Renovation opportunities fall victim to red tape

by AB15 Feb 2016
Costs associated with local government red tape have made structural renovations in areas such as inner city Sydney unaffordable, according to one renovation expert.

Professional renovator Cherie Barber and founder of the popular Renovating for Profit education courses, believes renovators looking to carry out major works on properties are being priced out of the opportunity as councils impose a more detailed planning and approval process.

“Councils these days are a lot more difficult to deal with and the costs of getting approval and things like construction certificates are making it really hard to do structural renovations in inner city areas,” Barber told Australian Broker's sister publication, Your Investment Property.

“It used to be that councils would demand dilapidation reports for the houses immediately on either side of you, now they want reports for the three houses on the left of you and the three on the right. Those reports can be up to $1,500 a pop, which is a fair blow before you’ve even started work.”

Barber said the change in stance from councils seems to be an attempt to reduce the chances of legal action in the future.

“Councils are trying to safeguard themselves. Because people are so willing to take legal action they want to make sure they’re protected if anything does happen down the line,” she said.

“It’s probably a sign as well of the fact that urban living is becoming a lot more dense these days and councils are trying to make sure they stop any bad developments from going ahead.”

While Barber can see why councils may be placing enforcing more stringent controls, she isn’t always supportive of their process.

“It’s not just the extra reports; they can be really unpredictable in how they deal with applications as well. You submit plans and then if there’s something like four or more objections you have to redesign them and resubmit and then you see things get approved that seem really inappropriate.

“A lot of people who get into renovating are just clueless about that sort of thing and a few little mistakes can mean they have to redo things that could be costing $6,000 or $7,000 a go.”

While Barber believes inner city structural renovations will likely become an option only for those for whom money is not an issue, she did say there are still ways for everyday investors to profit from renovations.

“I think we’re going to see a real surge in cosmetic renovations.

“There’s a trend now of people buying structurally sound houses and doing some quick comsmetic work, the kind of thing that is exempt from council approval and then either selling it or renting it out. They’re making a smaller profit, but they're also investing less.”

While a cosmetic renovation, which could be as simple as a coat of paint, may not require the same outlay of capital, there are still pitfalls people need to avoid.

“One of the single biggest mistakes people make is buying the wrong property. There are diamonds out there, but there are duds as well.

“You need to make sure that you are buying something that is structurally sound and can benefit from a cosmetic renovation. A 1970s kitchen is usually sound and in working order and can be freshened up easily to add value to a property.

“You do need to hone your formulas on what to spend and what to do. You want to do work that will improve the bank value of the property, not the emotional value.”
 

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