Prevent a renovation money pit
RENOVATIONS remain a popular activity for homeowners across the nation who are trying to avoid stamp duty and other expensive property purchasing costs.
Australians spent almost $2.1 billion on residential property renovations in the June quarter this year, according to Bureau of Statistics data. Inevitably, some renovators will feel they’re throwing cash into a bottomless pit.
Being burnt financially by a renovation project can be a harsh money lesson, but there are ways to minimise the potential pain.
It all starts with good planning. Mortgage Choice CEO Susan Mitchell said homeowners who failed to plan and did not engage qualified professionals, such as a licensed builder, could overspend.
“Homeowners should factor in a buffer to their renovation budget,” she said. “For smaller renovations, stick to a 10 per cent buffer, and 20 per cent for major renovations, in order to control costs and avoid topping up your loan.”
Ms Mitchell said it was a good idea to get a building inspection before the job started, to identify potential problems such as faulty wiring or asbestos. “Have an honest conversation with your builder before starting any work,” she said.
“Factor in the finer details, which are often overlooked, such as waste removal and landscaping repairs.”
Mortgage Choice research found that more than half of homeowners have renovated, with almost 40 per cent saying they did so because it was too expensive to move. Metropole Property CEO Michael Yardney said one DIY job would not create a renovation expert, so people should be careful going it alone. He said finding the right people for the job was vital, and could come from referrals from friends and family, or even the local hardware store, which might have good relationships with tradespeople. Mr Yardney said people who worked full time should employ a qualified project manager.
“Although their fees may add another 10 per cent or so to your costs, it would likely be worthwhile,” he said.
Bronwyn and Richard Scarce recently completed a 13-month renovation of their home. It went slightly over budget after they made some extra modifications, but there were no nasty surprises.
Mrs Scarce said renovators should be patient.
“Take your time and do plenty of research so you know exactly what you want,” she said.
“While it was hell living in our home while the renovation was under way, living on site gave us access to the renovation that we would not have had otherwise.”