and non-structural defects for two years,but only covers you if your builderhas died, been declared insolventor has disappeared. In all othercases, it is up to your builderto fix or complete works orto pay for any costs awarded.

Using impliedwarrantiesAll domestic building contracts,regardless of the price, includewarranties by the builder to:

carry out the work in a properand workmanlike manner, inaccordance with the plans andspecifications set out in yourcontract

ensure all materials supplied

by the builder are good andsuitable for the purpose and,unless otherwise stated in thecontract, are new

carry out the work inaccordance with all relevantlaws and legal requirements

carry out the work withreasonable care and skill andcomplete works by the date (orwithin the period) specified by

the contract

Avoiding common pitfalls


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Each yearConsumer AffairsVictoria assists

an average of2000 people withbuilding disputes

ensure new homes, extensions,renovations and kit homes(or similar) are suitable foroccupation when completed

ensure other types of work arereasonably fit for your intendedpurpose.

You can use your contractwarranties to ensure your builder:

uses good workmanship

delivers everything listed in yourcontract

ensures everything is in workingorder.

The buildingsurveyors roleMany homeowners believe theirbuilding surveyor controls thequality of the entire project andwill safeguard them against poorworkmanship or works that donot match the description in theircontract.

This is not the case. The buildingsurveyors role is to issue yourbuilding permit, inspect works toensure they comply with buildingregulations, which primarilyrelate to health, safety, amenityand sustainability, and issue youroccupancy certificate.

It is your builders responsibilityto deliver everything includedin your contract. And it is your

responsibility to ensure thateverything you want is clearlylisted in your contract. If you haveany concerns, it is also your role todiscuss the issues with your builderso they can be resolved. Unless youhave technical expertise in the area,you should seek the advice of anindependent building consultant.

Using independentexpert helpBefore you sign your buildingcontract, it is wise to use anindependent building lawyer toensure that the contract containseverything required by the lawand fairly balances your rightsand obligations with those of thebuilder.

While your builder is obliged todeliver everything that is includedin your contract, you can monitorthe progress by communicatingregularly and by using anindependent building consultantto supervise the entire project, or tomake checks before you make stagepayments.

Independent building consultantsare qualified architects, engineers,building practitioners or buildingsurveyors who make inspectionsor manage works on your behalf.They should carry professionalindemnity insurance. To find anindependent building consultant,contact a relevant professionalorganisation or look in the YellowPages under building consultantsand building inspection services.

Depending on the scope and priceof contract you have with yourindependent building consultant,the consultant may need to beregistered to carry out the work.

For peace of mind, it is wise toinclude the cost of these services inyour budget.

Avoiding common pitfalls5


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Assessing costsRegardless of which building orrenovating option you choose,it pays to shop around beforecommitting yourself.

If youre looking at building adisplay home, you still need tochoose the right home at the rightprice for you.

If youve decided to use a smallerbuilding company, you may needto talk to architects or draftspeople

and builders to get an idea of thecost of different sized homes anddifferent quality finishes.

For alterations to a bathroom,kitchen, laundry and otherrooms, talk to specialist buildingcompanies and other builders.Visit display homes and buildingadvisory centres to help you decidewhat you want and what you canafford.

Obtain a copy of a cost guide

to get an idea of building costsfor additions and extensionsand a wide range of renovationsand repairs. These are availablefrom Archicentre (1300 13 45 13)and Reed Construction Data(1800 80 60 60). Figures providedare general costings.

Building prices can varysignificantly depending on thebuilder you select, your choiceof materials, the method of

construction, the fixtures andfinishes you choose and theeconomic conditions. Larger worksachieve a more economical price

per square metre. The standard

of work you require, the ease ofsite accessibility and whether youchoose to do some of the workyourself will also affect the finalprice.

Make sure your building contractincludes the following costs:

the building fee, which mayor may not include the cost ofmandatory inspections by thebuilding surveyor and may varybetween companies

planning permit fees (if yourcouncil requires a planningpermit)

lodgement fee paid to the localcouncil for recording purposes

crossing deposit or assetprotection fee paid to the localcouncil and refundable at theend of the project if no damagehas occurred to council property

inspection fee, a non-refundable

fee paid to the council forthe cost of their inspection ofcouncil assets

Goods and Services Tax (GST)

government levy charges whenthe contracted cost of works isover $10,000. There are threelevies based on the total cost ofyour building, which also applyto owner builders. Your buildingsurveyor can advise you of thesecosts.

Once you have shopped aroundand worked out how much youthink your home building project

will cost, we recommend that you

add an extra 15 per cent to yourestimate, to cover contingencies.

Associatedinancial costsMany people take out a home loanto cover the cost of building a newhome or an extension, while othersredraw on their existing loan tocomplete renovations or homeimprovements.

When assessing how much toborrow, you should also factor inadditional costs associated withgetting a loan such as:

legal fees

loan establishment fees

government charges, such asstamp duty and GST

property inspection fees

fees for independent legal andtechnical advice throughout the

project

furniture storage costs

rent

moving costs

building and contentsinsurance.

It is also advisable to include amargin to allow for potential risesin interest rates. In the last twodecades, rates have been as low as

5 per cent and as high as 17 percent.

Finance


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Plan to haveenough funds tocover unexpected

costs


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Getting a home loan

Consumer CreditCodeTo ensure fair dealing and protectthe interests of consumers, alllenders must comply with theConsumer Credit Code that stateslenders must provide:

a statement outlining theborrowers rights and obligations

a pre-contractual statementabout certain financialinformation that must beincluded in the contract

a schedule of comparison rates.

This protects you as a borrower andhelps you to compare products. Ifyou need any information aboutcredit, call Consumer AffairsVictoria on 1300 55 81 81.

LendersHome loans are available frombanks, credit unions, buildingsocieties and finance companies.

Some building companies offerfinancial advice or refer you to alender. Some promote loans for100 per cent of the price of thehome. Remember, anyone offeringfinancial advice must be licensed. Itis wise to get independent financial

advice and compare loans fromindependent lenders before signingup with the lender suggested byyour builder.

Mortgage brokers/inance brokersA mortgage broker can assist infinding the right loan. Even ifyou use a broker, it is wise to dosome research to be sure that therecommended loan is the right one.

When shopping around for brokers,find out if they:

belong to an industryassociation

are independent or if they onlydeal with a certain lender

have professional indemnityinsurance

are a lender as well as abroker, as this may affect theirrecommendations

offer a wide range of loans from

a variety of independent lenders

can justify theirrecommendations.

When using brokers it is alsocrucial that you:

do not pay an upfront fee

make sure they disclose allfees and commissions prior tosigning you up

ask to see a copy of the

application and any financialdetails they send to the lenderon your behalf.

It is important to note that beforethe broker can begin negotiatingon your behalf, they must give youa signed copy of the document ofappointment. The appointmentdocument must state:

the amount of credit orthe maximum credit to benegotiated

any requirements as to the termof contract

the maximum annualpercentage rate(s) the client isprepared to pay

how long the broker isappointed for

an agreed maximum amountof credit application fees andvaluation fees the client may berequired to pay.

It is advisablefor owner buildersto make their

loan applicationbefore startingworks


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Lending criteria

For most institutions, your abilityto borrow will depend on:

your income and capacity torepay

the loan to value ratio (a ratiothat compares the total loanamount with the purchase priceor property valuation amount)

for new homes, the amountyou have as a deposit (mostminimum deposits are

between 5 and 10 per centof the purchase price). Somelenders require proof throughbank statements that a certainamount of the deposit comesfrom your own savings.

Most lenders will approve a loanin principle. This allows you tobe confident of your spendinglimit when planning your buildingproject. The approval is usuallyvalid for six to 12 months but

needs to be renewed after thisperiod.

