Buying Property For Dummies Read online

  When you’re looking around a display home, don’t assume that you’re going to get everything you see. You need to check the list of inclusions to find out what you get and what you don’t get along with your home — you may get a surprise at what’s on the list and what’s not.

  Items that are usually included: These items may include tiling in wet areas, hotplates and oven, bathroom fittings, a heating system and a hot-water service.

  Items that may not be included: Very often the dishwasher isn’t included, even though space is left for the appliance. Fences are generally not included and often neither is the driveway. Curtains, blinds and light fittings are normally not included.

  Note that many developers point out in the fine print that they can vary the inclusions and even the floor plan without notice.

  Deciding on some optional extras

  You may have to pay for some inclusions that are optional. They may include the following:

  Air-conditioning

  Carpets

  Clothes line

  Curtains or blinds

  Driveway concrete or paving

  Fences

  Landscaping

  Light fittings

  Security screens

  Wall and ceiling insulation

  As a way of differentiating themselves from other builders, some builders offer these optional inclusions as ‘standard’. Invariably, however, you have to pay extra as a result. Check whether you can add these features yourself; you may find it costs less.

  Upgrading to a better model

  Housing estate developers and project-home builders are slick operators used to dealing with hundreds of hopeful buyers just like you. While the good operators take note of your needs and suggest something that falls within your budget, many try to talk you into upgrading to a higher-end model.

  When you’re buying in an area of grand homes, feeling pressured into spending a few thousand dollars extra to get something a bit more palatial is easy. But be aware that you have to service that bigger loan, and that adding an extra walk-in robe or bathroom may stretch your ability to make those monthly repayments.

  Getting finance through the developer

  Many of the bigger developers have arrangements with banks and other lenders and may offer to arrange finance for you to buy one of their house-and-land packages. You may even still see promotions along the lines of ‘No Deposit? No Problems!’ that suggest you don’t need to come up with a deposit. These arrangements generally presume that you use your first home owners grant money as a deposit, and often also require a family member to act as guarantor.

  Taking finance into your own hands

  A house-and-land package company told friends of mine they would take care of their home loan. Based on this assurance, my friends were happy to be talked into upgrading the model and fittings on the house they had chosen, confident they would be able to get a home loan through the company to cover those extra costs. After making their choice, they were astonished to hear that the company’s finance company had refused their loan application.

  ‘We had just assumed that we’d get the money because it was being organised in-house, so we let them talk us into applying for a more expensive loan,’ they said. Taking matters into their own hands, they applied for a home loan themselves, adjusting their budget to the amount the bank was prepared to lend them. ‘At least we then knew exactly how much we could afford.’

  Instead of first choosing a home and then arranging the finance to pay for it, you may be better off getting a loan independently and then choosing a house that you can afford based on what the lender is prepared to let you borrow.

  Your Dream Home: From Plans to Completion

  You’ve picked out the house design, you’ve decided whether you want the Nova or the Heritage or the Ventura, you’ve agonised over the colour scheme: That’s the easy part. Now you’ve got to make sure that all the really important stuff — getting your home built properly, legally and to your requirements — is carried out.

  Obtain copies of the plans and the specifications, and engineer and site reports, and review them carefully. You may consider having an independent architect review them as well.

  The sequence of events is usually as follows:

  1. Builder correlates the house design with the block of land.

  Before anything else happens, the builder should make sure the design of the house fits properly on your block of land, and that the land has all the connection points for power supply, phone lines and plumbing. The builder should also get an engineer to determine the correct slab/footing system for your site, and then arrange for site clearance.

  2. You sign the building contract.

  When you’re happy with the plans and specifications, you’re asked to sign a building contract, which contains all the information about the property, a schedule of finishes and a list of appliances and fittings. This list should be quite a detailed one that includes the make and model number of each item.

  3. You wait for building approval from council.

  After the approved plans are received, you’ve arranged your finance and the builder has organised their construction insurance, construction can begin.

  4. You keep informed of progress during construction.

  Speak with either the construction manager or the building supervisor on a regular basis. If you engage a builder to build on your land, the contract specifies how the progress payments are to coincide with particular stages of the construction.

