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Your guide to becoming an owner-builder

In Victoria, an “owner-builder” is someone who carries out their own domestic building work or manages a sub-contracted party for the same purpose.
Owner-builders enjoy reduced costs, flexibility and control when they D.I.Y. However, there are risks and you should consider the following before taking the plunge:

1. The Law

The most important thing to remember is that an owner-builder assumes the same legal responsibilities as a registered builder.
Pursuant to the Domestic Building Contracts Act 1995 and the Building Act 1993 an owner-builder is responsible for the following:

  • Domestic building insurance;
  • Permits and Inspections;
  • Occupational Health and Safety compliance; and
  • A defects Inspection report if he or she decides to sell their property within 6 years and 6 months of completing the domestic building works.

Additionally, in 2005, legislation was passed by the Victorian Parliament to limit the building activity of owner-builders such that you can only obtain one building permit for one house in any three-year period. Also owner-builders must obtain a certificate of consent from the Building Practitioners Board to apply for a building permit to carry out domestic building works in excess of $12,000.

2. Insurance

Domestic building insurance protects any subsequent purchaser an owner-builder dies, disappears or becomes insolvent.
In order to obtained the requisite insurance, you will need to provide the following to your insurer:

  • Defects report; and
  • Domestic building insurance certificates given to you by builders or any party you have sub-contracted to perform the domestic building works.

You should note that domestic building insurance only becomes effective when the contract of sale has been signed and that all claims are capped at a $200,000 for the following:

  • structural defects, for six years; and/or
  • non-structural defects, for two years.

It is also worth noting that domestic building insurance does not cover defects or incomplete work identified in the defects inspection report.

3. Permits and Inspections

As a rule of thumb, you should never sign a building permit as an owner-builder if you have sub-contracted a party to do the domestic building works.
This is because the latter may be unregistered and/or trying to avoid their legal responsibilities.

Remember, even if you become an owner-builder, your sub-contractor will still need to provide you with a written contract for domestic building work in excess of $5000 and domestic building insurance for work in excess of $12,000.

Also, there are mandatory notification stages in a building project. At each of these stages the owner-builder must notify their respective local council so that an inspection can be carried-out. Usually, these stages are listed on the building permit.

4. Occupational Health and Safety

As an owner builder, not only do you need to understand the technical, administrative and legal aspects of domestic building, but you also need to understand your duty to comply with Victorian occupational health & safety regulations.

Pursuant to section 26 of the Occupational Health and Safety Act 2004 an owner-builder has a duty to ensure that the workplace and the means of entering and leaving the workplace are, so far as is reasonably practicable, safe and without risks to health.

This may include providing adequate facilities, information, and training to employees, as well as ensuring that the workplace environment and any equipment are safe and without risks to health.

5. Selling your property

As briefly mentioned above, if you intend to sell your property within six (6) years and six (6) months of completing your own building work, you  will be required to provide the following:

  • Defects inspection report not more than six months old from a registered building practitioner for all work regardless of value, including extensions, renovations, garages and verandas; and
  • Domestic building insurance for work over $12,000, to protect the person who buys your property. This is the case even if a registered building practitioner carried out the work under a major domestic building contract that is covered by his or her own domestic building insurance. You still need your own domestic building insurance to cover your work.