Criteria or ownerbuildersLenders generally have strictercriteria for owner builders. Somedont lend money at all to ownerbuilders, while others lend onlya percentage of the total costor lend only to building-relatedtradespeople.

It is advisable for owner builders tomake their loan application beforestarting works, as it may be difficultto get finance once building hasbegun. If you choose to be anowner builder, it is also wise tohave a building process plan toshow lenders. This will also helpyou to manage your cash flow onceyou commence the project. It isalso important to note that somelenders do not provide mortgage

protection insurance to ownerbuilders and may charge largerinspection and valuation fees.

When shopping around, ask aboutpolicies lenders have for loansto owner builders, the amountavailable as a loan, the equityrequired and any other specialconditions.

Types o loansHome loans are generally referredto as a mortgage but there are avariety of home loans availablewith different interest rates andpayment styles.

Choosing the right home loan isas important as choosing the rightbuilder. Lenders will advise on thetypes of loan available. Make sureyou obtain as much informationas possible in writing and thatyou understand the fees, ongoingcharges, penalties and other termsand conditions before signing anagreement.

There is intense competitionamong lenders. The loan that

appears to be the cheapest becauseit has the lowest interest rate maynot be the cheapest option in thelong term.

You can use a mortgage simulatorand comparison rates to help makean informed choice. Cannex andInfochoice allow you to comparehome loans available in Australia.These are free services that can beviewed at www.cannex.com.au andwww.infochoice.com.au.

Most lenders have mortgagesimulator software that createsdifferent models of a mortgage.This enables you to you entervarious figures for the amount ofthe loan, the duration of the loan,and the frequency of repayments(weekly, fortnightly or monthly).You can compare graphs for eachmodel to find out differences in theamount you can pay off each year.

A comparison rate allows you

to check the real cost of a homeloan. It presents the comparisonrate as a single percentage figure,based on the interest rate plus any

fees and charges relating to theloan. For example, the lendersadvertised interest rate may be 6.30per cent, but the comparison ratemay be 6.95 per cent. When usinga comparison rate, make sure theloans you are comparing are of thesame amount and for the sameterm.

The idea of paying off your homeloan more quickly is very appealingand is used by some mortgagebrokers as a method of attractingyou to their loans. Essentially, there

are only two ways to pay off yourhome loan much faster:

1. Find a cheaper interest rate(which may not exist).

2. Make larger or more regularrepayments on your loan.

In reality there is no magic trick orsecret type of loan that will let youown your home sooner. Substantialsavings are only achieved byconsistently making additional

payments on your mortgage. Youtherefore need to be very carefulwhen brokers claim that you canown your home sooner and makesubstantial savings by using a lineof credit mortgage facility.

To anyone paying a mortgage,the idea that you can own yourown home free of debt sooner isalmost irresistible. So how can youreally pay off your mortgage faster?Should you refinance? Will extra

features, such as a redraw facility,mortgage offset account or a line ofcredit help you? Or should you gofor a basic no frills loan instead,and make additional paymentswhenever you can?

Finance 9


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Mortgage insurance

In some cases an institution maylend you 100 per cent of thepurchase price, requiring no depositat all. If you are borrowing 80 percent or more of the purchase price,lenders generally require you topay for mortgage insurance. Thisis an additional upfront payment,usually in the form of a one-offpremium paid at settlement.

Mortgage insurance protects thelender in case you default on the

loan and the sale of the propertydoes not cover the amount youowe. It is important to note thatif you default and the mortgageinsurance is paid out, the insurancecompany will want you to repaythe debt.

Under the Consumer Credit Code,a lender can require you to take outmortgage insurance.

Consumer credit

insuranceConsumer credit insurance canbe used to guard against losingyour property by defaulting onloan repayments due to sickness,accident or unemployment.Carefully consider the costs of thisinsurance to ensure the benefitsare worth the outlay. Also, studythe terms and conditions for anyrestrictions or limitations, such as athree-month limit on cover.

Under the Consumer Credit Code,it is against the law for a lender torequire you to take out this type ofinsurance.

First Home OwnersGrantThe First Home Owners Grantscheme provides eligible firsthome owners with a non-meanstested, one-off payment of

$12,000 that can be used for thepurchase of an existing home orto build a new home.

Some lenders will help to arrangethe First Home Owners Grant

application for their borrowers.Eligibility criteria and applicationforms are available online from theState Revenue Office of Victoria atwww.sro.vic.gov.au.

Controlling thebuilding contractpriceOnce you have your loan approval,you need to ensure that your costs

dont blow out. To avoid borrowingextra money that will be difficultto repay, it is important to knowhow to control the price of yourbuilding contract before you start.

By law, your major domesticbuilding contract must have a priceand state the legally permissiblepercentage of total price that youshould pay as deposit when workscommence, and as stage paymentsafter each stage is completed.

Only items permitted by law, suchas prime cost and provisional sumitems, other identified costs, andvariations can cause changes in theprice. It is easier to stick to youroriginal budget and avoid financialtrouble by keeping these to aminimum.

Permissible depositThe law requires that the deposityou pay can be no more than:

10 per cent of a total contractprice that is less than $20,000,or

5 per cent of a total contractprice that is $20,000 or more.

Only sign your contract and paythe deposit after you have sightedyour builders warranty insuranceCertificate of Currency.

Key tips forreducing yourmortgage

Shop around for thebest possible interestrate, because thats yoursingle biggest cost. Its theunderlying rate that counts,not the honeymoon rates.

If youre thinking ofrefinancing, make sureyoull be better off first.Dont get churned.

If you want additionalfeatures, look for a lowinterest rate loan that hasthem. Paying an extra0.5 per cent interest fora loan with features thatmay save you money, willprobably end up costingyou more than youll save.

Make extra regular payments

if you can. This will makethe most difference in thefirst few years of the loan,but can be a good idea atany time.

You may incur substantial costsfor ending or switching fromcertain loans that can include:

termination or break fees,for exiting your current loanearly. For fixed rate loans,in particular, such fees may

be high. You will also haveto pay the lenders legal feesfor discharging the mortgageover your property

fees and costs associatedwith the new loan(application fees, stampduty on your new mortgage,valuation and legal fees).


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Usual payment schedule

Type of contract Percentage of Stage of buildingtotal contract when paymentrequired is made

Contract to build 20 per cent Base stageto Lockup stage 25 per cent Frame stage

Contract to build 12 per cent Base stageto Fixing stage 18 per cent Frame stage

40 per cent Lockup stage

Contract to build 10 per cent Base stageall stages 15 per cent Frame stage

35 per cent Lockup stage25 per cent Fixing stage

Do not sign a contract and paya deposit until after you haveshopped around and madeinformed choices regarding thescope of works and the builder.

When you are ready to sign thecontract, ensure that it includesthe usual price schedules and stickto them. Only agree to a differentschedule in exceptional andunusual circumstances and ensureyou understand the consequencesof doing so.

There is a risk that if you pay toomuch for the early stages of theproject, the builder may be unableto finish the work on time or fix

defects. In some cases builders havetaken the bulk of the money earlyin the project and not finished thebuilding at all, leaving homeownerswith a long and costly legal battle.

Also, if your builder has died,been declared insolvent, orhas disappeared the builderswarranty insurance companymay argue that they do not needto compensate you for advancedpayments for work that has notyet been carried out.

If you are considering agreeingto a different payment scheduleto the usual one, be sure to seeklegal advice and examine yourfinancial situation carefully. Do

not agree to a different paymentschedule if you cannot affordto make those payments. Onceyou sign a contract that includesa different schedule, you areobliged to make the payments asset out in your contract.

