Why you should think at least twice about becoming an owner-builder

I was reading a renovating forum recently and the topic was owner-builders – the pros and cons. The original poster wrote, “Hey there, I did my recent renovation/extension as an owner builder, and all I got was “you will regret it” type comments from friends and families. As it turned out, we had a good experience – yes there were some issues – but the feeling of control over what happened throughout the job was great. I’ve had friends who have employed builders for their jobs and still had problems! What have other people experienced?”

While this guy had a great experience and I’m super happy for him, one of the things to be careful of when you’re an owner-builder is that you don’t know what you don’t know. It’s one thing to get three quotes from tradesmen but it’s quite another to know whether you’re getting quality workmanship that is being built to Building Code of Australia standards and manufacturer’s instructions.

Becoming an owner builder is relatively simple – basically you take an online test and pay between $171 and $250 – and then you’re ready to go with the building of your dream house or renovation. However, before you push the big green button and reach for a crowbar, there are some things you should consider.

An owner-builder permit is designed to allow people who have the skill or capacity to build their own house or supervise construction by coordinating appropriate sub-contractors. While an owner-builder permit is not a builder’s licence, as an owner-builder, you are responsible for the building work as a fully licensed builder would be.

A licensed builder has been educated in all aspects of building and supervising trades and quite often was a licensed carpenter or other tradesman before they became a builder. They know the difference between quality workmanship and shoddy work and they are very aware of their legal obligations with regard to all the work that is undertaken – it’s their business, after all. Think very carefully about whether you have the skill and capacity to take on the same responsibilities as a licensed professional.

Really important to note is that as an owner-builder, you are not insured by the Home Building Act 1989. What does this mean? Licensed builders are covered by the Act, which means that defects are required to be fixed within about six years of work being completed. Owner-builders are not covered by this and if you try to sell your house within 7 ½ years of a permit being issued, that must be noted in the contract and any solicitor will advise their client to think extremely carefully before purchasing a home built by an owner-builder.

Why are owner-builders no longer covered by this legislation? Quite frankly, they were costing insurers too much money by building homes that were riddled with defects that had to be rectified. A little over two years ago, the insurers and NSW state government decided they were too much of a liability.

Real world example – about five years ago a friend of ours purchased a semi that had been built by an owner-builder three years earlier. There were a number of major defects that needed to be rectified across both properties (water-proofing, cladding, a collapsed driveway, illegal wiring) – total bill to the owner-builder was over $300,000. Which we can safely assume would have knocked out any profit he might have made. Not to mention that it was really painful for our friends and their neighbours.

The NSW Fair Trading website is a good place to start learning about your responsibilities as an owner-builder, but that’s really just one side of it. The other is whether you are capable (from both a time and knowledge perspective) of supervising the building of your home – are you confident that you know whether bathroom waterproofing has been done correctly? Are you aware that bricklayers charge more to go around corners? Do you have any leverage with tradesmen who will be doing this one-off job for you?

Being an owner-builder may be the right option for you but please think carefully before that first wall is demolished. There are plenty of ways you can be involved in your home building or renovation project, without taking the whole thing on yourself. Tradies and unfortunate home-owners all over the country have many stories to tell about owner-builders who got it wrong.

Have you been an owner-builder? Is it something you’d consider? Is there an aspect of your building project that you’d especially like to be involved in?