[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

October 12, 2010 - 5:26 am

Hi DWolfe,

I'm already having problems with my builder, and building hasn't even commenced yet. What I was informed sounds really convenient for someone in my situation, but I don't know how realistic it is (it came from someone in the industry, though).

A problem with the slab, for instance, will not be able to be fixed once it's completed, so "remedying" the situation then will be impossible. And yes, the owner is ultimately responsible, but the builder and their contractors are generally in control of the quality of their work and what they do at the end of the day. Knowing how other people's projects have turned out, from personal observation, that quality is more often than not compromised, so both builder and contractors can finish the job faster, and not better. I've seen newspapers stuffed in places where bricks should have been put, and bricks placed vertically, so less can be used in the construction process, resulting in a very compromised end result, and thin walls!

I was just asking whether what I was told is done and followed by those "on the inside", who are all too aware of industry practices.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 25, 2010 - 10:51 am

Sandrat101, sorry to hear about your heartache too. It's definitely frustrating, and very time consuming. It shouldn't be this hard. We'll be looking at getting someone out to the property to inspect and see if they can give us advice on what WILL be approved, or we'll sit down with someone and discuss the issues. Going back and forth through our builder is pointless. He doesn't appear to be fully aware of what he's doing, and only seems to skim-read the letters council send. Doesn't care about the end product, as long as the houses are built and he gets his share of it.

Who were the Administrators, by the way? Were they not in council, as well? I think if we speak to the planners' bosses in council we'll get the same response, as ultimately they work together and seem to like prolonging things.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 25, 2010 - 8:25 am

Have taken all of your comments on board, so thank you all for that. I think a one-on-one meeting with a council planner/officer looking after our application will be the way to go, as they keep contradicting their requirements with us. I.e. If we move one of the houses, then we'll satisfy A, B & C requirement, but not D & E. But if we move it from X to Y spot, then we'll be fine with E requirement, but not B or A, and D might be compromised, etc. It's an absurd process to be going through, and I'm starting to pull my hair out!

Thanks for everyone's advice, though

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 24, 2010 - 12:05 pm

Make sure council knows you by your first name! Familiarise yourself with their rules and regulations, and make sure the plans you send to them are both plans you're happy with and plans they'll approve. Their website should have the necessary documents. Read them! Get a town planner/consultant, so they can give you some pointers. I'm in a similar situation myself at the moment, and I'm learning the hard and long way of going about this. Make sure your builder also knows what they're doing and don't just take their word as gospel. Do the research yourself.

Other costs you haven't mentioned could include tax/CGT/GST, depending on your intentions – build a home to live in or for investment purposes. Speak to an accountant or the ATO. Either way, you're bound to hear different things from both

Don't know if your building costs are just strictly for building or include other things as well. Could consider items not included in the builder's contract (e.g. landscaping, paving, kitchen and bedroom floor coverings, heating and cooling, hot water system, etc). Maybe budget for other unexpected items or holding costs for a longer than anticipated period. Anything could go wrong in the meantime.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 15, 2010 - 1:28 pm

Hi Andrew,

That's an absurd story! I thought our situation was bad, but there's always someone out there slightly worse off than you think you are.

I wonder why councils are so difficult? Considering people are actually doing them a good deed – creating multiple lots and doubling, tripling, etc. the council rates they get from what was once one block of land. I'm all for following rules and having certain standards for new buildings, but mostly I think it's over-regulating just so they can keep their comfy jobs going!

It's a painfully slow process to build a new property, and while I'd like to do it again, I shudder at the thought I'll have to repeat this. It all depends on the council, yes, but the process itself is harder than what it should be. Probably best thing one should be on the lookout for are reno projects or vacant land with already approved plans.

Might post an update in the future… if we come out of this in tact.

Thanks for all the replies.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 15, 2010 - 12:13 pm

Thanks for the replies!

It's interesting to find out the different strategies people employ to secure their IP's. Also even more interesting when you consider it from a vendor's point of view, especially if the vendor's an investor, and he's trying to maximise the return he gets on his IP. In that instance I'm not so sure I'll fall for the "That's all I can afford right now", but I suppose a seller can't wait around forever to get his exact asking price, especially in this market.

Thanks again for sharing.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 11, 2010 - 12:44 pm

Hi Tracey B,

Thanks for your input as well. You're right with what you've said, but the contract's already been signed (unfortunately for us now). I suspect it's more the individual we're dealing with rather than the actual company he's working for, but I'm also trying to deal with council members directly, and not just take the builder's word for it. They seem to have a problem with the concept of returning people's phone calls, though. Very, very difficult to deal with!