Permissible pricechangesYour contract will be easier tomanage if you keep prime cost

items, provisional sum items andvariations to a minimum. Primecost items are fittings or fixtures,for example a basin. Provisionalsum items are the supply andinstallation of items, for exampleair conditioning.

Where possible, dont agree toallowances for prime cost andprovisional sum items. Be specificabout fittings and extra work byincluding all costs before you sign

the contract, as this will reducepossible cost increases.

Variations to the contract arechanges you or your builder wishto make, or changes that yourbuilding surveyor orders afterthe contract has been signed andbuilding has started. For mostvariations, the law requires youand your builder to agree in writingto the changes and document thedetails, including new price andcompletion date, in your contractbefore the work is undertaken.

Exceptions are variations that thebuilder reasonably believes will not:

require a change of price

cause delay

add more than 2 per cent to theoriginal contract price.

Other exceptions are variationsthat:

are required by the buildingsurveyor, and

arise due to circumstancesbeyond the builders control.

Keeping variations to a minimumis vital to controlling your financesas continual variations add up andcan increase the final contract priceabove your budget.

The best way to avoid variationsis to know exactly what youwant and place all details in yourcontract plans and specificationsbefore you sign it. That way, exceptfor unforeseeable events that are

outside of the builders control,you know exactly how much theproject will cost.

Finance 11


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Climate change is now a reality.

Drought affects large areas of thestate, drinking water supplies aregetting low and across the worldsupplies of traditional sources ofenergy are shrinking. Now morethan ever, it makes sense to buildlong-term sustainable practices intoour lifestyles.

Building and renovating providesa great opportunity to create ahome design and install efficientproducts that lessen your impacton the environment and save youmoney. It is much easier to buildsustainable features into your homeduring planning and constructionthan waiting to fit them when thehome is completed.

Sustainable energyratingDesigners and builders in manycountries, including Australia,now use an energy rating systemof stars to indicate the level ofsustainability achieved in thedesign and construction of a home.The more stars your home buildingplans and specifications achieve,the higher the energy rating onyour home.

Victoria has minimum compulsory(mandatory) energy ratingsfor residential buildings. It isessential to check these beforeyou commence planning and wellbefore you apply for a buildingpermit. To find out requirementsof the current mandatory energyrating, check with SustainabilityVictoria on 1300 363 744 or atwww.sustainability.vic.gov.au andthe Building Commission on(03) 9285 6400 or at www.

buildingcomission.com.au.

Accredited energy raters areavailable to assess your plans andspecifications to ensure they meetthe current minimum standardrequired by building regulations.

You can choose to go beyond

the minimum required standardof energy rating when includingfeatures, materials and systems thatconserve energy and water andminimise waste.

These measures will not onlyhelp reduce harmful carbonemissions and reduce your energybills, but make your home amore comfortable place to live.Sustainable features also seemto attract home buyers and canincrease the re-sale value of yourhome.

The following tips list a range ofsustainable features you can choosefrom to save natural resources andcosts.

Building for our environment


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Energy efficient

blocksWhen choosing a block of land,consider:

blocks that enable you to sitethe home facing north so thatyou get access to the sun. Avoidblocks overshadowed in winterby buildings, big trees, fences orother obstructions to the north

rectangular blocks with longboundaries running north-south

or east-west, especially blocksless than 500 square metres

north-south running blockswider than 11 metres (less if youhave a two storey house andcan use north windows on theupper floor as well)

east-west running blocks widerthan 12.5 metres, except wherea street or parkland is to thenorth, in which case blocks canbe narrower and still provide

good solar access

blocks that allow the northwindows to daytime livingspaces to be placed 4.5 metres ormore from a single storey houseto the north, or 8.5 metresor more from a double storeyhouse to the north

blocks that slope down to thenorth

north-south or east-west blocks

which face onto free open spaceto the north, such as a street,backyard or parkland.

Saving energyDesign all your daytimewindows to face north andall evening areas (such asbedrooms) to face south,providing better night timecomfort in summer. This takesadvantage of the winter sun andreduces your winter heating billsby up to 25 per cent. Greatersavings can be made by usingdouble glazing. During summer,the sun is much higher in the

sky than in winter, so north-facing windows are easilyshaded with an eave or pergolato keep the home cool. In hotterparts of the state you may alsoneed to also shade windowswith blinds.

Choose a design that gives youadequate distance betweenyour north windows and yournorthern neighbours lot.

Use a design that maximises

north-south ventilation flow tocool your house during summer,rather than relying on airconditioning.

Install ceiling fans, rather thanair conditioning.

Use an accredited energy raterwhen planning and designingan extension, to identify ways tomaximise energy efficiency. Youmay also receive advice on howto increase energy efficiency in

existing rooms.

Install wall insulation inold parts of your homewhen replacing plaster orweatherboards.

Install heating that has thehighest energy efficiency rating.In victoria, gas water heaters,gas room and ducted heatersmust have energy efficiencyrating labels that enable you tocompare products.

Take advantage of a governmentrebate from sustainabilityvictoria for installing solarpower, a solar or high efficiencygas hot water system or heater.

Purchase new electricalappliances with a high energyefficiency rating. In victoriamajor electrical goods such asrefrigerators/freezers, washingmachines, clothes dryers anddishwashers must have energyrating labels that enable youto compare the efficiency of

different makes and models.Appliances are rated on asix-star scale: more stars indicatemore efficient appliances withlower running costs. Visitwww.energyrating.gov.au for alist of energy labelled electricalappliances.

Choose energy efficient lighting.There are many new productsavailable for a wide rangeof uses. It is now possible to

install energy efficient, compactfluorescent downlights and ledsinstead of halogen downlights.

Contact Sustainability Victoriafor advice on eco-friendlyproducts and materials, go towww.sustainability.vic.gov.au.

Building for our environment 13


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Saving waterSaving water is paramount on theworlds driest continent.

Visit www.ourwater.vic.gov.aufor advice on what you can dowhen building or renovatingto make your new home or

renovation as water efficient aspossible.

Take advantage of governmentrebates for a range of watersaving products. To find outmore visit www.ourwater.vic.gov.au.

Choose water saving devicesthat also reduce your water bills:These include rainwater tanksfor flushing toilets, systems thatrecycle household wastewaterand use grey water to flushtoilets, and replacing older tapsand shower roses with moreefficient ones.

Check plumbing regulationsthat provide changes to thewater flow measures and waterpressure reductions at www.pic.vic.gov.au

Design a drought tolerantgarden.

RecyclingUse recycled building materials:there are a number of qualityoutlets in Victoria that sellrecycled timbers, roofing tiles,floorboards, windows and doors.See the Yellow Pages, under

Building MaterialsSecond-hand.

Design your kitchen with spacefor bins that allow you toseparate rubbish for landfill fromfood that can go in the compostand paper, plastic, glass and tinsthat can be recycled.

Use a compost bin to turn allyour green, fruit and vegetablewastes into fertiliser for yourgarden.

Use council recycling bins.

Reducing litter andstormwater pollution

During construction, yourbuilder must use appropriatemeasures to prevent rubbishblowing off the site and to stopmuddy or chemical laden water

entering the stormwater system.The Environment ProtectionAuthority (EPA) of Victoriaprovides information about yourbuilders obligations to managethe potential off-site impacts ofyour project. Details are availablefrom the EPA on (03) 9695 2722and at www.epa.vic.gov.au.

Find out about your councilslaws relating to containment ofrubbish and other materials on

the site.

Get a copy ofAsbestos in theHome from the Department ofHuman Services (DHS) to findout about safe handling anddisposed of asbestos, by calling1300 761 874 or visting www.health.vic.gov.au/environment/downloads/asbestos_home2003.pdf.

