Should You Become an Owner Builder for Your Construction Project? Understanding NSW Fair Trading Requirements

4 min read

The role of an owner-builder in NSW offers an appealing blend of autonomy and potential cost savings, attracting many to undertake their own construction projects. However, this choice also comes with a substantial set of responsibilities and requirements dictated by NSW Fair Trading. This article examines the practical and legal aspects of becoming an owner-builder, detailing the benefits, challenges, and crucial regulatory obligations you need to navigate to successfully manage a construction project under this title.

Table of Contents

Understanding the Concept of Owner-builder

Being an owner-builder means taking full control of your construction project from start to finish. Unlike the traditional approach of hiring a construction company to manage everything, as an owner-builder, you are in charge. This includes deciding on materials, hiring tradesmen, and overseeing the day-to-day operations of your build.

Owner-builder work involves any construction, alteration, repair, or addition to a property where the market cost, including labour and materials, exceeds $10,000. This work must relate to a single dwelling-house, dual occupancy, or a secondary dwelling that either requires development consent under Part 4 of the Environmental Planning and Assessment Act 1979 or is considered complying development within the meaning of that Act.

This approach offers a hands-on experience and allows you to directly influence the outcome of your project, but it also requires a significant investment of time and effort to ensure everything runs smoothly.

Advantages of Being an Owner builder

  • Financial Control: As an owner-builder, you gain the advantage of cost control over your construction project. You have the ability to search for the best material prices and labour rates, negotiate better terms, and possibly handle some tasks personally if you have the expertise. This proactive involvement can lead to significant cost reductions, making your construction goals more economically viable.
  • Customisation and Personal Involvement: Embracing the role of an owner-builder enables you to tailor the construction process to your specific preferences and requirements. This approach ensures that every detail of the building is aligned with your personal needs and lifestyle, providing a level of customisation that is typically compromised when outsourcing to contractors. The end result is a home that not only meets your specifications but also embodies your personal aspirations and the hard work you’ve invested.
  • Educational Opportunity: Taking on an owner-builder project requires mastering skills in planning, budget management, and project oversight. These skills are not only crucial for a successful build but are also applicable in various other professional and personal contexts. While the learning curve is steep and the responsibilities great, the knowledge gained is invaluable and can empower you for future projects or other endeavors.

Cons of Being an Owner builder

Becoming an owner-builder comes with several challenges that need careful consideration:

  • Time Investment: Managing a construction project is like taking on a full-time job. It involves coordinating trades, scheduling deliveries, and solving problems as they arise. This can be daunting for those with work or family commitments and requires meticulous planning.
  • Supervising Help: While having control over the project can be appealing, it’s crucial to recognise when you need assistance. If you’re not familiar with construction standards or the processes used by inspectors and subcontractors, you may end up wasting time and money.
  • Lending Challenges: Many lenders view owner-builders as higher risks compared to established contractors, which can make securing a loan difficult. The loans available might also come with higher interest rates.
  • Costly Mistakes: While the main attraction of being an owner-builder is the potential cost savings, mistakes can be expensive. Building errors might require hiring professionals to fix issues, leading to higher costs. You also bear legal liability for any code violations or safety issues in the finished property. Hidden costs like planning applications, building permits, and compliance with state standards can add up, especially for inexperienced builders.
  • Lack of Experience: Even with the required courses, the lack of practical building experience can be a significant drawback. Certain details that only experienced builders notice can be missed, potentially causing structural damage in the future.

Considering these disadvantages is crucial for anyone thinking about taking the owner-builder route. It requires a substantial commitment of time, effort, and sometimes money to ensure the project’s success.

Owner-builder Permit: Eligibility and Qualifications

To become an owner-builder, certain eligibility criteria and qualifications must be met. You need an owner-builder permit if you plan to supervise or do building work worth more than $10,000 on your property and are not contracting a licensed builder for supervision.

