June 2011 Ask a Builder

How do I work out what is value in a home?

Valuers spend years at university learning how and it is a serious profession, but with a little bit of common sense, you can get some basic ideas about what is and isn’t value. It is one of the most common questions we receive from people trying to make the most of their budget. Consider this basic principle in terms of effort: a hole can get dug by forty men in a day or by one machine in four hours. While both offer the same result, one clearly offers value and it is easy to observe in terms of effort.

However, when we choose products in the home it is less obvious but the benefits are just as valuable to you as the consumer. In this light, choosing the right products, methods and design features in your home can ensure terrific use of your budget.

Often upfront savings can be achieved in a home by opting for less durable materials, or products that don’t have support and after sales service. Always check with your builder what they are using throughout the home and chances are, if you can’t easily identify the product or can’t find it online, you should be questioning why it is in your home.

Further, the choice to install some products over others can affect long term value of the home. A cheaper house initially may provide savings, but maintenance and running costs of the home can be affected enormously. For example, insulation can seem to be costly as some builders may not provide it upfront, but installing it at the time of construction will not only offer significant savings over the life of the home, but also will improve your personal use and enjoyment of your new home.

So in short, take your time, be informed, and enjoy your time you spend when choosing your builder.

What is a ‘spec’ home?

A spec home is a home that is not built to a client’s brief, and typically sold off the plan or placed for sale on the market when completed. Sometimes, this can include house and land packages, but usually this is a home built specifically to be sold on completion. For the client, this offers a home that is ‘out of the box’ and brand new, so there is no holding cost, and no waiting for the building to complete. If you love a new home, but can’t wait for it, then this is your best option. There is however in most cases much more stamp duty to be paid on this type of transaction as opposed to building a custom built home, and you will miss out on choosing your colour schemes and special touches.

May 2011 Ask a Builder

It seems that older properties in established suburbs are cheaper than the new ones in developing suburbs - shouldn't I be buying these rather than new homes?

Most people prefer to live in a brand new home. The reason some new properties may seem more expensive is that they offer a higher quality of living, the latest in construction methods, building design, facilities, technology and amenities. Ever increasing land and building costs means each new project usually costs more than the last one.

Renovating old homes can be a great way to have the best of both worlds – a home with modern function in an established area.

You should bear in mind that an older property does not usually come with the same warranties and guarantees, and will need upkeep or renovation before a new one. All of these calculations need to be taken into consideration.

As a home owner, you need to think about what it is you may want out of your home and consider that a new home provides an open slate to influence the design and end up with the house you truly want rather than a compromise of what is on offer.

As an investor, you need to look at what tenants are demanding, such as open plan living, cool, energy efficient homes, and the level of community in the area the home you are looking at provides.

Explain what advantages exist with regard Stamp Duty and construction?

Stamp Duty is a Territory Government tax on the transfer of property and is charged in all Australian States. In the Northern Territory, if you purchase an established property, full stamp duty is payable on the total purchase price of the property.

If you purchase a house and land package, you only pay Stamp Duty on the value of what physically exists at the time of purchase “ad valorem”, i.e. if construction has not commenced, you pay substantially less Stamp Duty. This saving is usually some thousands of dollars.

Stamp Duty payable is calculated proportionately on the level of construction completed at time of purchase. Therefore if you purchase halfway through construction you will still receive roughly half the maximum saving. The earlier you buy the less Stamp Duty you pay and the more you save.

Importantly if you choose construction, you will need to balance these considerations of stamp duty with the holding costs that are typically payable during construction until the home completes. If the construction period is lengthy, than the savings in stamp duty may not be enjoyed or it may end up costing more!

April 2011 Ask a Builder

I see a lot of adverts for Affordable Housing. What’s the story?

Affordable homes are a great initiative and there is plenty of information available with a simple online search. There are around twenty designs available for homes in Bellamack, and prices are from $342,000 to $420,000 for two to three bedroom homes. This is a fantastic chance to enter the market and if you qualify for one of these restricted blocks, then you would spend a long time searching to find a deal as good as what you may get for these homes purely in terms of size, let alone something brand new!

If you are in the market, you simply must factor these onto your list of properties to look at and examine.

Which way should I approach planning my home prior to construction?

Like the home needing good foundations for it to be a success, it is essential that as a client you have a great relationship with your builder. After all, they will be building what for most people is the biggest investment of their lives.

When you walk into your builder’s office the initial relationship you start with, which hopefully should be positive, is typically the relationship together you end the project with. This is especially so if you and your builder work together and give some time and thought to planning your home. In that light, being pro-active and being able to have question and answer sessions with your builder should be the accepted minimum. If they can’t do this for you, you should find one who can.

