Contaminated Land

Discussion in 'What to buy' started by Landryn, 25th Oct, 2019.

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  1. Landryn

    Landryn New Member

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    Hi PC People

    I have come across an interesting scenario.

    I have been made aware of a property that is currently been deemed contaminated. It is a normal residential property in a good area, but the house and surrounding properties used to be a bit of a dumping ground.

    After the council conducted a few random tests in the area, a number of properties have now been deemed contaminated.

    Local council has put the properties on a waiting list to be cleaned (i.e.e replacing a couple of feet of soil).
    The impact on the property is that the value has gone from about $600,000 down to $400,000.

    There is a waiting list of about 6-8 years for the property to be cleaned (for a small fee of around $10,000) by the council.

    The question for you all - assuming all other factors in the market stay constant, would you purchase a property that is contaminated but looking to be 'clean' within 6-8 years?

    Love to hear your thoughts and if you've had any experience with this.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    So you are willing to buy land which is unusable in its current state, go on a wait list for 6-8 years on a maybe that council will remediate the land on which you might then be able to build? What if the regs for rehabilitation become more stingent? What if council no longer subsidise the rehabilitation?

    You may have to capitalise all costs of owning the land until such time as you can rent it out - eg. $2k/yr rates, water availability $1k/yr, insurance, land tax (if applicable) etc.
     
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  3. Landryn

    Landryn New Member

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    Hi Scott... thank you for your reply.

    You bring up valid points about current state vs. future state of the regulatory conditions to support this strategy.

    I should also clarify... it already has a building/house on the land, and people residing there.
    So overall - assessing if it is at all viable to enter into such a deal.
     
  4. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    I would also want to know who is legally liable if it is known to be contaminated, then if/when a tenant gets sick and wants to make a claim? Doubt council will own that part.

    How badly contaminated and with what are fairly big considerations. I have helped clients look at purchasing ex service stations before and convert to residential so this is not a new idea but the costs to clean up are LARGE and can be LARGER depending on what is in the soil and how deep.
     
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  5. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Never. Then they find asbestos. Or uranium , mercury and others dump their spoil and crap on the lot and council wants that removed first. And the trees which grow on the lot. Eventually you apply for a DA and council knows its former dirty land and wants another $30K spent on enviro consultants to prove its clean. Or tells you there is no some rare frog on the site. Or a damned Koala or native possum. If that happens you can forget the DA. And brings in some new tougher standard. Like excavating 3 metres and compacting it etc
    None of the costs are deductible. The cashflows out make it a loser.

    Have a client who owned a banana plantation at Coffs. Stopped making money and council regs made it too hard. Now its got Koalas. They can do jack. Council wants them to donate the land as a sanctuary to avoid all the costs.
     
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  6. Anthony416

    Anthony416 Well-Known Member

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  7. bmc

    bmc Well-Known Member

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    been involved in a few of these remediation sites in and around Cabarita, Rhodes, Homebush Bay, mostly lead contamination from the old British Paints factory. (amongst others, timber yards, Union Carbide etc etc.)

    sadly sydney harbour / parramatta river was an unregulated dumping ground. the industry is now gone but the tonnes of chemicals and heavy metals still remain. ever wondered why you are warned not to eat any fish caught west of gladesville bridge.

    although i still notice that the surrounding streets and residents continue to build and re-build and the prices increase.

    ignorance is bliss i suppose.

    not sure what the authorities have found in your soil, but if i had a choice, i would look elsewhere with less risk.
     
  8. Lacrim

    Lacrim Well-Known Member

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    Easier ways to make $200K than this
     
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  9. piggybackzebra

    piggybackzebra New Member

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    As someone who assisted in a litigation matter that involved a contaminated site, there is no way I would personally purchase a property that was known to be contaminated.
     
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Don't dig for worms in Iron Cove Bay either, there's enough carbon black from the Dunlop factory (now Birkenhead Point shops).
     
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  11. significance

    significance Well-Known Member

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    If I were considering this, I’d pay an environmental chemist at a local university a few hundred dollars to read the contamination report and write me a plain English evaluation of the risks involved and the likelihood of full remediation after the clean up process.
     
  12. The Y-man

    The Y-man Moderator Staff Member

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    As above, have to cost in the remediation.

    It can be done - relos did a much bigger version - bought an old petrol station and built commercial/apartment block on top,

    Had to remove tanks and basically excavate a giant hole to the boundaries. Then get clean fill.

    The Y-man
     
    Last edited: 27th Oct, 2019
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  13. Stoffo

    Stoffo Well-Known Member

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    I guess it really depends on what is planned for the site.
    If the above excavation is being done anyway for underground parking use below apartments the cost is reduced :D
    Considerably different if it is to build a 2br house with large yard o_O
    *Edit, I bought an office suite on the ground floor, it was noted in the sale documents that the site was formally a "garage" ! (as 99% of the site was removed to a depth of 12 meters it never worried me)
     
    Last edited: 27th Oct, 2019
  14. Stoffo

    Stoffo Well-Known Member

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    Generally the licence to operate also includes provision for ongoing monitoring, removal of tanks/infrastructure and remediation .

    Remediation can take years via vaccuum pumping from wells/pipping into carbon canisters, or excavation and removal for treatment (I worked on one project where the earth was dug up and run thru a furnace to eliminate contamination then compacted, and is now commercial and resi).

    I would have more reservations about the council, and the type of contamination :confused:

    If you intend to "make money" out of it, allow to pay for remediation asap ;)

    I live in a build up Sydney suburb, there has been evidence of fuel residue/contamination near the local river a klm away from the servo (under 100s of houses, most don't know about it :rolleyes:)