Property ownership is a significant investment; what if it becomes necessary to renovate or rebuild?
Some property experts say that to consider a knockdown and rebuild (KDR) requires a bit of due diligence. For starters, you must consult your local council’s construction planning laws to verify the status of your property. If the place has any historic significance and is properly listed on a register, it cannot be torn down and only a renovation may be carried out. A sewer/drainage plan listed in the original purchase contract for the property, plus council records, may also determine its age.
A council evaluation of your property’s block will also add more information. For instance, knockdowns and rebuilds of houses on flat blocks are easier to accomplish than those on sloped blocks. If there’s vegetation or trees that must be displaced for the project, that will require a separate permit, in addition to contractor fees for tree removal. Account for the property’s boundaries and other factors such as orientation when planning your chosen project with a contractor.
Your due diligence for either a renovation or rebuilding must account for the market conditions in your area to determine the average property value; associated information for this can be gleaned through a property agent who is licensed to operate in the area. If for example, your existing suburb has lower property values, a renovation of modest value may be an attractive option.
If you are planning to renovate or rebuild, the following are some points to consider.
Renovation
Pros
A home renovation can increase the property value, especially in the case of the kitchen and bathroom, which several property appraisers attest as reaping the most value for the place. Renovating the property gives you a chance to style it according to your preferences, given much thought in the interior design. The property can also deserve an upgrade in aesthetics.
A renovation may work when you’re looking for lifestyle changes, such as downsizing or your family is growing in size. If the budget is properly managed and the project is completed on schedule, the final cost may be cheaper than buying a new property. Some studies estimate the average cost of a property renovation in Australia to range between $2,500 per square metre to as high as $4,000.
Cons
The biggest setback to a renovation is the danger of overcapitalising. In this sense, you may spend a lot more money on the project, but a subsequent assessment reveals that the property value may not change – at worst, it may even go down. If you spent too much money on a renovation, some experts contend that it may help render the property unattractive to buyers. For example, a house with a one-of-a-kind renovated bathroom or kitchen made for a high cost might clash with the other areas of the property, let alone other houses in your neighbourhood.
For health and safety purposes, you may be forced to live elsewhere for the duration of the project, whether to move in with relatives or settle in a rental property. If you know some friends who also had their entire properties renovated, they may suggest the same thing, as sawdust or paint fumes are health hazards. Depending on the project timetable, you need to properly manage the assignment of tradespeople.
Rebuild
Pros
A knockdown and rebuild project is often seen as a chance to start over on the property, especially if the existing house has been evaluated and determined that it is structurally unsound, due to factors such as age and condition. Given the possibly decrepit shape of the property, a full rebuild may save you time and money that would have been otherwise spent on a potentially unsuccessful renovation. It may also give you the opportunity to have the resultant house designed according to your specifications, even more if you closely consult with a noted architect and contractor on the project. In an age of environmental sustainability, a KDR property built with modern, “green” materials may be attractive to property investors looking for more comfortable living.
Building a new house on the lot can help bring up the property resale value. It may also ease up your maintenance expenses; some homeowners who now live in rebuilt properties claim they had a smoother time with maintenance as opposed to tedious work in their original properties.
For certain people, knocking down a property can be seen as a way to remove unpleasant memories, with the demolition of Jenny Curran’s old house depicted in the classic movie Forrest Gump as a sad example. On a bright side, some families consider KDRs as a way to reaffirm their ties to the local community, even more if they have lived in the area for years and have no plans to resettle elsewhere.
Cons
A knockdown and rebuild can only be successful if the architect and homebuilder overseeing the project is of impeccable reputation and strong workmanship. A verified Master Builders licence in your state or territory is also critical; the absence of which may reflect in the final output of the project.
Any knockdown/build-up project should have the final approval of your local council. However, building up the documentation and submitting it to the council for clearance may take some time. A reputable homebuilder may help you navigate the process.
If you have committed to a knockdown and rebuild, one consequence of it is you have to resettle elsewhere, such as renting another property or to ask friends or family to take you in for the meantime. You must also plan to keep revisiting the property to check on the progress. Knockdown and rebuilds are usually known to be carried out between eight months to a year, so map out your timetable accordingly.
Conclusion
Whether you want to pursue a renovation or to start something new, the end result will be worth it. All you need is thorough funding and preparation.
