Whether you blame it on the popularity of home improvement TV shows such as The Block or high property prices that prompt people to renovate their existing homes rather than buy something bigger, we are a nation of renovators. In fact, Australians spent $6.35 billion on renovations in 2012, according to the Australian Bureau of Statistics.
If you are considering improving your home or are keen to get into the renovate-and-sell game, there are five risks you should keep in mind.
Anyone who’s watched the ultimate home renovation show Grand Designs will know that building and renos rarely come in on budget. To avoid a budget blowout, Sydney-based Archengine Architects recommends engaging a quantity surveyor to estimate the cost of construction before lodging a development application with the local council – this will ensure you don’t end up with approval for a renovation you can’t afford. The quantity surveyor’s fee of $5000 could save you tens of thousands later on.
This is the biggest risk of renovating and it occurs when you spend more on the renovations than the profit those improvements could be expected to bring if you were to sell the home. If you are planning to live in the home “forever”, this may not be a problem, although it’s worth remembering that you never know when you may have to unexpectedly sell.
Real estate agent Mark Dawes, director of Richardson & Wrench Alexandria Waterloo, advises researching property prices in your area and not spending more on the total cost than buyers in your suburb would be willing to pay for. “You have to tailor your spend to your market and adjust accordingly,” Dawes says.
Devaluing your property
The point of any renovation is to improve your home and therefore add value when it comes time to sell. Once again, unless you intend to live in your home forever you must be careful that any renovation you undertake is finished to the utmost quality and has wide appeal.
Over-personalising a renovation can actually devalue your property. “You have to be careful not to personalise it too much,” Dawes says. “You’ll be appealing to a small part of the market of people who have the same taste as you. To achieve a premium price, you need to have competition and to create competition you need to appeal to the maximum number of people.”
In one case Dawes is aware of, an owner in an inner city suburb of Sydney had to reduce her asking price by $150,000 after her home spent 14 months on the market with potential home buyers put off by its ornate and ostentatious renovation. “She would have sold for $150,000 more had she gone for a simple, contemporary renovation,” Dawes adds.
Not getting the right advice
“Another trap is that people go into a renovation thinking they know what they’re doing but soon realising it’s not that simple,” Dawes says. An architect familiar with local council regulations – such as heritage restrictions, for example – and a builder can tell what to expect before you embark on the reno process.
“You need to get the relevant experts to tell you what you’re in for,” Dawes adds. “You need to do your homework to avoid surprises.”
Sourcing reliable builders is also of the utmost importance. “Don’t necessarily go for the cheapest quote – go for the person most capable and look at the quality of their work before you choose them,” Dawes says.
Shoddy work can end up costing you more than you bargained for.
Risking your health
If you’re planning a DIY job on your renovations, the budget won’t be the only thing to worry about. A survey by Sydney’s St Vincent’s Hospital last year found that 61 percent of respondents who had recently completed their own renovations had been exposed to asbestos. Asbestos was used in products such as carpet underlay, walls and floor tiles in homes constructed before 1987.
Electrical wiring, falling fragments of wall and potential trips and slips are also risks associated with renovations, so taking all necessary safety precautions is crucial.