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July 31, 2015

Renovating under the influence

By MATTHEW WRIGLEY

The rage for renovating, swing to strata living and seemingly ever-upward property demand is creating new pressure for strata managers and owners’ corporations.

Influenced by the heady allure of extreme makeovers and the promise of instant profit, Australia has become a renovation nation. Owners often rush to remodel, unaware of the costly pitfalls and long-term repercussions.

Rarely is any renovation experience straightforward, but when this is compounded by a lack of (or lax) strata by-laws, as is commonplace, it’s just a matter of time before there’s a problem.

Most strata issues and disputes relate to renovations where the owners are unaware of just where their responsibility starts and ends. As strata living is on the rise, so too are related renovating disasters. I should know – initially a builder, I’ve worked in the construction industry for more than 10 years. My career change, into strata management three years ago, was sparked by the fact that most serious strata issues spring from a lack of experience and understanding of the complexities of building and construction.

Strata renovation mishaps are often borne out of naivety and compounded by regulations and legislation that are mired in confusion.

Strata management schemes have a raft of legislation and regulation to consider when renovating. Any breaches or poorly executed work can have long lasting consequences and cause considerable expense for home owners and fellow residents, and affect the value or sale of everyone’s property.

Matthew Wrigley

Matthew Wrigley

Residents generally don’t set out to fall foul of the system, but the mores of strata regulations and by-laws are open to interpretation, have plenty of grey areas and often are just poorly written and executed in the first place.

Sophisticated investors, first homebuyers, DIY renovators and those from non-English speaking backgrounds are all expected to be familiar with the ever-changing technology and terminology of the Australian building code (BCA), tradespeople of varying skills, licences and permits updates. None of this is straightforward.

There are many hidden caveats for the uninitiated: it’s a little known rule that all risk lies with the owner and it’s the owner’s responsibility to employ a solicitor, expert in strata matters, to have a by-law written that specifies the planned renovations. That exercise alone can be expensive.

Owners are often unaware of what the term “renovation” means and indeed there are different interpretations in every building, council and state.

I recall one inner-city apartment owner who added down-lights, ducted air conditioning and a new ceiling, believing that, as the owner, he was within his rights.

The renovations only came to light once a council fire order was placed on the building. Not only did this raise the need for a change in by-laws with ensuing legal implications and costs, but the property had to be rectified to comply with fire regulation. As this was the responsibility of the owners’ corporation (OC), a special levy of more than $100,000 was struck and each of the strata unit owners had to foot the bill. And this was in a small strata scheme of 20 units.

A bitter lesson when the owner-renovator has made a tidy profit, sold up and moved on.

Extreme examples are known as a “Hollywood renovation”, whereby a property is glammed up to sell. The owner knows full well what corners to cut with scant regard for approvals. The only aim is a quick turnaround and a quick profit.

Hollywood-type builders have made it their business to know how to get around insurances, warranties, approvals and OCs.

With a building industry background you can head off any signs of trouble before there’s a dispute – but for someone without an insider’s skills and nous, that can prove very difficult.

Our guide to strata renovations

1. No secrets no surprises

Advise the OC before the hammer hits the nail to avoid any squabbles. Get in first and get in early. If in any doubt about what requires the permission of the OC, it’s safer to assume that permission must be sought. Put your intentions in writing to the OC together with plans and documentation. Secret or illegal renovations done under the cover of darkness can backfire and cause grief and financial repercussions. They may also affect the value of the property.

2. Neighbours, everybody needs good neighbours

Face it – renovations can be annoying for the neighbours. The OC should advise the neighbours of the impending disruption. Even if the OC does this formally, the courtesy of a personal note in the letterbox can soothe potential fracas. Renovation noise and mess should be covered under the by-laws, including what time renovations start and finish, what happens with debris and mess, and tradies’ access and parking. The latter is one of the biggest issues, so best to work that out upfront when you’re talking about access.

3. Down Mexico way – across the border  

Each building is unique. Each council will be different and each state will be different in terms of regulations and by-laws and what are deemed minor and major works. What applies to a property in Queensland is not the same as New South Wales or Victoria. What’s accepted as renovation and what is a “cosmetic update” will vary. Be sure you understand where your property envelope starts and finishes and where the common property starts, as this will be the responsibility of the OC. Familiarise yourself with the terminology, as it’s not obvious or simple.

4. Cousin Vinnie renos

For small renovations, the home-handyperson is fine. If the work is worth more than $1,000, however, you’ll need a licensed builder. There has to be a formal contract between you and your tradesperson and it falls on you to check the licences are up-to-date and in order. Best to keep a copy of these to provide to the OC. Where the work is worth more than $20,000, homeowners’ warranty insurance is mandatory. This is considered an insurance of last resort if the builder defaults, goes bankrupt or dies.

5. Avoid the damp squib

Be aware that anything to do with water has the potential for trouble. To an amateur DIY-er, what could be simpler than buying a bucket of waterproofing-liquid-membrane and slapping it around the shower recess? But a disregard for application and drying times will see more leaks than the Trevi Fountain in years to come. Usually it’s years later that a leak springs and you may have to rely on the paperwork at the time of the project to decide who takes responsibility and ultimately who pays for damages. Where plumbing is involved, bring in a professional plumber.

6. Wires and cables get the chop

Mistakenly cutting through wires, cables and pipes can happen to the most experienced builder or contractor. The repercussions of this can be costly, particularly if the premises are commercial. But it’s the inexperienced or illegal renovator who’s unaware of his or her obligations. The builder has the responsibility of preparing a defect report before the work begins so there can be no mischievous claims for damages when the work is finished. Illegal work and defects can come back to bite the strata scheme years later.

7. Time warp

Coordinating people and events is fraught at the best of times. With any renovations there are myriad details – from permits and licences to plans and quotes – to organise. Add to this the caprices of councils, committees and corporations, as well as other residents. Best to allow for a flexible timeframe and not rush into renovations.

Strata management’s intertwined with responsible asset management, as property’s usually a significant investment. There are changes afoot as people wise up and strata living becomes more commonplace. Now, even owners of the smallest strata schemes are challenged to become responsible for setting the tone for the building.

About Matthew Wrigley

Matthew Wrigley, a former builder, worked in the construction industry for more than a decade. His move to strata management three years ago was inspired by the fact that most serious strata issues result from a lack of experience and understanding of the complexities of building and construction. He is the managing director of Perpetual Strata Management.