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Owner builders

This policy sets out HIA's position on the operation of owner builders and where they are permitted to construct their own home.

HIA’s Position Statement

  1. HIA does not oppose the notion that a home owner has an inalienable right to build or renovate their own home as long as that right:
    • does not provide opportunities for commercial gain or profit
    • does not allow the misuse of the owner builder permit by third parties and
    • is balanced with the principles underpinning the licensing of building trades, consumer protection and work, health and safety matters.
  2. Regulation of owner builders
    • Owner Builders should be regulated and monitored by the relevant consumer protection agency
    • There should be limits on the type and scope of residential building work that can be carried out by an Owner Builder
    • Owner Builder permits should be issued by the builder licensing body which will maintain a central register
    • Owner Builders should be required to undertake nationally recognised training prior to being issued with a permit to carry out residential building work.
  3. An Owner Builder should be liable for defective work, engaging licensed contractors as appropriate and ensuring a safe workplace.
  4. Contractors to an Owner Builder are to have access to the same forums, including security of payment adjudication, as they would have if contracting to a licensed builder.
  5. The certificate of title should contain a notation that building work has been undertaken by an Owner Builder.
  6. An Owner Builder who commences work without the appropriate permit should face significant penalties.

Background

  • Each jurisdiction has a different approach to the regulation of owner builders and while it is difficult to get reliable statistical information on owner builder work the amount of residential building work done by owner builders varies significantly from state to state.
  • It is clear that the amount of owner builder work carried out is heavily influenced by the regulatory regime currently in place. For example Queensland, with very low levels of owner builder activity, could be described as imposing the strictest regime, requiring a permit and owner builder training for a relatively low value of works ($11,000), placing strict limits on the type of work owner builders can carry out and preventing warranty insurance from applying to owner builder work. These requirements have been in place since at least 1996 and would seem to be operating as a successful deterrent against owner builder work.
  • Historically, members in most jurisdictions have raised concerns with owner builder activity and its scope. In response, Governments have attempted to balance the view that a homeowner has an inalienable right to build or renovate their own home balanced against the principles for licensing building trades and the consumer protection and safety considerations for future owners of the dwellings that flow from such regulation.
  • When such matters come up HIA has argued for greater restrictions on the carrying out of residential building work by owners on their own land.
  • An unintended consequence of owner builder regulations and the lack of power to monitor and enforce owner builder schemes is that it potentially affects the market for licensed builders. The burdens on licensed builders and owner builders are unfairly imbalanced particularly when it comes to compliance with Work, Health and Safety, warranty insurance and hiring of trades.
  • Any notion of a competitive edge that an owner builder believes they have over the engagement of a licensed builder should not influence their decision as to whether or not to opt out of utilising those operating within the highly regulated building industry.
  • The consequence of poor building work is often put forward as validation for a hard-line approach to regulating building occupations, yet there is very little done to apply the same rigour to those constructing homes as owner builders.
  • A further consequence is that builders are often approached by those operating under an owner builder permit to act as a ‘project manager’. This arrangement creates a multitude of problems.
  • By agreeing to project manage the work the builder is exposed to the same, or greater, liability as they would incur if they were directly contracted as the builder on the job.
  • They do not, however, attract a margin on products and subcontracts and therefore the financial risk may be greater.
  • The risk of license lending is equally problematic with reports of owners without owner builder permits (where required) engaging contractors to carry out some of the works and then inappropriately using that contractor’s license details on the building approval paperwork. Where the work triggers home warranty insurance, this provides a trigger for the contractor to be informed and accept such a nomination. However in the worst cases, the contractor may inadvertently become responsible for all of the work.
  • In these instances there seems to be very little appetite by consumer protection agencies to impose penalties for such activities despite safety concerns and the detriment to the builder. In basic terms the owner has carried out unlicensed works and all jurisdictions impose penalties for such activities. Yet in reality little is done to address this.
     

Policy endorsed by HIA National Policy Congress: October 2020.

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