4 Must-Do's Before Signing Up To Your New Build
Has the home build and reno mania that has swept the world of late left you dreaming of a brand new home? We are bombarded with telly programmes and images of ‘Pinterest worthy’ homes and rooms these days which are enough to make any amateur house enthusiast swoon. The property-obsessed lawyers and consultants at Movest have been lucky enough to be involved in many build projects, and have learnt a lot along the way. If you have decided it’s time you got in on the new home or reno action, here are some of their insights to help you choose the right builder and to consider before signing the build contract:
Do your homework on the builder before you commit
There is nothing worse than being trapped in a relationship with someone you can’t stand. Add hundreds of thousands, or even millions, of your hard-earned dollars to the mix and you could be living in hell! A good relationship with a builder you can trust is essential for a positive build experience. Ask to see other houses they have built. Are they certified builders? Talk to other owners about their experiences. “Google” your builder. Check the Companies Office website and the Insolvency Services website to see if they have had any companies that have been struck off in the past or been bankrupted. Lastly, (and possibly most importantly), trust your instincts! If something doesn’t feel quite right, don’t just sweep that feeling under the new carpet so to speak.
Aim for a fixed price, and budget a little extra
A fixed price build contract means that the builder will take the risk of price increases on materials and makes budgeting for your build a breeze. It will also keep your bank happy (a fixed price is often essential for the bank to loan on a build), and it incentivises the builder to complete the job quickly to avoid overrun delays. Check the price of the building contract carefully; is it a fixed price or estimated price (or fixed with some specific items estimated). Does the fine-print allow for increases in certain circumstances? And even if the price is fixed, if you are like most of us women, a little extra budget goes a long way when you see the perfect black kitchen tap that you just have to swap out the standard one for, or for adding in the air-conditioning at the last minute since the best opportunity is often ‘now or never’ when building!
Know exactly what you are (or are not!) getting
Thoroughly check through the specifications to make sure you understand exactly what is included and what is excluded in the build contract. Development contributions and water connection fees are often excluded and can be very costly (often $14,000 plus) so it is important to be aware whether or not they are included. Does your price include Council fees, site works and landscaping? You should also determine exactly what fixtures/fittings are included at the outset (right down to things like door handles, electrical sockets and tapware), paint colours and the like to avoid any disputes during the build.
The building contract should also provide that the builder will apply for the building permit and apply for and obtain the Code of Compliance (“CCC”).
Understand when the payments will be due and when you can expect to be moving in
Movest generally recommend the initial deposit is no more than 5% or $20,000 (this is all a standard Masterbuild Guarantee covers).
Final payment should not be made until the CCC has issued (this is often a bank requirement too). Owners often try to save money by doing works themselves but if you do this the builder will require you to apply for and obtain the CCC. Because of this, it can sometimes make sense to get the builder to do all of the works.
Be aware that you generally are not permitted to hold back payments, even in the event of a dispute.
And make sure that there is a completion date in the building contract and that the final payment due after CCC is at least 10% of the total contract price to ensure there is sufficient incentive to fully complete the property in a timely fashion.
Keep in mind that this is just general information about where to start with a build contract. We advocate that you hire a great lawyer who is familiar with build contracts to check it for you before you sign as you can potentially save a lot of money and a lot of stress.
Movest are specialists in new build and off the plan property purchases. Email email@example.com or call 09 282 3202 for more information.