  5. You make regular inspections.

  As construction proceeds, you’re entitled to walk through your new home to make sure the finish and quality of work are of the standard you expect. Some developers contact you after settlement to check that all is in order.

  Project Building

  If you already have a piece of land, or perhaps you’re planning to knock down the property you already live in, you may want to contract a project builder to build your home. If you’ve visited a display home, the quality and the style of a certain builder’s designs may have impressed you.

  Project builders may be a little more flexible in their designs than are the volume builders that construct homes on new housing estates. Project builders tend to be more expensive as a consequence, but the cost isn’t nearly as much as it would be if you commissioned an architect to design a one-off project. The advantage of having a project builder is that you have more control over the design and the building process.

  Apart from having better control over the project, the process is similar to that outlined in the preceding section. You need to agree on a contract that covers all the inclusions, has distinct progress payments at various stages of construction and ensures that all the necessary surveys and planning is carried out and building permits obtained. (For more information on the process of building your own home, see Chapter 9.)

  Buying ‘Off the Plan’

  In one way, buying an off-the-plan unit or apartment isn’t too much different from having a house built for you, based on what you have seen in a display home. However, when you’re having a house built on a housing estate, you at least have a piece of land, and you can get a sense of the location and the kind of facilities you’re getting.

  An off-the-plan apartment is located in a building that isn’t even constructed yet (unless the apartment is a conversion of an existing building). The quality and facilities of the building — as much as the apartment itself — determines how happy you’re going to be living there.

  You can benefit from stamp duty savings in some states if you buy an off-the-plan apartment. This has long been the case in Victoria, where stamp duty is payable on the value of the land and building at the date of the contract of sale, so as long as construction hasn’t started yet you only pay stamp duty on the value of the land. New South Wales has also recently introduced an initiative under the Home Builder’s Bonus program where, if you purchase a new home off-the-plan for up to $600,000 before the start of
construction, you pay no stamp duty.

  Be aware, however, that if the sale takes place after construction has commenced, you have to pay stamp duty on the value of the work that has been completed. (For more on stamp duty, and stamp duty concessions granted to first home buyers, see Chapter 2.)

  You have a lot less control over the design and construction of a unit in a multi-unit development than you do over a house being built just for you, so getting as much information as early as possible before you make any decision is important.

  Imagining your home from a glossy brochure

  A glossy brochure, and even a display unit, can make things look great, but pretty pictures don’t guarantee that the end result is going to be an exact replica of an artist’s impression. When you buy off the plan, you must carefully read the contract and take note of the inclusions, especially of any fittings or furnishings that the contract says may vary.

  The golden fleece

  That an artist’s impression of a proposed building can be misleading was very vividly depicted in one of the apartment buildings built in Melbourne’s Docklands area. Hundreds of people bought into one building on the basis of an artist’s image that showed the building glowing like gold and towering above the horizon. When it was built, the golden exterior had somehow transformed itself into a dull brown that, as one angry buyer complained later, ‘Couldn’t even be described as bronze’. The colour was described, in fact, as a much more offensive shade of brown. Other buyers of off-the-plan units in the building complained that interior surfaces and fittings did not match the impressions from the brochure or display units. In most cases, the complaints of buyers have been dismissed on the basis that the contract made it clear that the final product might sometimes differ from that advertised.

  You would do well to get the advice of a solicitor right from the beginning if you’re considering buying off the plan; you don’t want to get involved with a dubious scheme. The companies that build large-scale developments have deep pockets and can afford to pay expensive lawyers to fend off complaints from unhappy customers.

  Finding out everything you can

  To get a sense of the kind of work the development company produces, ask if you can visit some examples of their previous apartments. You can learn a lot about their approach to design and, most importantly, the quality of their work just by opening and closing a few doors and windows and knocking on a couple of walls. If the apartments look poky and poorly laid out and the materials feel flimsy and cheap, don’t bother.

  Apart from the slick design and stunning views the brochures show you, other factors are just as important. Look out for the following when considering an apartment:

  Air-conditioning: In some developments, air-conditioning is provided on a floor-by-floor basis rather than to apartments individually. The floor-by-floor system isn’t great if you have to share your air with a next-door neighbour who smokes, or you’re confronted with the smell of boiled cabbage in the hallways.