The actual application has been with council for 6 weeks now, 2 of which were spent trying to iron out the issues they have with our proposal. No one from council seems to want to speed things up. I think some people there only work on a casual or part-time basis, making things like this very difficult for your average developer.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 11, 2010 - 12:37 pm

The contract's been signed, so we can't just up and leave. The final plans are still up in the air, as council still need to OK them. This is what's annoying – will council be living in the houses or the owners?!

Builder's saying "I told you so" that plans are subject to change pending council approval. In other words – listen to council so your plans can be approved, and we're changing your plans because they have their own requests.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 11, 2010 - 12:00 pm

The delays are because of council. First they said this, then they're saying that. What they're saying now is not what they brought up previously, etc. Bit of a mess unfortunately. Other reason for the delays is the builder keeps changing the plans to suit them, and we're not happy.

Anyone willing to share their experiences?

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

June 11, 2010 - 11:33 am

Hi dougiebuilder,

It's 4 months since the signing of the contract, soil reports, etc. So while there is some progress, the actual building is yet to commence.

One property will be an IP, the other will be a PPOR. We want to get both of them right. We're also considering the plans from a purchaser's perspective – will a new buyer be willing to pay for what we'll be offering.

The builder is a reputable company in SA, but the person who's handling this seems to be giving us the run-around. I think he's looking at making council happy, not us, so everything can commence and he can get paid. While we want to get things started ASAP, we don't want the houses to look like caves just so we can finalise everything.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

May 25, 2010 - 11:45 am

The ATO rep I spoke to told me to be careful which order I do things in. I'm not sure why, as he didn't elaborate further, but I was left with the impression that that will have an impact on how my tax is determined – whether it's a property development business "event" I'm doing, or just with the intention to build and rent it out.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

May 24, 2010 - 12:10 pm

Thanks Mr5o1!

I thought things wouldn't be all that great, but I think my main saving grace here is that the IP will be held for >12 months, so at least the 50% CGT exemption rule will apply.

I'm still confused as to why it matters which order I do things in – subdivide and demolish, or demolish and subdivide. Any ideas?

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

May 23, 2010 - 12:44 am

I was told the cost base of it all would be valued from the time the PPOR was purchased. This means they'll backdate the valuation to the purchase date, halve it, and find out how much half of the land is worth (the one where the IP will be built). Only the portion of the land used for the construction of the PPOR will be CGT exempt. Might have to go for a Private ruling, after all.

Thanks, Terryw.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

May 22, 2010 - 2:41 pm

Yes, I will eventually be provided with a cost base of the land (backdated to when the PPOR was purchased), but the thing from the ATO that threw me off was that the second portion of the subdivided land (the one where the IP will be built) will be subject to CGT from the time the PPOR was purchased. If there was no IP or second property on the block of land 7 years ago, how can they honestly give me the CGT bill for a property that did not exist then? Or am I missing something here?

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

May 15, 2010 - 12:06 am

Thanks Terryw! Very much appreciated.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

February 25, 2010 - 11:50 am

Subdivision will occur first, building, then new CT's. It won't be any different to most of the other developments out there. I guess the issue would be how to structure the loans (one against the IP only for both IP and PPR costs, or one against each property), so we can put money aside for tax purposes first, then worry about paying off the PPR loan second.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

February 25, 2010 - 11:23 am

Terryw, thanks for the info! You've given me a different way of looking at this.

From a loan point of view, though, I personally thought it'd be safer to just offer the IP as security on the loan and keep the PPR separate (not mortgaged), as it's already paid off to begin with (it's not just a vacant block of land, there is a property there at the moment). I guess getting one loan for the PPR and one loan for the IP keeps things simple and clean, but why risk the PPR by mortgaging it and putting it as security on a loan?

Thanks again!

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

February 25, 2010 - 9:48 am

Terryw, yes, you're right, but I'm not sure how this helps in this case? We don't want to take out another loan against the equity in the PPR to pay for CGT.

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

February 25, 2010 - 9:22 am

Duckster,

Yes, the intention is to pay off the entire loan (both for the IP and PPR) by selling the IP only and keeping the PPR. The PPR on the land at the moment is fully paid off, and we don't intend on obtaining a loan for that house only, separate to the IP.

It's still not clear to me, after having paid off the loan (which will be secured against the IP only), how I'll have access to enough funds for CGT purposes. Or at least sufficient to call this a profitable exercise. So the funds from the IP sale, on paper, will be more than what will be left, as the PPR part of the loan will also be paid off.

I know the PPR part of the loan is not tax deductible, but with one property on one loan, the bank will want its full amount back upon IP sale.

That's my main concern!

[shangrila00Member@shangrila00Join Date: 2009Post Count: 65]

February 17, 2010 - 9:59 am

Simple. Thanks.

And if it's given away? (Makes for a great birthday present!)