Dual occupancy in a double storey house

Hi All:

I am newbie in property investment. I recently bought a large double storey house in Castle Hill NSW. The vendor was joint owners. They were actually two sisters with their own family. Since I bought the place, without much knowledge that it might breach certain council regulations, I did a subdivision of the house. Basically, I separated the top and bottom level and lease them out separately. Each level have their own entrance and kitchen. (new kitchen was added upstairs). Today, I just got a phone call from Council saying they had a complaint and will need to inspect the property. and he was telling that I can't lease the house to two household. Since I had spent almost 50k doing the renovation. is there any way of rectifying this situation at all? and who to contact? Thank you all in advance.

 

Did you bet any guidance on BCA compliance issues?

What fire and noise separation have you installed?

Are smoke detectors interconnected?

Did you get it certified by a private certifier?

How to rectify - terminate one or both leases and remove the 2nd kitchen etc.

 

Hi Scott:

Thanks for the reply.
It is a double brick construction with concrete slab throughout (between ground and level above). The only thing I did to separate upstairs and downstairs was to install a wall next to the stairs. I had also install wireless smoke alarm for both upstairs and downstairs. They are just the cheap ones from Bunnings which operates individually.
As I was new in the property game, didn’t think it was a problem too much...
is there gonna be a massive fine for it if council finds out when he does the inspection. I don’t intend to lie about it cos it is pretty obvious there are two houholds living there. What are the possible ways to get the issue resolved?
Don’t think I can get the tenant out in such short notice. Also I can’t force them out as they just started recently as well.
Stressing out big time now...

 

Consult a town planner and a building certifier - you will generally have buckleys of getting one up/one down approved.

 

Unfortunately you have spent $50k doing something illegal.

It is not illegal to have 2 kitchens in a house but it is illegal to convert a dwelling into 2 properties without complying with the Building Code of Australia (BCA) and local town planning laws and have 2 separate parties/2 leases.

At the very least you are not insured for what you have done. If Tenant A has a fire and it spreads to Tenant Bs area you are liable for everything and insurance will cover nothing.

If the council determines that it doesn't meet the BCA and/or contravenes their town planning laws then you will have to terminate the leases. I suspect you are self managing as it's likely a PM would have asked for documentation to support the ability for the house to be rented to 2 parties. Unfortunately for your tenants they will have to find somewhere else to live.

After the leases are terminated you might be able to find a large family who would appreciate the set up - perhaps a multi generational family.

 

This is a giant problem. I'm surprised none of the tradies doing the work even mentioned it (or maybe I shouldn't be?). Some very good advice above. I think if you're honest with the council you may get away without a fine but they will almost definitely force you to revert it to its original condition.

One of my other concerns is that you've now entered into contracts with two different tenants into what is essentially an illegal dwelling. In addition to the aforementioned insurance problems etc., you're also going to have to try and terminate one or both leases. If the tenant doesn't agree you'll have to go via the tribunal and I assume this might result in a range of break costs to enable the tenants to relocate. Personally, I would be most worried about an insurance event though - if there's a fire and anyone dies, you will have no P/L insurance and could be up for literally millions.

Had you told anyone what your plans were before or during the renovation? Even being new to property investment, most people have a general knowledge that DA approvals for works is required by council even for minor things such as pergolas etc. Surely someone made mention of contacting council or a company for guidance before committing to such a large amount?

 

Did you get council approval for the renovations?
If not, why not?
Marg

 

Because the tenants pay cash?

 

You must terminate one tenancy immediately. You are renting illegally which means your insurance is probably voided and won't cover you in the event of any loss.

Plus you face fines from the Council.

The illegal tenancy is your fault. To avoid further problems with the Tribunal, you would be best to offer compensation to the tenant to persuade them to leave. As you have signed a lease, you are in a tricky situation as the tenant can refuse.

I reckon you are looking at a $5K to $10K incentive. Approach both tenants see who will go for the lowest amount.

If both refuse you are in a world of trouble.

These are the consequences when you break the rules we all must abide by.
Marg

 

And separately.....