Sustainable featuresattract home buyers andcan increase the re-sale

value of your home


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When choosing your land youll

probably be influenced by yourbudget, and whether you need tobe near work, public transport,schools or other facilities. Youwill need to seek expert helpwhen addressing some items inthe checklist below.

ChecklistHave you established thecorrect location of yourallotment? Your certificate of

title shows your allotmententitlement, however youneed to define your allotmentboundaries on the buildingsite to ensure your building,when constructed, is correctlypositioned. This is determinedby the position of the surveypegs located on the allotmentthat indicates your allotmentboundaries. A licensedland surveyor can onlyposition these survey pegs

(commonly referred to as are-establishment survey).

Have you checked thecertificate of title forrestrictions for buildingenvelopes, easements,covenants and rights ofaccess?

Are there any special localcouncil planning overlaysthat apply to the site that mayimpact on your house design?

Are there any zoning or local

council planning changesunderway?

Is the block suitable for thetype of home you intend tobuild?

Are services such as gas,electricity, water, sewerage andthe telephone connected?

Is a legal stormwater dischargepoint available directly to theallotment?

Have you checked withrelevant service providersabout availability and costs ofhaving services connected?

Does the block and yoursubsequent plan provide forprivacy, safe entry and exit,an energy efficient aspect androom for all your needs?

Where are the boundaries anddo you need fences?

Can you get satisfactorybuilding access to the block?

Is the block well drained inregard to potential surface orsub-surface run-off?

Are there any large treeslocated where you intend tobuild, or at a distance from itthat is less than 1.5 times thetrees height?

Do you have a copy of theplan of subdivision for theblock from the local council?If so, does it show any cutand/or filling as extra costsmay be incurred for footings.

Have you reviewed the natural

and finished levels of theblock and the crossing andstormwater information?

Do any trees, buildings andassociated structures such asfoundations and septic tanksneed to be removed?

Have you checked whetherthe block is prone to termites?Although your council willdetermine whether your blockis located in a designated

termite area, termites are notalways confined just to thesedeclared areas. Consequently,regardless of the locationof your block, you shouldcarefully consider measuresto protect your new homeagainst termite infestations.

Is the block located in a flood-prone, landslip or snowloadarea?

Is your land located in a

designated bushfire pronearea? If so, you may berequired to use specialconstruction techniqueswhen building your home.Design and maintenancemeasures to preventdestruction by bushfires canbe taken. Contact the CountryFire Authority (CFA) fordetailed information on(03) 9262 8444 or visit thewebsite at www.cfa.vic.gov.au.

Choosing your block

Choosing your block 15


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Many people decide to build

a house with a large buildingcompany (volume builder) thatoffers several designs based ondisplay homes. This option canbe affordable and can seemto save time, as the companyalready has plans drawn up andwill usually obtain all permitson your behalf. But there arestill important decisions to makeregarding: which company touse, which display model youwant, and what changes you

want to make to the displaymodel so that it suits your needsand budget.

If you are choosing to build ahome that is an exact replica ofthe one on display, the volumebuilder is required by law toinclude in your contract exactlythe same plans and specificationsas those used to build the displayhome.

However, the home on display

is sometimes the top model in arange. Most volume builders doallow you to customise the modelyou choose. This means you canvary the floor plan, fittings andfixtures to some extent, to suityour lifestyle and budget.

After choosing any variations,

make sure you ask the salesperson the exact cost of thehome on display and the exactcost of building the version thatyou want. It is important to notethat changing standard plans canlead to significant increases to thecost of construction.

When you have chosen a builder,it is wise to choose all yourfixtures and fittings before yousign the major domestic buildingcontract. Itemise the details ofyour choices (such as make,model, colour or style) in yourcontract, and dont leave anyblanks.

Some volume builders requestyou to sign one or twodocuments before the maincontract. These documents arecommonly called preliminaryagreements. A preliminaryagreement document may also becalled a quote, order, preliminary

contract estimate, provisionalquote to build on your land,authorised tender acceptance orcontract request.

These preliminary documentsmay be used in the first instanceto obtain a soil report but mayalso include costs for drawing upplans and specifications.

Volume builders usually

own the copyright to displayhome designs and plans. Thismeans that you cannot sign apreliminary document and paya deposit for particular plans andthen choose to have the homebuilt by a different builder.

If you do sign a preliminarydocument and decide not toproceed with the buildingconstruction, the builder may beentitled to keep some or all of thedeposit paid.

Before entering any agreement,regardless of what it is called, itis wise to seek advice from theBuilding Advice and ConciliationVictoria service at ConsumerAffairs Victoria or a buildinglawyer.

Rather that sign any of thesepreliminary documents, it ispreferable to choose your builderand include all works that you

have agreed the builder will carryout for the construction of yourhome in one major domesticbuilding contract.

Choosing a display home


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Changing standard planscan lead to significantincreases to the cost of

construction


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You will need to seek

independent expert help tocomplete some of the checksbelow.

ChecklistEnsure the existing home isstructurally sound.

Find out if you need localcouncil planning anddemolition permits.

Find out if you need a

building permit.Obtain a copy of theTitle of Land. Check forany covenants, buildingenvelopes, easements andoverlays that may restrictyour building before you get adesign and plans.

Assess the space that youwant and can afford. Make adetailed list of your specificrequirements and desires. The

more detailed and precisethis list, the more satisfiedyou will be with the finishedrenovation.

Decide whether you want toduplicate the original style ofthe house or add a contrastingmodern style.

If borrowing money for

the project, use the financesection in this guide to choosean affordable loan and ensureyou control the price of yourbuilding contract.

Check that your existinghouse and content insuranceis still valid during the periodof construction.

Get a quantity surveyor toprovide independent adviceon the cost of the project.

If using an architect, arrangefor tender documents to beforwarded to appropriatebuilders.

Get a copy ofAsbestos in theHome from the Departmentof Human Services (DHS)before your start anydemolition or do-it-yourselfwork (see page 14).

Use the information in this

guide to successfully plan forand manage each stage ofyour project.

Extending, altering andrenovating a home can be astressful time, whether youare contracting a builder orcompleting the work as an ownerbuilder.

You can usually count on the

project costing more and takinglonger than expected. Carefulplanning before you start willhelp you to manage the projectwell and minimise disruptions toyour daily life.

Sometimes older homes dontreveal their hidden faultsuntil the outer layers begin tobe stripped away. Additionalcosts can include restumping,underpinning, rising damprepairs, termite eradication,rewiring and re-plumbing.

Be prepared for a change oflifestyle; once walls start comingdown therell be dust everywhere.Hang plastic sheets and coverfurniture and appliances forprotection. It is important to notethat contaminants that can causeallergies may be used during therenovation.

You may need to arrange

temporary use of otherbathroom, toilet or kitchenfacilities. Some homeownersmove out for the duration ofthe renovation. If you decide todo this, remember to factor thecost of rent into your budget andliquidated damages (penaltiesstated in your contract that thebuilder is required to pay youif building goes beyond thecontracted completion date).

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Do it yourself safetyMany people extending,renovating and completing smallhome improvement projects tryto keep costs down by completingdemolitions themselves, or bydoing some of the painting or

minor works.

Handling asbestossaelyAny home, shed or fence builtbefore the 1990s may containasbestos. Asbestos fibres pose aconsiderable health risk if disturbedby sanding, hammering, sawingand removal. Asbestos can be foundin asbestos cement and corrugatedsheeting and some roof tiles, floortiles, plumbing and under floors orwalls in bathrooms and kitchens.

Whether you are completingdemolition, small do-it-yourselfjobs, working as an owner builderor engaging a handyman, it iscrucial to:

identify asbestos material thatyou may disturb in the process

handle asbestos safely

dispose of asbestos safely.Get a free copy ofAsbestos in theHome from the Department ofHuman Services (DHS) for detailed

information about safe handlingand disposal of asbestos (seepage 14).