Eligibility Criteria for an Owner-builder Permit:

  • You must be 18 years or older.
  • You must hold a current general construction induction card (white card).
  • You must be the owner or joint owner of the land, a shareholder in the company that owns the land, or have a minimum 3-year lease registered with NSW Land Registry Services.
  • You must intend to live in the property after the building work is complete, or in the case of a secondary dwelling, one of the dwellings.
  • You must complete the owner-builder approved education requirements or equivalent accreditation if the cost of building work is $20,000 or more.

Property Type

The property must be a:

  • Single dwelling-house
  • Dual occupancy (e.g., semi-detached home)
  • Secondary dwelling

Permits are not applicable for properties in a multi-dwelling strata complex.

Courses Required

  • Owner Builders Course: This can be done online and covers work safety, drawings, estimations, cash flows, and managing the work.
  • White Card Safety Course: This is a 6-hour face-to-face seminar available across almost every city.
  • Permit Issuance: After completing the required courses, you can obtain an Owner Builders Permit.

Restrictions

  • An owner-builder permit is not a building license. It only covers the project specified in the development application or complying development certificate.
  • Specialist work like electrical, plumbing, gasfitting, air conditioning, and refrigeration work requires a licensed professional.
  • You cannot engage in any commercial or industrial building work.
  • You cannot do owner-building work for apartments, townhouses, or properties with a strata title.

Meeting these requirements ensures you are prepared for the responsibilities and tasks involved in being an owner-builder.

Responsibilities of an Owner-builder

As an owner-builder, you take on the role of managing and overseeing the entire building or renovation project on your land. Your responsibilities mirror those of a fully licensed builder, even if you don’t perform all the work yourself. Here are the key responsibilities:

  • Insurance Coverage: You must cover all necessary insurances for the project.
  • Code Compliance: Ensure all work complies with relevant building codes and standards.
  • Building Inspections: Comply with all required building inspection requirements.
  • Technical Codes: Adhere to all relevant technical building codes.
  • Tradespeople and Sub-contractors: Ensure all tradespeople and sub-contractors are licensed and insured.
  • Quality Standards: Ensure that the work is carried out to the required standards.
  • Owner-Builder Permit: Obtain an Owner Builder Permit, which typically involves completing an approved course.
  • Project Management: Provide the necessary project management and supervision skills. Building a home or overseeing a significant renovation project requires a considerable time commitment and organisational skills.
  • Site Safety and Security: Take responsibility for the safety and security of the building site.
  • Industry Knowledge: Have a good understanding of the building industry to effectively manage the project.
  • Permits and Approvals: Be responsible for obtaining all necessary building permits, town planning permits, build-over permits, and council approvals.
  • Rectify Defects: Rectify any work that does not meet inspection standards or is defective.
  • Occupational Health and Safety (OHS): Ensure that site and worker OHS requirements and safe work practices are met.

By fulfilling these responsibilities, you can ensure the successful completion of your building or renovation project while maintaining compliance with all relevant regulations and standards. To understand the legal obligations of an owner-builder in detail, please read our detailed article here.

Becoming an Owner-builder vs Hiring a Licensed Builder: What is the Right Decision for You?

While the owner-builder route can provide significant control and potential cost benefits, it also requires a thorough understanding of construction, legal standards, and project management. Adhering to NSW Fair Trading requirements ensures not only the legality and safety of the construction project but also safeguards the owner-builder against potential liabilities and financial risks. If you’re considering this path for your construction project and need further guidance or legal assistance, don’t hesitate to contact our law firm. We’re here to help you navigate the complexities of the owner-builder process, ensuring your project proceeds smoothly and in compliance with all relevant regulations.

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Picture of Authored By<br>Raea Khan

Authored By
Raea Khan

Director Lawyer, PBL Law Group

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PBL handled my late mothers estate, they were very obliging and patient with any and all questions that we had, thank you to David , Sharon and the other staff that we dealt with, everyone was so easy to talk to and friendly .David came to the home where my Mother was living and helped her to get her will in order, Sharon helped us through the process of executing her wishes when the time came even doing a house call which was so much easier, thank you all so much
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I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
Amanda Reitzin
The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
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Tricia Wheatstone
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