Often we are tempted to go ahead with a construction or dual occupancy without getting the proper council approvals. While this can be done it does carry with it significant risks which investors and home owners need to be aware of.
Rochelle and Nicole from PfP Urban Planning work with their clients to mitigate these risks by giving advice and helping you get the planning approval you need.
Today I sat down with them and discussed the risks of not getting council approval (and they are pretty scary).
The Risks Of Not Getting Council Approval
Getting council approval for a new construction of dual occupancy can seem like a long and tedious task that isn’t worth doing, but there are some huge risks that you need to take into account if you are going to go ahead and do this work without getting the proper legal council approval.
Today, I sit down with Rochelle and Nicole for Part 3 about dual occupancies and we talk about the risks of going ahead and doing construction work without having council approval, and let me just say to you that there are some pretty big risks associated with doing this so you are going to want to listen to this episode and find out what they are before you decide to go ahead and do it. If you looked at yesterday’s episode we talked about the price of getting those approvals, so if that’s something that you are really worried about, then I suggest that you go to www.onproperty.com.au/135 and you will find out ballpark figures of how much it’s going to cost you, so maybe you will be encouraged not to go ahead and do it illegally basically.
Today, I’ve listed a brand new property which you can find onprpeorty.co.au and this one is on the market for $180,000, so it’s in a regional centre, it’s got a 7.51% rental yield and using the advanced property calculator I calculated that it is estimated to generate over $1,800 in passive income per annum. Now, obviously I can’t guarantee that, because there are always risks with any property that you go into but that’s a pretty exciting figure to think about. What would you do with an extra $1800.00 per year? Or do that a couple of times? You know, it’s pretty exciting. So, head over to www.onproperty.com.au/properties to check out all about positive cash flow property listings. So let’s go into the interview and find out more about the risks associated with going ahead and do building work without those council’s approval.
So what are our risks, if we don’t get that legal approval. because I bet there are people out there saying I live in half a house and I could never get like my address verified because I was in whatever A and I could never get it verified with all the government sites and stuffs like that, so my guess is that it wasn’t legitimate, so what should people consider, what are the risks if they are going to do it illegitimately.
Rochelle: Probably the two main risks would be 1: is that a neighbour or whoever doesn’t learn what you are doing and maybe knows that you don’t have the approval and they don’t like that there are three extra cars now parked on the streets because it’s about three streets and its living in your house or whatever it might be so they made a complaint to your local government in which case they issue you with a local government ___(not clear – 3:11) or short course notice or in Queensland it’s basically a notice from the government saying that you have to show us that you got an approval or this use has to stop, so if you invested money in construction or whatever then you lose that money and they can take legal action with that, in which case you have to get a retrospective approval anyway and you can’t go back through the process anyway and you may not get approval because you might have not done something correctly so that’s I guess a pretty big risk.
Ryan: Its a big risk that the construction may be ____(unclear – 3:48) like not approved anytime you can’t actually use that at all and so you invest all this money into construction and then you can’t use it, it can’t generate an income for you.
Rochelle: So that’s like a very big risk and I guess another big risk is the insurance risk, so say if something happens on your property like for example a fire or something dramatic and tragic, any insurance you have may not cover because it’s not legal, so something could happen, whatever happens to your property and you are not covered by your insurance which is another big risk.
Ryan: It’s the same sort of situation like if you are driving your car illegally or if you drink driving or something like that, often insurance doesn’t cover you because you are not driving in a lawful manner, so the same could happen to your house if it is not used in a lawful manner. You could be at risks of hundreds of thousands of dollars if your property was completely damaged because you didn’t spend the couple of grand up front to get the approvals done.
Rochelle: We don’t know the specific details on that because we are not lawyers or insurance agents, but I guess I would also consider the human risk as well, so say if somebody is to get injured or lose a life and you were operating unlawfully, I guess there is always the potential to be sued in civil court as well, so that’s a pretty big thing for your personal part of the thing to consider as well.
Ryan: We will put a big disclaimer over this and say that none of us are lawyers, or insurance agents, so we can’t say that these are definite risks, but people definitely need to go ahead and access these for their own situations so I think that has given us a good overview of dual occupancy and its definitely given me a good overview of what needs to happen and some of the cost associated with that, obviously it’s very site specific.
Ryan: So if anyone wants to get in contact with you, what is the process that you do and how can they best get in contact with you?
Rochelle: You can head to our website which is www.pfpurbanplanning.com.au and that’s got our emails, our phone numbers. We are probably going to put a link through your website with this podcast, I’m guessing so you can just click on that link, give us a call or shoot us an email if you got a property that you are specifically looking at or you have just got some specific questions, as part of our service is to give you some advice, up front initially. I’m happy to go through any queries that you might have. Nichole, do you have anything to add?
Nicole: Nothing. You actually covered it.
Rochelle: I just want to reiterate, I think it was like the second kind of topic that we covered, “When Should You Call A Town Planner”. I think that last portion of this discussion that we spoke about, insurance and unlawful use should really highlight to everybody that it is really important to get some planning advice whether or not you go ahead and do it with us or another planner or if you figure out that you can follow the process yourself , it’s good just to be aware of that buying a way of things, like buying a business, buying a property, to know everything upfront and like you really cover yourself just going into it with your eyes really wide open and knowing the risks as well as the opportunities, because also a planner might say you can do this as well and they might add even more value to a site that you hadn’t even considered.
Nicole: There is also the risks if you’ve done all these improvements and enhancements and you don’t have approvals in place, people generally ask, have you got approval for this and then you have to run the risk of actually don’t, and to be rigid with surprise and to get approval for all of this, those thing always pop up when you are selling, so you generally want to have that in places so its legal.
Ryan: Alright, well thank you guys so much for your time and hopefully we will get you back on in a few chats to talk in more details about thinks like subdivision and development and stuff like that.
Nicole: Perfect. Thanks Ryan.
Rochelle: Thanks Ryan.
So as you can see there are some pretty big risks there, the big one obviously is if something dramatic happens and the house burns down and the insurance company finds out you were doing something illegally or without approval then you might not be granted the insurance money that you are due. If this happens that could cost you a hundred thousand dollars, two hundred dollars, because you won’t have the insurance money to build a new property, so a small amount now in order to get the right approval will probably be worth it down the road in case something bad happens. Also, it is important to get approval if you are going to go and unsell the property because you are limiting your market, if you have done construction work that isn’t approved because some people will shy away from your property and not want to purchase it because it doesn’t have those correct approvals in place.
For the full transcription of today’s episode, head over to www.onproperty.com.au/136 and we will link up to Rochelle’s and Nicole’s business over there as well.
So until tomorrow when the next episode comes out, remember that your long term success is only achieved one day at a time.