Using ladders saelyYou only have to fall one to twometres off a ladder to be seriously

injured. Fractured limbs, spinalcord damage or even death canresult. At least 83 Australians havedied over the last five years afterfalling from a ladder. Thousandsmore have been seriously injured.

Protect yourself before using aladder by checking that it has norusty, broken or missing parts. Itshould also have non-slip safetyfeet and be the right height forthe job.

Remember to always place theladder on dry, firm and levelground. Ensure you engage all locksand fully open a step ladder. Keepthe ladder clear of powerlines andexposed electrical wiring and placethe foot of an extension ladder at adistance from the wall that is equalto a quarter of the length of theladder.

When climbing the ladder wearwell-fitting, enclosed shoes and

always have someone holding theladder at the base. As you climb,hold the ladder with both handsand carry tools in a tool belt.

Only climb to the second rungfrom the top of a step ladder andthe third rung from the top of anextension ladder. Secure the top ofan extension ladder into positionbefore you start climbing.

When working from a ladder

always work only within armsreach of the ladder and hold theladder with one hand. Be carefulwhen pulling items from shelves,gutters or rooves, as this may causeyou to lose balance.

CAUTION!Never lean a ladder on anunstable or slippery surface.

Do not walk the ladder to anew position while still on it.

Do not push or pull againstother objects when up theladder.

Do not use a ladder if youare affected by medicationor you have a medicalcondition that can causeyou to lose your balance.

Never have more thanone person on the ladderat a time.

Sometimes older homesdont reveal their hiddenfaults until the outer layers

begin to be stripped away

Extending and renovating 19


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Small renovationsand repairs

Council permitsBefore engaging a tradespersonto complete small renovationsand repairs, contact your localcouncil to find out whether anypermits are required for the worksyou are considering. For instance,some councils require you to geta planning permit before paintingthe exterior of your home orreplacing your roof or guttering.You may also need a buildingpermit for some smaller works.

Minor workscontractsIt is wise to request a written minorworks contract before any workcommences for all projects under$5000 so that you and the builderor tradesperson are clear about eachothers obligations, the details ofthe work to be completed, the priceand the timeline for completion.

Remember that you are requiredto complete a major domesticbuilding contract for works over$5000. See the section in this guideon contracts (page 32) for fulldetails.

Choose tradespeople

careullyCheck the reputation andqualifications of tradespeoplebefore signing up with them. Ask tosee examples of their work and tospeak with recent clients.

Ask to see the tradespersonscertificate of currency forpublic liability insurance,which will protect you or thirdparties against any damage thetradesperson may cause.

Check the Choosing a buildersection of this guide (page 29)for trades that are required to beregistered or licensed. If using thesetradespeople, ask for their licence orregistration number.

Only engage tradespeople who canprovide you with a physical addressand landline telephone number,rather than those who will onlyprovide a mobile phone number.Ensure you get their registeredbusiness name along with othercontact details.

Avoid using itinerant traders whoknock on your door or telephoneyou out of the blue with incrediblycheap deals on roofing, asphalting,concreting or painting. Theyusually only offer the deal fora short period and seek a largedeposit before disappearing withoutcompleting the job. Since itineranttraders do not have a fixed address

or legitimate registered businessname, they are very hard to trace ifyou want to get your money back

or get a job completed.

Avoid usingitinerant traderswho knock on

your door ortelephone youout of the blue


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Owner builders use their own

skills to complete building workson their home or to manage sub-contractors who carry out the work.

As an owner builder you areresponsible for a range of taskswhich may include insurance,occupational health and safetyof workers on the site, arrangingpermits and inspections, andensuring tradesmen haveappropriate registration andinsurance.

Owner builders may:undertake all or part of thebuilding works themselves,except in areas that requirelicensed tradespeople, such aselectricians and plumbers

contract out all or part ofthe work to appropriatetradespeople

engage a building consultant tocheck the quality of the work.

Advantages of being an ownerbuilder include:

increased control over the wholeproject, including the design

saving the cost of the buildersmargin

more flexibility.

Many people choose to become

an owner builder to reduce thecost of building. But in reality,completing a building projectcan be like running a smallbusiness. Skills in research,administration, organisation,finance and communication arejust as important for the ownerbuilder as building skills. Aboveall, you need plenty of time toprepare thoroughly, make well-informed choices of tradespeopleand carefully supervise all

stages of the project. Withoutmeticulous planning, you mayend up spending much more thanyou expected and find yourselflacking the experience to deal withcomplex situations.

ObligationsOwner builders completingworks that cost over $12,000must obtain a Certificateof Consent from the BPB.

Application forms for theCertificate of consent arecontained in the Owner builderApplication Kitprovided bythe Building PractitionersBoard (BPB) on 1300 360 320.

RightsAs an owner builder, if youenter a contract with atradesperson for any buildingwork that is over $5 000 you areentitled to the protections oftheDomestic Building ContractsAct 1995.

If you enter a contract witha tradesperson (who is notcarrying out exempt buildingwork) for building work over$12,000, that tradesperson

should also have builderswarranty insurance.

TipsClearly plan and define thescope of works you wantcompleted by tradespeople.

Choose and appoint a buildingsurveyor to issue your buildingpermits, inspect for compliancewith building regulations and

issue relevant certificates oncompletion.

Follow tips throughout thisguide to ensure smoothmanagement of finances,contracts and construction.

Becoming an owner builder


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Without meticulousplanning, you may endup spending much more

than you expected


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Purchasing a building before it has

been constructed is commonlyknown as buying off-the-plan. Thedesign of the building and sketchesof its final appearance may beincluded in advertising materialwell before occupation is possible.

People are often attracted to off-the-plan sales by the reducedstamp duty they are requiredto pay. Be aware that you arestill required to pay stamp dutywhen buying off-the plan. Theamount payable depends on howadvanced the construction of thebuilding is and its current value:the closer the construction is tobeing completed, the higher thestamp duty.

Contact the State Revenue Officeto find out about stamp duty on13 21 61 or at www.sro.vic.gov.au.

If you have purchased an off-the-

plan home and find that there arebuilding defects, you are entitledto approach the builder aboutthese defects, as they are coveredby the implied warranties in theDomestic Building Contracts Act 1995that run with the land. In somecircumstances, you may also havean entitlement to builders warrantyinsurance.

If you find defects in your off-the-plan home, initially bringthese defects to the attention ofthe developer, and seek to resolvethe issue. If this fails to achievea solution, you may contact thebuilder directly.

Other issues to consider when

buying off-the-plan are the sellingprice, possible changes to the plansafter works have commenced andthe quality of finish in the finalproduct.

Buying off-the-plan


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Be aware that youare still requiredto pay stamp

duty when buyingoff-the-plan


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Volume builders usually supply

plans and specifications and obtainplanning and building permits foryou. But if you are using a smallerbuilding company to build yournew home or extension, you mayneed to get a design and suitableplans and specifications.

Using an architect ordesigner/draftspersonArchitects and designers/draftspeople can offer a full service

that may include designing anddrafting and obtaining engineeringcomputations, foundation data andplanning and building permits.They can help you by developinga design that makes the most ofyour existing home or your blockof land.

Registered architects must havethe necessary qualifications andexperience and must have passedexaminations set by the Architects

Registration Board of Victoria(ARBV).

Designers/draftspeople must havethe necessary qualifications andexperience and must have satisfiedthe requirements of the BuildingPractitioners Board (BPB).

It is important to note that

architects or designers cannotprepare drawings or specificationsfor building construction worksunless they:

are registered with the ARBVin the case of architects; or theBPB in the case of designers/draftspeople, and

have professional indemnityinsurance, and

in the case of architects, complywith professional conductregulations.