Do these meet regulations for smoke alarms in a rented dwelling?
Marg

 

I think you've potentially got yourself in an extremely precarious situation.

Although many of the members here would like to help, we just don't have enough information from your write-up to give you good advice, and what you need right now is solid professional advice specific to your situation, ASAP.

The result could be any number of outcomes, e.g.
- Fully compliant.
- Small changes needed for compliance.
- Building approval needed.
- Material Change of Use needed.
- Changes totally illegal.
- etc.

If the property is illegal and you have an issue, your insurance will very likely not cover you- leaving you up for MILLIONS, and it is more than likely to be millions in event of major personal injury.
____________________________________________________________________________

@Meristone, do you know anyone who can help with compliance and approvals down your way?

 

Your situation although illegal and risky, is probably not that uncommon to the council. Ideally you need them to approve you for dual occupancy and ensure you meet BCA, but I believe it's rare these days.

If you're honest to the council, I think they will probably not fine you, but give you a set time to rectify the situation. You can then ask them if there is any chance of dual occupancy approval. In the meanwhile if you terminate one of the leases as suggested it will greatly reduce your risk. Explain your situation to the tenants and help them find somewhere to live.

Alternatively you can consult a private certifier for advice on BCA compliance, I can recommend Darren Ball & Associates in Sydney.

 

I live in the Hills too, and have dealt with them for various things. For the most part they're pretty good - just be totally honest and show that you're working to rectify an issue you weren't aware of.
Don't try and buddy up to the council inspector, but be very 'yes sir, no sir, I'm sorry sir'.

 

All above is great advice. Try and get a letter from council outlining what they want and what options they would accept?
I am doing a similar one at the moment and the council letter stated that the 2nd kitchen must be removed if it is to be returned to a single dwelling, however they also left the door open to retrospective approval. This particular case was an attached secondary dwelling to the main house but some principles would apply.

 

How big is the smaller of the two dwellings? If one is less than 60m you may want to see if it meets the criteria for the Affordable Housing State Environment Planning Policy (SEPP) to be classified as a secondary dwelling.

Regards,

Jason

 

Thank you all for great advice above. I guess I had myself to blame as I was not thinking about the potential issues with council. I should have checked with them.

To apply for dual occupancy is out of question as the house had already got a granny flat on it.
I was just confused that while previous owner can have two family living in there, why I couldn't lease out to two families? I guess I shouldn't just follow what was done before.

The problem with leases are that they just commenced... would the council force the lease to end immediately??? also would I need to return everything to original condition???

Does anyone on this forum know someone who is capable of dealing with The Hills council on this particular matter at all as I don't want to say something that might turn out against myself down the track when he holds the inspection this coming week?

thank you all in advance.

 

Maybe check with council to see if the granny flat is council approved, would be a shame to assume that all is OK, we all know how that can end.

 

You said the property was previously occupied by sisters. These are related parties. And since they jointly owned and occupied the property the council laws may be different to rented properties.

Your problem is that you rented to two SEPARATE families on two SEPARATE leases.

If you had rented the entire property on a single lease to related family members then you may have been OK, depending on local council definitions.

In some councils you cannot rent a granny flat separately to the main house, whereas other councils permit it.

And if you have rented out the granny flat, you have THREE separate families living there.

And yes, if the use is illegal then the council can force you to comply with laws. How you achieve that is your problem. Your bigger problem is with your insurance.
Marg

 

I think if the kitchen is for yourself you can install a second kitchen.

However, if you have two groups. there needs to be separation material like steel plates in between. if lower floor goes on fire upstairs can't be affected.

I am not sure. You will need to contact the council to confirm the requirements. Good luck, hope everything works out for you OP.

 

I think you are the best person to meet the council inspector - be respectful and honest and explain that you genuinely didn't know. They will likely only make you remove the elements that turn it into a dual occupancy - the wall separating the stairs and probably the second kitchen.

They won't step in to deal with your tenancy - that's an Office of Fair Trading issue. I think if you explain to your tenants the council's decision (show them the letter as the council will put it in writing once they make a decision), explain that you will complensate for their moving costs and maybe some free rent, write them a glowing reference and help them find something similar, they will understand.