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Carrying out renovations [Nov 2008]

Article Source: New Zealand Herald Article Date: Nov 2008
Contact Person: Tim Jones Legal Area: Property & Real Estate

The property market at the moment is in a state of some uncertainty.  Many clients have approached us saying that they may take their property off the market for the time being and renovate rather than sell and purchase another property.  In the somewhat uncertain times renovation may well be a viable alternative to buying a new and different house. 

 

However there are some issues about renovations that all homeowners need to be careful about.  Not only should homeowners be careful as to how they go about organising a builder having plans drawn up but they should also be sure that they have all of the correct statutory compliances in place both before they get the work started and when the work is completed. 

 

Therefore I thought it might be useful to set out a series of suggestions to any homeowner who is looking to renovate. 

 

So the issues that you should consider are as follows:

 

1                     Apply to your Territorial Authority (TA) for a Project Information Memorandum (PIM).  This will help you to identify issues relating to the type of renovations you want to carry out and any specific features that the TA will require you to comply with. 

2                     Do you need a resource consent as well as a building consent.  This needs to be checked with the TA as well.  Many TAs will not let you use your building consent until you have got a resource consent if you need one to carry out the renovations. 

3                     Have a professional set of plans drawn up as this will give the TA full details of what you intend to do, it will speed the process of getting your building consent and it will make the builder’s quotation against those plans and specifications much more accurate.  Also when the builder comes to carry out the work they will have more details about how they complete the work which will ensure a far better job.

4                     Always chose a builder who is recommended.  Some have certification from various organisations such as a Master Builders Association.  In the near future builders will need to be registered through the Department of Building and Housing as part of the new registration regime under the Building Act.

5                     Where possible get at least three quotes for the work and be sure that you know what the builder’s quote is based on and what is included and what is excluded from the builder’s quote.  Very often a builder will give you a letter of quotation in which they will specify the work quoted, extra work required, work excluded and estimates for work that they cannot in fact quote for until the work has started. 


6                     Apply for a building consent – very few structures are exempt from building consents under the Building Act.  Don’t be talked out of a building consent process as it may come back to haunt you later.  Any reputable builder will be sure to insist that you get a building consent or may in fact include the application for the building consent as part of their work. 

7                     Preferably have a building contract prepared but at least have an agreement with the builder as to staged payments as the building work goes along – called progress payments.  Never pay a large percentage of the building contract price up front. This applies to any work: big or small.  Always pay progress payments and be sure to keep enough money to complete the work should the builder fail to complete for whatever reason.

8                     Never pay the final payment until you are satisfied the building work is complete and if need be get somebody independent to check it for you.  At the very least be sure that a Code Compliance Certificate is issued by the TA first.

9                     If you are borrowing money to do the renovations most mortgagees will require to see the building contract, the building consent, will insist on progress payments out of the mortgage funds, and will not release final funds until the Code Compliance Certificate is issued.  This is often a very valuable additional protection.

10                 It is often wise to speak to your neighbours to tell them you are about to do some renovations.  Even if they don’t have to consent under a resource consent application it is always neighbourly to let them know there will be contractors coming and going, parking in the street, delivery materials and building noise at all times of the day.

It never pays to take shortcuts when doing renovations.  If you do and you try to resell your house in the future the lack of a building consent or a Code Compliance Certificate will certainly have a detrimental effect on the resale value and the saleability of the house.  Any number of clients have fallen foul of this particular point.  Often we don’t find out about it until the purchaser does a LIM to find that the building work that was carried out did not comply with the Building Act in some way or another.  It is very difficult to get a Code Compliance Certificate sometime later. 

So in summary plan ahead, talk to the TA, get a reputable builder and pay as the work is done.  In the end ensure you get all final certificates from the TA.  In the end the renovations can only increase the value of the house for later resale.

For more information contact Tim Jones at .(JavaScript must be enabled to view this email address)

 

The contents of this newsletter are of a general nature only. While the information is believed to be correct no responsibility is accepted for its accuracy. Readers are advised to establish the applicability of information in relation to specific circumstances and not to rely solely on the text of this newsletter.

 



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