You can contact the ARBV on(03) 9417 4444 or at www.arbv.vic.gov.au and the BPB on(03) 9285 6400 or at www.buildingcommission.com.au.

If you are choosing your ownarchitect, designer or draftsperson,it is important to note thatfees are subject to open marketcompetition. There are no standard

rates: fees may be based on apercentage of the cost of works, alump sum, or an hourly rate.

The architect or designer/draftsperson should provideyou with a written contract thatoutlines the level of services beingprovided and what you are gettingfor your money. This is to ensureboth parties understand their rightsand obligations.

Architects and designers retain

copyright on drawings, plans anddocumentation provided underyour contract. This means you canonly use the plans once, and onlyon the site they were designed for,unless agreed otherwise. It is wiseto have your contract checked by abuilding lawyer before signing.

Under your contract, your architector designer/draftsperson may:

liaise with the builder

ensure contract specificationsare met

inform you of progress

work with you to approvevariations

certify progress payments

identify defects and administertheir rectification

decide if the work is completeaccording to your plans andspecifications.

For more details, contact theARBV for a copy of their brochure,Working with your Architector visitthe Building Commissions websiteat www.buildingcommission.com.au for other information toconsider before embarking on yourproject.

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Architectsand designersretain copyright

on drawings,plans anddocumentation


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Ensure your plans

suit your land, yourbudget and the lawIt is important to ensure that yourplans are complete and take intoaccount the cost of excavation andrelevant local council laws andbuilding regulations, otherwise youcould end up paying for plans youcannot use or will need to change.

Regardless of who draws up yourplans, it is important that they

have the following informationbefore they start:

foundation data, including soiltests so that they know thedepth of foundations requiredand the cost of excavations

whether the site has beensurveyed by a licensed landsurveyor. Any variations in thelevels for sloping blocks maycontribute to increased costs forexcavation or extra bricks. You

need to include these costs inyour budget

local council laws that requiredesign consideration

the features you want to includethat comply with the currentmandatory energy ratingrequirements set out in buildingregulations.

You may need the assistance of abuilding consultant and building

lawyer to check these aspects ofyour plans.

Local planning laws

Planning permits relate to thezoning of your land according toits use.

Before starting to build or renovateyou or your agent (builder/architect/designer/draftsperson)must find out from your localcouncil whether you need aplanning permit. If so, you mustobtain one before you can be issuedwith a building permit.

Foundation dataBy law, the builder must obtainfoundation data relating to yourbuilding before entering thecontract.

Volume builders selling houseand land packages should do thisfor you. But you can obtain thefoundation data yourself, eitherthrough your architect or designer,or by engaging a geotechnicalengineer. You can then provide thefoundation data, along with yourplans and specifications, to buildersyou approach for a quote.

Sustainability

Before your plans are drawn up,it is wise to consider includingfeatures that conserve energyand water and minimise waste,including current mandatoryenergy rating requirements.See the sectionBuilding for ourenvironmenton page 12 for fulldetails.

Update your plansbefore signing thecontractOnce you have chosen yourbuilder or building company,you may discuss some changesto your original plans. Make sureyour plans and specifications areupdated and include all detailsbefore you sign the contract. Youmay need to seek advice from abuilding consultant to check this.You or your builder may also needto go back to the council to have

the changes approved.

This is the stage where you needto make absolutely sure thateverything you want is in the plansand specifications. Doing this cansave you money because continualvariations add up and can increasethe final contract price above yourbudget.


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Registered buildersDomestic builders in Victoria mustbe registered for all contracts over$5000, except for those tradepeoplewho do not require registration.The Building Practitioners Board(BPB) is an independent statutorybody administered by the BuildingCommission. It is responsiblefor registering Victorian buildersand building professionals andsupervising and monitoring theirconduct and ability to practice.

To be registered with the BPB,building practitioners musthave the required qualifications,knowledge, and expertise and carrybuilders warranty insurance.

Other building practitionersinclude building surveyors,building inspectors, quantitysurveyors, engineers engaged inthe building industry, draftspeople,commercial and domestic builders,demolishers, and persons who

erect temporary structures.

All plumbers, gasfitters anddrainers must be registered orlicensed with the PlumbingIndustry Commission and mustcarry an identification card.

Electricians are licensed by theOffice of Electrical Safety.

Architects may be referred to asbuilding practitioners if they areregistered with the ARBV and carry

appropriate insurance.

For further information contact:

The Building Practitioners Board(BPB) 1300 36 03 20 www.buildingcommission.com.au

Architects Registration Boardof Victoria (ARVB) 9417 4444www.arbv.vic.gov.au

Energy Safe Victoria(03) 9203 9700www.esv.vic.gov.au

Plumbing Industry Commission(03) 9889 2211

Tradespeople whodo not requireregistrationIt is advisable to have a writtencontract for these one-off contracts.Tradespeople do not needregistration to complete one-offprojects such as:

attaching external fixtures(including awnings, security

screens, insect screens andbalustrades)

electrical work

glazing

installing floor coverings

insulating

painting

plastering

plumbing work as defined in

section 221C of theBuildingAct 1993

tiling (wall and floor)

erecting a chain wire fence to

enclose a tennis courterecting a mast, pole, antenna,aerial or similar structure.

If any tradesperson uses acombination of trades, such aspainting and tiling, to completework that exceeds $5000, thenthey will need to be registered.

Getting quotesIt is very important to shop around.

Some extension companies andspecialist companies (for examplekitchen and bathroom suppliers)do not provide you with detailedinformation and a price unless yousign a contract and pay a depositfor plans and specifications.

These contracts sometimes givecopyright ownership of your plansto the builder. Signing this typeof contract means you cannotuse the plans elsewhere, despitepaying for them.

Dont lock yourself in with abuilder either by signing overcopyright to the plans or enteringa major domestic contract unlessyou have made an informedchoice and everything you wantis clearly stated in your contract.If you change your mind after anycooling-off period you may loseyour deposit and your plans.

Whether you are building a new

home or renovating, it is importantto choose a registered builder youcan communicate with easily, haveconfidence in and feel you can

Choosing your builder

Choosing your builder29


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work with for the duration of theproject. Remember, your builder

is not your mate: your builder isproviding a service that you arepaying for.

After getting at least three quotes,compare:

the written quotes you receive.Make sure you know exactlywhat the quotes cover thecheapest may have exclusionsor give a base rate that doesntcover the cost of the actual

materials and finishes you wantreports from previous clients

the builders recent work.

You can pay an independent quantitysurveyor to assess your plans andgive you an estimate of the cost.This can help you when comparingquotes from builders. Decide whichbuilder is most likely to:

deliver value for money

listen to your needs and wants

give you clear and regularupdates on the progress of thebuilding

be trustworthy as a businessperson and skilled builder.

A good working relationshipbetween client and builder isfundamental to the success of adomestic building project. Makesure you are able to communicateclearly, verbally and in writing, with

your potential builder. Ensure thatyou will be able to meet regularly.It is important to note that you dohave legal rights to visit the site tocheck progress and quality.

Tips for choosingyour builderAsk your family or friends if theycan recommend a registered builderthey have recently used.

Check the registration of buildersyou are considering with the BPBby calling 1300 36 03 20 or

doing an online search at www.buildingcommission.com.au.

Ask to see the most recent work ofbuilders you are considering. Asktheir recent clients:

Did the builder start and finishon time?

Were they able to communicateregularly and clearly with thebuilder about any changessuggested by either partyor about queries relating toquality?

Did the price increase? Wasthe reason for and amount ofthe increase reasonable andagreed to?

