Your home is likely to be the largest investment you make, so when it comes to renovating, you want to make sure you make the right decisions at each stage of the process. This avoids costly mistakes, protects the value of your investment and ensures your new home is everything you want it to be!
Here are the most frequently asked questions we’ve heard from renovators over the years:
What should I do first to organise my home renovation?
It all starts with research! Researching your project before you decide to go ahead will assist in the smooth running. Next is know your budget. Once you have your budget in mind and your finance available then you can progress to the design stage. For any project of more than $10,000 (including labour and materials), you may need an architect, designer and /or design draftsperson. Your engaged architect, designer and /or design draftsperson will then provide details of the approval process and arrange for your project to be submitted to your local council.
Can I DIY my home renovation?
Aside from budget and time, the most important factors to consider when deciding whether to DIY your renovation is your skillset and safety. Some work such as painting, bench-top resurfacing and minor demolition work (removing floor coverings and changing flooring) are all safe and fairly simple to do yourself. However, when it comes to electrical or plumbing work, you could be legally bound to go pro to avoid problems during the process and with the final product, which you and others have to live with.
What is the difference between a Registered Builder and Contractor Tradesmen?
A registered builder will project manage your home renovation or home extension project to ensure that the assigned team of tradesmen are licensed, skilled, punctual, work efficiently, produce high quality workmanship and provide a 7 year guarantee on that workmanship.
Your builder must:
- be registered in the relevant class and category for the proposed work and use a major domestic building contract if the cost of the work is more than $10,000
- take out Domestic Building Insurance if the cost of the work is more than $16,000
- complete your building project to the standard and quality of work required by the building regulations and your plans and specifications
Domestic Building Insurance only covers defects in limited circumstances.
How do I appoint a building surveyor?
A builder who enters into a major domestic building contract, or a person who acts as a domestic builder for building work, must not appoint a private building surveyor on your behalf. Similarly, a private building surveyor cannot accept an appointment from a builder on your behalf. A builder may recommend a private building surveyor, but you’re free to appoint a private building surveyor of your choice. You can also engage a municipal building surveyor to act as your building surveyor.
A building surveyor is professionally trained to understand the building permit process. Building surveyors are responsible for checking that the building documentation and work complies with the building regulations and standards
What kind of contract will I need with my builder?
Regardless of the cost of the work, we always recommend using a written contract. This ensures both parties are clear about the terms of the contract and their obligations.
For work worth up to $10,000, a contract should include:
- the date the contract is effective (this is the date on which both parties have signed)
- a start and finish date for the work, with allowances for delays
- a plan and specifications (detailed description) of the work to be done, including references to any Australian standards that apply
- the make and model number of any fittings such as ovens, tiles or tapware, and who is responsible for supplying these
- details of how variations to the contract may be made
- labour costs per hour; and per person if more than one person will be doing the work
- any insurances or warranties that may apply
- details of what happens if you cancel the contract, including any cancellation fees
Look very closely at any long-term ‘guarantees’. These can sound attractive, but may not be of any benefit if the business is later sold or closed. Check carefully what they cover.
What do I need to check before I sign a major domestic building contract?
- the builder is registered with the Victorian Building Authority (VBA) by using the building practitioners search on the Victorian Building Authority website
- the domestic building insurance policy, and that your builder is eligible to purchase domestic building insurance, by using the Builder Search on the Victorian Managed Insurance Authority website
- the procedure for changing the plans and specifications
- you’ve only agreed to pay progress payments for work already completed
- you’ve had enough time to thoroughly review the contract
You automatically have rights to visit your building site. Before you sign, it’s recommended you:
- delete any clause in your contract that limits your rights to visit your building before you sign
- get a building lawyer to review your contract before you sign. The Law Institute of Victoria has a referral service that can help you find a building lawyer
Check these costs are included in your contract price:
- the building fee, which may or may not include the cost of mandatory inspections by the building surveyor and may vary between companies
- planning permit fees (if your council requires a planning permit)
- lodgement fee paid to the local council for recording purposes
- crossing deposit or asset protection fee paid to the local council and refundable at the end of the project, if no damage has occurred to council property
- inspection fee, a non-refundable fee paid to the council for the cost of their inspection of council assets
- government levy charges when the contracted cost of work is more than $10,000. There are three levies based on the total cost of your building, which also apply to owner builders. Your building surveyor can advise you of these costs.
What are variations to the contract and when will they apply?
Variations occur when you change the specifications, plans or scope of works. If this results in project costs increasing or the project taking longer, then this is classed as a variation to the original contract. All variations should be detailed and priced in writing by your Registered Builder/Licensed Contractor and then signed by both of you before the work starts. It should then be attached to the original contract.
When does the contract start?
Builder’s contracts usually commence the day you sign the contract. This is called the “Contract Date” but it may not be the starting date for your project or the date by which the building time is calculated. The starting date (commencing date) is usually the first day work is performed on your site.
The contract finishes once the premises are safe for occupation, a Certificate of Final Inspection has been issued by your local council or private certifier (if required), and of course that you as the owner you are happy with the workmanship that has been completed.
What insurance does a Registered Builder and Licensed Contractor require?
All Victorian Registered Builders and Licensed Contractors undertaking domestic building work beyond $15,000, must provide both insurance for the contract works undertaken and public liability insurance.
What are Prime Cost items?
A Prime Cost (PC’s) is an agreed, reasonable estimate for materials (fixtures and fittings) which you may not have selected at the time of entering into the contract. Usually, PC’s are one-off items, however they can relate to a large number of items when the labour cost remains constant. Examples may include kitchen and bathroom items.
What are Provisional Sum items?
A Provisional Sum (PS’s) is a reasonable estimate for material and labour of a particular part of the home which the builder cannot give a definite price for. The reason being the owner had not decided what they want at the time of entering into the contract. Examples are pool and landscaping.
Does the builder need to provide evidence for increases in Prime Cost and Provisional Sum items?
The builder is required to quantify the extra claim if requested by the owner. That is, to give evidence of the cost of a prime cost item or a provisional sum item when claiming payment for that item.
What is Warranty Insurance and what does it cover?
Warranty insurance in some states is called Statutory Insurance or Home Indemnity Insurance. The insurance coverage varies widely, depending where you live. In most states, except Queensland, it is considered as “last-resort insurance” and only covers situations where the builder abandons the work for reasons of death, bankruptcy or injury. In other states, like Queensland, the insurance covers the owner against major defects to the work for a period of six years and six months.
Warranty insurance should not be confused with Contract Works and Public Liability Insurance, which is sometimes called Builders All Risk insurance. This insurance covers fire, damage, theft and injury during the construction period while the builder is in possession of the building site.
What is the dispute resolution clause for and how do I make use of this?
Most home building contracts contain a dispute settling procedure. In some states parties have no option and are referred to a government sponsored Tribunal (people’s court) where dispute settling clauses are permitted, the parties are given a number of options to choose from to settle their dispute. In Victoria, this is VCAT (Victorian Civil Administration Tribunal).
If you enjoyed these Frequently Asked Questions, you may also be interested in our FAQs for Property Investors.