  Body corporate or owners’ corporation fees: These are annual fees that cover the cost of maintaining any public areas such as lobbies and lifts, as well as swimming pools and gyms, and the cost of security guards and concierges. The fees can add up to several thousand dollars in some developments, so you would be wise to find out beforehand to avoid unpleasant surprises.

  Car parking and storage: While most large-scale developments have a basement car park, don’t take it for granted. Check how many spaces you’re entitled to. If you’re a two-car family, or you’re living with a friend, you need spaces for both cars. Also check additional storage options. Given the compact size of many apartments, having access to storage — often in the form of a storage cage in the basement or car park — can be a great way to store larger items. Also check on security in the car park.

  Neighbours: You’re going to be living in fairly close proximity with others in your building, so you want to know whether they’re the kind of people you could live with. Have a look at the brochures for clues on whether the building is aimed at young groovy types, or whether the marketing material is targeting busy professionals who may not be interested in sharing the time of day in the lift.

  Privacy: Can people see in easily, either from the street or from other apartments? Are you expected to provide your own curtains or blinds?

  Soundproofing: One of the biggest complaints about apartments is the lack of soundproofing. There’s nothing worse than being forced to listen to the more intimate aspects of your neighbours’ lives. Ask the developer how well the building design deals with the issue.

  Views: One reason to buy into a high-rise development is to get a great view. However, make sure you really are getting the view you assumed was yours, and that you’re not going to be looking out at the apartment block next door. Also do some research with the local council into proposed developments nearby to make sure your stunning water view isn’t built out in years to come.

  Chapter 9

  Building from Scratch

  In This Chapter

  Choosing the perfect block of land

  Finding the right designer

  Moving from drawing board to building site

  Building your dream home

  The ultimate goal in life for some people is to build their own home on their own piece of land. Not a house-and-land package, nor a project home or someone else’s idea of what a home should look like, but their own custom-built home, built to their requirements and using their ideas.

  You can build your own home in one of three ways:

  You can engage an architect to design your home to your specifications and project-manage the actual construction, organising all the administration and coordinating the builders and tradespeople right up to completion.

  You can design the home yourself, with the help of a draftsperson if necessary, and engage a builder with whom you coordinate the tradespeople.

  You can design and build your own home yourself, with a little help from your friends if you have a high level of technical expertise or know people who do.

  Building your own house can be enormously rewarding and enormously challenging, but you need to be prepared to put in the time and money. In this chapter, I discuss all the factors you need to take into account when making the decision whether or not to build your own home.

  Starting with a Block of Land

  Much the same criteria apply to finding a good block of land as apply to buying a home (refer to Chapter 5 for advice on finding the right home). You want somewhere you’re not only happy to live but which also grows in value over the years. Finding the right block isn’t just about falling in love with a particular piece of land; you need to consider how well the location serves your and your family’s needs. Does it have the kind of facilities you’re going to need over the years, such as shops, schools, sporting facilities and access to public transport?

  If you’re buying in the country or an area that is newly established, be mindful of how much it is going to cost to connect the block to water, telephone, electricity and gas, as well as the sewerage system.

  Don’t take a selling agent’s word that you’re going to be able to build where and what you want to. Check with your local council whether you’re restricted in any way in building a home on the block you have in mind. The following are examples of some not uncommon situations:

  Check out blocks in areas that seem well established but may have restrictions on the size and number of bedrooms that are allowed. You can pay a fortune for some coastal blocks, for instance, only to find that a limit of two bedrooms is in place on the block because of septic tank systems.

  Find out what the council’s regulations are concerning new buildings when you’re thinking of buying in a rural or newly established area. Some blocks are zoned rural and strict rules apply to them, such as how close you can build to other dwellings.

  Find out whether any heritage restrictions apply in an area, which could prevent you from building that u
ltra-modern townhouse you dreamed of. (Refer to Chapter 6 for information on heritage restrictions.)

  Look out for possible caveats or covenants on the land if you buy a vacant block in town — they may prevent you from building more than two storeys, for instance.