Did the builder place details andprices of changes suggested byeither party in writing and getthem signed off before makingchanges?

Did the builders sub-contractorsarrive on time and do a good

job?Did the builder request anychanges to the size of stagepayments in the contract or askfor payments before a stage wascomplete? (This can be a sign ofcash flow problems.)

Were the clients satisfied thatthe quality of the work matchedthe details placed in theircontract?

Ask your architect (if using one) torecommend two or three builderswho have done good work forprevious clients.

Find out how long the buildersyou are considering have beenin business and whether theyhave always traded under thesame name. You can do this bycontacting the Australian Securitiesand Investment Commission(ASIC) on (03) 5177 3988 or atwww.asic.gov.au.

Find out about a buildersreputation by checking:

the Domestic Building Listof the Victorian Civil andAdministrative Tribunal (VCAT).This will show whether anybuilders you are consideringhave been a party to any recentdomestic building dispute.Details are listed on the VCATwebsite at www.vcat.vic.gov.au

for any enforceable undertakingsand prosecutions against the

builder by Consumer AffairsVictoria. These are listed atwww.consumer.vic.gov.au

for any breaches by the builderof domestic building laws andregulations and other consumerlaws. These are listed in theConsumer Affairs Victoria AnnualReport, also available online

for any prosecutions ordisciplinary action againstthe builder by the BPB. These

are published in the BuildingCommissions Inform magazinewhich is available at www.buildingcommission.com.au.

If you have employed an architect,building designer or a draftsperson,ensure that everything you want isclearly defined in your plans andspecifications and conveyed to thebuilder.

If the builder is in charge of thedesign of the project, the scope of

the works should be clearly definedin the written quotation showing,wherever possible, type, makeand model number of items andaccurately estimated quantities.

Analyse quotes thoroughly. Thecheapest quote may not be thebest choice. It could be that certainitems have been missed out whichare included in a more expensivebut properly detailed quote.

If you have doubts about whetheryou can get along with a potentialbuilder, keep looking. Your ongoingrelationship will dictate the successor otherwise of the project.


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Get at least three quotesand analyse themthoroughly. The cheapest

quote is not necessarilythe best one


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Works requiringcontractA written major domestic buildingcontract is required by law formost building works over $5000,including:

erection or constructionof a home and associatedlandscaping, paving, retainingstructures, driveways, fencing,provision of lighting, heating,air conditioning, water supply

or seweragerenovations, alterations,extensions, repairs and anyother improvements to a home

work associated with therenovation, alteration, extensionor repair of a home, such aslandscaping, paving, retainingstructures, driveways, fencing,garages, workshops, swimmingpools or spas

preparation of plans orspecifications by the builder forthe work

demolition or removal of ahome

any work associated with theconstruction or erection of abuilding on land zoned forresidential purposes and forwhich a building permit isrequired.

ContractrequirementsA major domestic building contractis a legally binding agreementyou make with your builder tocarry out, arrange or manage yourproject. The contract must have aprice and should contain plans andspecifications that detail everythingyou want. It should also containa warning on how the price mayvary.

The specifications should includedetails of materials, quantities,colours and appliances, includingmake, model number andmanufacturer/supplier. If the termthe builders range or similar isused in the contract, the contractspecifications should accuratelydescribe what that range is.

Remember, it is easier to controlthe contract price and stick toyour budget by keeping prime costitems, provisional sum items andvariations to a minimum. See theFinance section in this guide fordetails on how to control yourcontract price (page 6).

By law, the builder must give youa fully signed copy of the contract,including plans and specifications.You are also entitled to receivecopies of any other documentsrelating to the building project,such as foundation data orbuilding permits.

Essential contentsIt is wise to pay a building lawyer(not one acting for the builder) tocheck the contract and give youadvice on any areas that you needto change. Using a building lawyercan protect you in the long run,even though seeking such advicemeans that you no longer have acooling-off period.

Your contract must include theseitems:

full details of the terms of thecontract written in English

a detailed description of thework, including plans andspecifications that containenough information to obtain abuilding permit

names and addresses of theparties to the contract

the builders registration numberwith the Building PractitionersBoard (BPB)

the date when work is tostart or how that date is to bedetermined

a statement that the builder willdo everything that is reasonablypossible to start work as soon aspossible if the start date is notknown

a finish date or the number ofdays required to finish the workif the start date is not known.

Your contract


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the contract price and legallyacceptable deposit and paymentschedule, including warningsin relation to progress payment

methods

the date of the contract

details of builders warrantyinsurance cover

a Notice of your right to a fiveday cooling-off period

a section including definitionsof words used in the contract

the checklist required bylaw. This can be seen at

www.consumer.vic.gov.authe implied warranties in thecontract.

Illegal contract itemsMake sure the contract does notinclude any of these items:

a compulsory arbitration clause

a caveat (a warning of someright or interest on the landtitle) on the building site land

a waiver or negation of impliedstatutory warranties, such asthose applying to fair andreasonable standard of work,

unreasonable time delays andprice increases

a cost escalation or rise and fallclause, unless the contract priceexceeds $500,000. The onus ison the builder to calculate intothe contract price any likelyrise in costs caused by inflation,wage increases, and the like. Ifthe builder wants to includea cost escalation clause, theDirector of Consumer Affairs

Victoria must approve it. Todate, the Director of ConsumerAffairs Victoria has not approvedany cost escalation clauses

the expression practicalcompletion is now obsolete.If you find it in your contract,delete it and insert complete inaccordance with the plans andspecifications.

Builders WarrantyInsuranceAfter youve signed the contract,

your builder must take outwarranty insurance for work onyour home.

Make sure you receive a Certificateof Currency for the builderswarranty insurance that applies toworks at your property. Contactthe insurer to check that the policynumber is correct and appliesto your home. Do not pay yourdeposit until you have sighted theCertificate of Currency.

Remember, you can only make abuilders warranty insurance claim ifyour builder has died, is insolventor has disappeared.

You can only make abuilders warranty insuranceclaim if your builder has

died, is insolvent or hasdisappeared

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TipsBefore signing your contract,check that you can answer yes tothese questions. You may need theassistance of a building lawyer andbuilding consultant to be sure.

Have you obtained approvedfinance for the building works?

Is the builder registered with theBPB?

Has the builder verified to youthat tests to assess the site for

suitability for the proposedworks have been carried out?

Have you or the builder/architect/designer/draftspersonon your behalf, obtainedrequired building permits and/orplanning permits from a privatebuilding surveyor and/or thelocal council?

Is the work shown and clearlydescribed in the contract, plansor specifications and any other

relevant documents such asengineering computations orsoil report?

Have you included all specialrequirements and finishes inyour plans and specifications?

If your home is based on adisplay model, do the plans

and specifications includecustomised items and allrequested variations in design,materials, finishes and costsclearly described and illustratedin your contract? (See Choosinga display home on page 16 forfurther details.)

Are provisional sum or primecost items clearly stated inschedules?

Have you checked that thereis a Certificate of Currency forthe builders warranty insurancethat applies to work on yourproperty?

Do you understand that youshould not pay a deposit untilyou have seen the Certificateof Currency for the builderswarranty insurance?

Is the deposit within the legallimit?

a maximum of 10 per cent ifthe price is less than $20,000,or

a maximum of 5 per cent ifthe price is $20,000 or more.

Are the price and progresspayments in accordance withthe law and clearly stated?

If you have to sign a separatewarning in relation to progress

payment methods, have youreceived advice from a buildinglawyer on this?

Do you understand theprocedure for variations of plansand specifications?

Are the start and finish datesclearly stated?

Is the procedure for delaysand extensions of time clearlystated?

Are penalty payments forexceeding the time forconstruction (liquidateddamages) clearly stated andsufficient to cover your costs,eg. rent?