Working closely with your builder and giving the planning process time will improve the outcomes no end. Insist on receiving a full Schedule of Finishes and a detailed Plan at each version of the drawings as you work to completion so you know exactly what you are paying for. Some builders are unwilling to change their range, style or standard of construction and it would be important you establish this prior to choosing a builder if this is essential to your vision for your home.

So often the major source of negative stories you hear about in the industry is because builder and client are not understanding precisely what is in the home, or drawings that don’t show the full areas of the home and don’t line up with the Schedule of Finishes. All of this should line up and make sense at all times, or if this isn’t the case, you should seek clarification from your builder immediately.

A classic example is with extras. Extras, or variations in some cases, can be charged at any rate after construction starts – not all builders charge market rates for such work, and usually there is little consumer protection in the contract. So make clear that you know what these costs are for extras prior to entering into a contract.

March 2011 Ask a Builder

Darwin is in a cyclone area and I have seen the damage they are capable of if they make landfall over or near a town. What about my home?

In 1974, around 8 in 10 of the 12,000 homes in Darwin were destroyed due to Cyclone Tracy. A large number of homes were classic tropical designs, featuring a lightweight, elevated home seated on stumps of generally around 2-2.5 metres tall. This allowed cooling breezes to come through the home at a time where air conditioning was not available on the scale it exists today.

Though building standards gave some thought to the possibility of a cyclone, most buildings were not capable of withstanding a direct hit. Since then, Darwin has seen a number of government led initiatives aimed at reducing destruction of homes and loss of life. This included the creation of a Cyclone Testing Station in Townsville in 1977, and the introduction of improved techniques such as ‘tie downs’ and ‘bracing’ to make the homes far more wind resistant.

Homes in Darwin are subject to some of the most intense inspection and building methods in the country, and have served to produce formidable homes that should withstand most storms. Standards were introduced after the cyclone and then updated in 1985. Post-Tracy, Darwin has thankfully not been confronted with this scenario with a destructive cyclone hitting Darwin directly. 

As builders, we have seen designs evolve from the ‘bomb shelter’ designs that were the immediate response to Cyclone Tracy and featured widely in the reconstruction of the city to the current styles that increasingly incorporate lighter weight materials that are now deemed to comply with the government standard and able to be used in homes.

These lighter-weight modern homes built today are as a result just as strong as any of the post-Tracy homes and can harness the breeze. This gives the locals benefit of lightweight tropical design without the obvious issues of forty years ago, where homes were being ripped to shreds or taken clean off them. In any case, any home post-1985 should withstand a cyclone event.

If we look across to Broome, where cyclones have directly affected the city in recent times they have embraced lightweight construction, if for no other reason than the relative difficulty in sourcing heavier materials in that area. These homes have resisted the cyclones, and while there is never a case for complacency, your new home should be a safe place in a storm.

February 2011 Ask a Builder

What sort of things should I think about when installing a pool in my new home?

Like landscaping, installing a pool all starts with understanding what you want to do with the pool and if you can, incorporating it into your home design. It will typically cost 5-10% of the total value of the home and should be given a lot of attention from the outset if possible. Like the verandah, in Darwin the pool can really become another living area, where you can spend a lot of time comfortably.

You should ask yourself if you want to be cooking poolside or under an adjacent verandah, if you want room for just a table and chairs or room enough to host poolside parties. Whether the pool is to be for families or as a statement to built form, this needs to be identified from the start.

In Darwin, we would advise you should from the outset budget for an umbrella or shade sail, and an industrial fan if you can install it safe from the elements. These can make a pool much more accessible for use and much more comfortable for the life of the pool. Umbrellas cost more than shadecloth but offer flexibility and they are far easier to retract, making them less exposed to the elements and damage.

Perhaps the most common question we receive about installing a pool is whether to install a spa or not. We find spas in Darwin usually are the crowning piece of the pool puzzle and you usually find they are most used part of a pool, sharing with friends and family. However, a spa can add significantly to the costs of the pool and will require significant additional electricity and as often happens with home improvement, you will have to balance budget with desired lifestyle.

Pool features to personalise the project abound and include waterfalls, swim jets and for the true local, water. They are regularly installed in Darwin, and your pool installer will know all about them should you elect to warm the water for those dry season days where the water is no longer hot tub temperature. It is little wonder why sometimes Territorian behavior is sometimes considered unique!

You will always have a thought when investing into a property a pool to keep an eye on making sure it is appropriate for future use, whether you sell the home or your requirement change, or to keep pace with technology. I would say just make the pool the place that feels for you right today, as it is tough to plan too far to the future. Who would have thought 10 years ago we would be installing internet enabled outdoor televisions on walls on most of our new homes?