Limit on amount of owner builds?

Discussion in 'Legal Issues' started by LouLou7, 8th Aug, 2017.

Join Australia's most dynamic and respected property investment community
  1. LouLou7

    LouLou7 Well-Known Member

    Joined:
    29th Jan, 2016
    Posts:
    71
    Location:
    Perth
    I was wondering the same. I think WA you are allowed to do one every 6 years. It seems to be less time in other states.
     
  2. LouLou7

    LouLou7 Well-Known Member

    Joined:
    29th Jan, 2016
    Posts:
    71
    Location:
    Perth
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    I would think trying to operate as a OB rather than a licensed builder exposes a number of major concerns. Its like suggesting you can give dentistry a crack as you may be OK at it too. Kinda like an ibrahim applying for a license to make medical grade narcotics.

    All the tax issues surrounding income tax (no CGT), GST and the like may also be other issues. Then there are issues with personal liabilities and managing financial risks and asset protection that invariably may need addressing.
     
  4. bob shovel

    bob shovel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,935
    Location:
    Lower Blue Mountains
    dont start applying barriers to such a young child! the world is their oyster! ;)
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    A friend of mine did a OB and encountered hell as land was in his wifes name and he did the build after they both did the TAFE OB course. But permit was issued to her...She had no involvement....Basically ... tell me when its finished !! . They almost got to the point of council insisting on demo of frames when common sense prevailed. Council didnt like that he managed the build and permit was her name. They allowed the permit to be revised to dual names meaning he was named.... They were fine with that.

    Apparently the rule in NSW (and many other states) extends to spouses anyway. So if permit is in one name that person MUST be the OB and their spouse cant build for 5 years. Varies from state to state a little.

    If they sell within "x" years they have to declare that its a OB project and apparently agents told them to expect inspectors to seek faults to knock price down. Apparently there are two types of OB jobs - Good ones and bad ones that are really really bad. He isnt worried as all work was done by good contractors and he did most of the electricals and had a independent contractor advise him as a double check. That time runs out this month so they are thinking of selling as they have outgrown the acreage.
     
  6. Skilled_Migrant

    Skilled_Migrant Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    796
    Location:
    Melbourne
    Same in VIC. Spouse goes on the application.

    Council is being unnecessarily picky in insisting on management by the OB. Just the responsibility (and some extra ones as well being OB) is with OB who can choose to outsource project management. In VIC you could (4 years back at least) nominate a project manager.

    The other issues can be mitigated by hiring private building surveyors instead of usual council ones and making contractor payments conditional to a satisfactory survey. Nominal costs for legally accepted advice and inspections which goes on file.

    Would be interesting to know the legal position on concurrent interstate OB builds? In VIC the qualifying criterion is "intend to live" which by definition is not binding, and you could live elsewhere post OB build on change of circumstance.
     
    Last edited: 9th Aug, 2017
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,927
    Location:
    Australia wide
    I don't know if there are any restrictions on spouses doing this or not. You will need to seek legal advice or do your own research to find out.
     
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    I believe in NSW where a person is a OB then their spouse is precluded for five years....Legal advice on "owner" may be required.

    • all other owners of the land for which an owner-builder permit may apply must also be listed - these other owners will not be able to apply for another owner-builder permit relating to different land for 5 years.

    Loads of limits to OBs in NSW...Single storey, houses only. Warranty insurance is still required by a contractor if $20K of contract work is done....They may not like that. The 7.5 year rule....etc....
     
  9. JohnPropChat

    JohnPropChat Well-Known Member

    Joined:
    10th Sep, 2015
    Posts:
    2,293
    Location:
    Middle Earth
    I know of someone who used someone else builder license to build it themselves. The Builder would come every now and then to sign-off on things for a fee ofcourse. Probably less hassle this way than full owner-builder.
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,927
    Location:
    Australia wide
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    Actually no mention of what happens if the spouse owns land. The problem my friend encountered was when the permit was in his name but they both owned the land. The permit was issued to him and then council realised land was in both names.. They baulked and refused to give certification to one of the stages of the build (framing I recall)

    The permit had to be reissued in both names. I think thats how they get around the issue so couples dont try to do two in 5 years by splitting between each name not they were trying...But I see no issue if HE owns a property and she does too. Maybe ?. Permit must b in owners names not just the person who is OB according to Hills Council at the time
     
  12. Bonz

    Bonz Well-Known Member

    Joined:
    23rd Oct, 2015
    Posts:
    144
    Location:
    Fremantle
    One every six years I believe. As an owner builder you will need to do a 2 day course to get the licence and if you sell within the six years you will need to get housing indemnity insurance for the balance of the first six year term. This requires obtaining an engineers sign off that the structure is sound.

    QBE I understand are the sole housing indemnity insurers in WA now. I would check what their attitude is to insuring ownerbuilders and the premium.

    That said all doable.
     
  13. Ghoti

    Ghoti Well-Known Member

    Joined:
    10th Jun, 2016
    Posts:
    314
    Location:
    Melbourne
    Going through this at the moment. Demolishing back half of house then extending so final result will be approx 40% larger than original.

    Will be applying for OB registration over the next week and I need a Stat Dec from the other owner (my wife) agreeing to me being OB.

    Only just started with permits...we'll see how it pans out. PPOR and certainly intend to live in it.
     
  14. LouLou7

    LouLou7 Well-Known Member

    Joined:
    29th Jan, 2016
    Posts:
    71
    Location:
    Perth
    Thanks everyone for your comments.

    So in order to renovate (Over a certain limit) or build from new more than the allowed time frames you would have to become a registered builder? I hear people renovate/sell one after the other - in theory these would have to be registered builders? Surely not everyone that does this is..
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,225
    Location:
    Sydney or NSW or Australia
    Maybe they engage a builder or someone with the appropriate licence and insurance.

    Builder's should avoid touching OB sites for fear that their licence will be tied to an inappropriate project (so too licensed project managers).