Is the clause containing the fiveday cooling-off period included?

Do you understand thecircumstances in which thebuilder or owner can end the

contract?Have you had the contractfor long enough to read itthoroughly and have it checkedby independent experts?


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You may needthe assistance ofa building lawyer

and buildingconsultant


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Building permitsA building permit is writtenapproval from a registeredbuilding surveyor that shows yourapproved plans and specificationscomply with building regulations,and allows building works tocommence.

You can find out whetheryour works require a buildingpermit by asking a registeredbuilding surveyor or checkingwith the Building Commission

on (03) 9285 6400 or at www.buildingcommission.com.au.

A building permit can be obtainedfrom a registered private or councilbuilding surveyor.

Choose your ownbuilding surveyorAlthough you or an agent youappoint to act on your behalf(including your builder) can choose

a building surveyor, it is preferableto choose your own. This way youcan be confident that your buildingsurveyor will perform independentinspections and feel free to instructyour builder to make any changesneeded to comply with buildingregulations.

Note that your building surveyor

does not check the quality ofworkmanship. You can engage anindependent building consultant todo this, if required.

Building surveyors are listed inthe Yellow Pages or can becontacted through the AustralianInstitute of Building Surveyorson (03) 9415 7600 or throughthe Building Commission atwww.buildingcommission.com.auunderFinding a RBP.

Applying for apermitIf your builder is acting on yourbehalf to get a building permit, youmust provide written authority inyour contract or a separately signeddocument. Be sure to read thepermit application and only sign ifyou agree.

It is important to note that if youappoint your builder to obtain abuilding permit on your behalf,you may not have any involvementin choosing your building surveyoror the details of the applicationdocuments. In this case you shouldreceive a copy of the permit once ithas been issued.

Do not sign the building

permit as an Owner Builder,unless you intend to take fullresponsibility for the project andhave been granted an ownerbuilders Certificate of Consent bythe Building Practitioners Board.

When applying for your buildingpermit, you or any person actingon your behalf may need toprovide a range of documents suchas the application form, title details,land survey, plans. Consult yourbuilding surveyor for a detailed list.

Your building surveyor will requesta fee, assess your application andgrant you the permit or requestchanges to ensure the plans andspecifications comply with buildingregulations.

Your building surveyor carries outinspections to check that buildingregulations have been met. Duringconstruction of a new home orextension, inspections will occur

at base (foundation), frame andcompletion stages, and otherinspections as specified in thebuilding permit. Remember, yourbuilding surveyor does not ensurethat the works comply with yourcontract.

Your building surveyor


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Your buildingsurveyor does notensure that the

works comply withyour contract


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Carefully check theprogress of yourprojectCheck the progress of your buildingproject and communicate regularlywith your builder. Remember youcan only get the materials, size,style and quality of items andworks specified in your contract.

Ask your building surveyor aboutand obtain written verification onthe outcome of each inspection

so you can be confident that theworks inspected comply withbuilding regulations.

You can also engage anindependent building consultantor architect to administer theentire project for you and/or tomake independent checks beforeyou make stage payments. Thiswill help you feel confident thatthe work has been completedaccording to your contract plans

and specifications and impliedwarranties.

Make sure that you:

provide the builder with itemsyou agreed to supply on time

put the details and costs ofvariations you and the builderagree to in writing and bothsign off on them before thebuilder makes the changes.(See Controlling the price of yourcontractin the Finance sectionfor more details on variations onpage 6)

make stage payments whenrequested and when the workfor each stage is complete.Do not make payments inadvance. If your builder hasdied, has become insolvent orhas disappeared, the builderswarranty insurance companymay argue that they do notneed to compensate you foradvanced payments for workthat has not been carried out.

Construction


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Do not makecontract paymentsin advance


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Act immediately ifthings go wrongIf you feel that works areincomplete, different from whatsin the contract, different fromwhat you believe you were offeredunder the contract, or defective youshould:

immediately discuss this issuewith your builder in a calm andbusiness-like way. Show thebuilder what you believe the

problem to besend a letter to the builderconfirming the details of yourconversation and agreed actions

if necessary, engage anindependent buildingconsultant to inspect the workso that you can get anotheropinion and be sure you have areasonable case

keep a diary of conversationsyou have had with the builderand take photographs

if you cannot get a satisfactoryresponse by discussing theproblem, place your complaintin writing and state clearly whatyou want done to rectify theproblem and when you requirethe response. Send this to thebuilder by registered mail. Keepcopies of all documents.

Dispute resolutionservicesIf you and your builder are unableto reach agreement on how toresolve a dispute, you should firstseek free government assistancethrough Building Advice andConciliation Victoria (BACV), ajoint service run by ConsumerAffairs Victoria and the BuildingCommission.

Building Advice andConciliation Victoria(BACV)1300 55 75 59www.consumer.vic.gov.au

Because every building situation isdifferent, the type of service BACVoffers will depend on your needs,the date of your contract andwhether your builders warrantyinsurance was issued before or after1 July 2002.

Services include free advice andvoluntary conciliation between youand your builder.

Technical inspections may alsobe available to check work whenthere is evidence of possible defects.Inspections may be sought byConsumer Affairs Victoria duringthe conciliation process and carriedout by a Building Commissioninspector.

If there is evidence that builders

have broken the law, ConsumerAffairs Victoria can take actionagainst them, including seekingredress for affected consumers.

BACV conciliators may suggesthomeowners take disputes toVictorian Civil and AdministrativeTribunal (VCAT) when it is clearthat agreement cannot be reachedthrough voluntary conciliation.

Victorian Civil and

AdministrativeTribunal (VCAT)

Domestic Building List

(03) 9628 9999www.vcat.vic.gov.au

The Domestic Building List ofVCAT (an independent appealbody) will generally requiremediation to resolve issues relatingto major domestic building

contracts before hearing a dispute.

Civil Claims List

(03) 9628 9830 or 1800 133 055www.vcat.vic.gov.au

VCAT also hears domestic buildingclaims under $10,000 through theirCivil Claims list.

Managing a dispute


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Check everythingbefore you payThe works are complete when:

your building surveyor hasissued the Certificate of FinalInspection and/or OccupancyPermit, and

your builder has completedall works according to yourcontract plans, specificationsand implied warranties.

Do not make your final paymentuntil you have thoroughly checkedthat all contract requirements havebeen met.

For peace of mind, you can pay anindependent building consultantto check for defects or unfinishedwork.

Make a list of any work that youbelieve is faulty or incomplete.Speak with your builderimmediately about your concerns.

Place your request and anyagreements made with the builderto finish work in writing and sendit by registered post. If there areareas of work that are in dispute,contact Building Advice andConciliation Victoria (BACV) atConsumer Affairs Victoria for help.

Keep all yourcertificatesThe law gives you the right tocopies of all documents relatedto the building project. Oncompletion, make sure the builderor building surveyor gives you:

a Certificate of Final Inspection(for extension/renovations), or

a Occupancy Permit (for newhomes).

Keep these certificates along withother receipts and documentsrelating to the project.

Get adequate homeinsuranceWhether you have built a newhome or renovated an existing one,it is wise to know exactly what yourhome is worth. Make sure yourbuilding and contents insurancecovers the true cost of replacement.

Completion

Completion 41


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The Fences Act 1968(Victoria)TheFences Act 1968 (Victoria)regulates the building of fences inVictoria.

For more details, you can:

purchase a copy of the LawHandbook from Fitzroy LegalService on (03) 9417 3744 or atwww.fitzroy-legal.org.au.

refer to Victorian Consolidated

Acts at www.austii.edu.au.refer to the Victorian LawReform Committees quickguide o

consumer afffairs building guide

Documents