Consider these costs if you are thinking of building.
Many first-time builders consider the land purchase price and construction costs, and even if you need to keep paying rent whilst building, but there are many other financial aspects to consider.
The following are some costs you may not have known about or considered when building.
Local councils require landowners to abide by different requirements and regulations, depending on the locale and the type of land in the area. For example, some councils will request a landowner to pay for and arrange a storm water assessment report due to the nature of the soil in the locality before they build.
Other council requirements that may induce a cost include:
Council contributions – fees to enhance public spaces and community infrastructure.
Traffic management – if realigning the sewer or if building very close to a set of traffic lights.
Council tree requirements – including if trees are near to powerlines, etc.
Geotechnical reports – costs pertaining to specialists who assess the land before some councils will allow building.
There could also be costs to meet building compliance standards for specific areas, including areas near airports or those prone to bushfires, which also needs to be considered.
Unexpected building and site works costs
Those looking to build a home should also consider civil works and engineering costs to prepare the block of land. These can include but are not limited to:
Sewer extensions and realignments.
Asbestos removal – post demolition.
Unexpected design variations.
Build inclusions and upgrades.
Technological changes – for example, adding NBN connection where it does not originally exist on the land.
Delay costs – not just related to construction delays, but delays associated with ‘red tape’, including finance and council requirements. These factors may impede on your build time, costing you additional and unexpected amounts of money.
A builder or building consultant would be able to advise you as to what costs you can expect to pay when developing a block of land. A buyer needs to factor in these costs when assessing the profitability of a block they are interested in.
Taxes and bank fees
In addition to the actual purchase price of a block of land, those looking to buy should consider the additional costs involved as they can easily get out of hand. These can include:
GST and capital gains tax if you plan to sell after you build.
Loan establishment fees.
Interest payments on your loan while you build.
By factoring in these unexpected costs you can ensure your budget and expectations match, and further pave a smooth path to successfully buying and building on a block of land. Anyone can buy a property to develop, but it’s easy to make mistakes throughout the process.
Contact me for any further advice on building a home. It may be worth buying an established home for some of you.