29 April 2019

How Owner-Builders Cut Construction Costs and Save 1/3 of their Budget

There are cases when owner-builders save 10% up to 35% of their budget. A lot of people want this, but sadly, it’s not for everybody.
How Owner-Builders Cut Construction Costs and Save 1/3 of their Budget

According to the Housing Industry Association (HIA), the average cost of building a new home is $286,843. That is a massive amount of money. But, what if we tell you that can save one-third of the construction costs by managing the project yourself? Would you be interested? Of course, you will. Owner-builders can cut construction costs and save money even without swinging a hammer. A lot of people want this, but this isn’t for everyone. The question is, do you have what it takes?

The role of owner-builders

Owner-builders take on the responsibilities of a registered builder. As an owner-builder, your job involves the following:

  • Supervising the construction from start to finish
  • Coordinating and managing various trades
  • Ensuring the safety of the building site as mandated by the Occupational Safety and Health Act 1984
  • Obtaining all necessary permits
  • Submitting all required notices
  • Complying with the Building Code of Australia, and
  • Meeting the requirement of the Building Services Acts

You are not required to do construction work, but if you want tasks to finish earlier, you can lend your workers a hand.

The benefits of doing it yourself

We’re not gonna sugarcoat anything. Being an owner-builder is a daunting task, but it’s worth it because you can reduce the total cost of construction up to 35%.

Just imagine the amount of money you save because you manage your own project. You can use this to improve your home’s interior design and landscape.

Apart from cutting costs, owner-builders get to build their homes the way they want to. It’s nice to have a sense of control and have room for a little creativity. Also, the choice of builders is limited especially in the regional areas. There are times when the homeowner can’t find the right builder for their project and ended up managing the project themselves.

Who can apply

Only individual property owners may apply to be an owner-builder and acquire an owner-builder certificate. All individuals on the property title must be included in the certificate. You must acquire this certificate first before anything else.

Only one certificate is given per block of land. The certificate lasts for three years and is renewable for another three years.

You can only hold one owner-builder certificate at a time. You can’t apply as an owner-builder of another property immediately. You must wait for six years from the issue date of your first owner-builder certificate.

An owner-builder certificate is not a building permit.

Who can’t apply

This is not for companies or businesses wanting to build. (Sorry! You really need to find a builder.)

If you are registered as a residential contractor, you do not need to apply or register as an owner builder.

When do you need the permit

You must have your owner-builder certificate when your project costs $12,000 on all the following types of buildings:

  • Class 1a buildings like a single dwelling or detached house
  • Class 10 buildings like garages, carports, sheds
  • Retaining walls that support a Class 1a or Class 2 building
  • Extensions where you increase the floor space

The construction, extension, or renovation of complex buildings like duplexes, townhouses, flats, and units can’t be done by an owner builder.

What does it take to be an owner-builder?

Applying for an owner-builder permit is easy when you have taken an approved course prior to your application. All applicants must have an understanding of the building process. Better if you have a background in construction.

More than the mandated requirements, a great owner-builder must have impeccable organisational and problem-solving skills. You must be able to manage your own build. If the work becomes too overwhelming, seek assistance from someone with a construction background.

Budgeting is also also a skill you must master. This is the most challenging part of being an owner-builder. Unless your finances are unlimited, budgeting is a real struggle for owner-builders.

Is the hassle worth it?

It depends on the situation. If you have a full-time job and you’re required to work eight to nine hours a day, then managing your own build will be tough. Get help from someone who can manage the construction while you’re at work. Or, scrap the owner-builder idea and ask your designer for his/her recommended builders.

However, if you have a flexible job and you have most of the day to work on your home project, this experience is worth it.

Final pieces of advice

Before we end this blog, we just want to give you five important tips that will help you survive your owner-builder project. The more you know, the more prepared you are to tackle this.

  1. The owner-builder permit is not the same as a builder’s licence, but owner-builders take on many of the responsibilities of a registered builder. An owner-builder is legally responsible for ensuring all sub-contractors are licensed and insured. An owner-builder must provide everyone with a safe working environment as well.
  2. As the owner-builder, your work is mostly supervisory. Make sure that all the tradies come on time. Make sure that all deliveries are complete and on time. Above all, make sure that all workmanship meets a certain standard. You must be keen on the quality of their work.
  3. It’s difficult to secure a construction loan when you manage your own build. Most banks only lend 60% of the land value plus construction costs. If you don’t want to have troubles with financing, we recommend engaging a licensed builder.
  4. Never buy fixtures and fittings that you can’t install during the early stages of construction. You can buy these on a later date. Spend money on your priorities on every phase of construction.
  5. Most lenders don’t approve construction loans of projects that already started. So, don’t start construction until your loan is approved. Once you have the funds, budget it well and try your best not to run out of money.

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