Duplex construction in Sydney is increasingly popular – for good reason but you need to be aware of the key duplex building risks.
The possibility of steady rental income and potential six-figure equity gains when owning a duplex is very attractive for investors. Also, duplexes are an option when one’s budget doesn’t really allow for a detached house on a freehold title.
Buyers who choose to live in one unit and rent out the other may be able to afford a better location in the process.
Key Duplex Building Risks
However, there are risks associated with duplex development. From the beginning, it is important to be a fully informed home buyer/investor. Every step comes with inherent risks, including site selection, council approval, site prep, construction and property management.
Many feel the NSW planning system is the most complicated in the country. When council approval is required, it is important to work with those who have the requisite professional knowledge. This is one of the key duplex building risks when duplex building in Sydney.
It is important to understand that not all development applications are successful. To enhance the chance for success, it is necessary to file the most appropriate application. Town planning laws are frequently complex, and real expertise is usually required to navigate them. There are numerous council considerations which may determine success or failure. These include:
- Privacy issues
- Parking and vehicle access
- Bushfire potential
- Site parameters
Privacy issues – Sometimes a neighbour will object to a dual occupancy plan on the grounds that it will interfere with their view, use of their backyard, etc. Fortunately, it is often possible to address objections before council renders a decision.
Parking and vehicle access – Two residences on one site effectively doubles parking requirements. Therefore, council approval may hinge on the developer addressing significant parking and vehicle access concerns.
Bushfire potential – When a site is in a bushfire prone area, other agencies may get involved in assessing your application, like the NSW Rural Fire Service. Therefore, it is important that plans address the requirements of any and all agencies with jurisdiction.
Site parameters – Given the size of the block of land, council rules may limit the floor area allowed. Noncompliance is not necessarily a deal breaker, but it is important to demonstrate how the greater total floor area of a duplex will not adversely impact the neighbours.
Inattention to zoning requirements can stop a project dead in its tracks.
Quite simply, a given block of land must be zoned for dual occupancy. It is also vital to note minimum site size, front and secondary setbacks and land width requirements.
Requirements vary from council to council. Don’t be seduced or misled by nearby projects. Construction of a new duplex one or two streets over does not guarantee duplex approval on a given block of land. Obviously if the council will not approve the building that posses key duplex building risks.
Timing and Delays
In all forms of real estate development, time is money. It is important to avoid unnecessary delays at every point in the process. For example, there are often ways to “fast track” the approval process through pre-lodgement of a development application. This one step may save several weeks in certain situations.
Construction of duplexes on certain sloping blocks raises the issue of storm water drainage.
With a single occupancy home, a drainage pit is often possible, but this is not typically possible with dual occupancy construction.
Most of the time, stormwater has to be drained through the council drainage system. If the land slopes toward the street, this may not be a problem. When slopes are a problem, a minor buildup of the block of land from back to front may be one solution. An easement through a neighbour’s property is another solution, but coming to an agreement may be expensive.
Sometimes, engineered drainage systems may lead to DA approval. A charged system may be an alternative when the land is not too uneven. While some councils allow pump-outs, most do not.
It is important to note that engineered solutions can be very expensive, generally around $15,000 to $25,000 but can be as high as $100,000 or even more. You need to be prepared for than when doing your budget and feasibility study. Otherwise this cost burden can quickly become a key duplex building risk.
Of course it’s not a problem when you are aware of it and have budgeted for it.
Site Prep Variables
Some sites are more complicated than others. Severe slopes, uneven land and tricky soils may drive up costs. Contour surveys and soil tests often reveal special needs. For example, difficult soils may require more expensive slab or footing designs.
It is important to understand that successful site prep at one site may cost thousands of dollars more than at another. Vegetation removal, cut and fill costs and the total distance from services are all important variables.
Coping With the Unexpected
From time to time, every builder encounters unexpected events and/or extreme weather that may lead to delays. Therefore, thorough communication between the buyer and the builder is of utmost importance. Also, some builders have the experience, resources and flexibility to cope with the unexpected, while others do not.
Once a property developer succeeds in getting council approval, it is vital that the builder complete all construction as intended. Variations and unnecessary delays can lead to expensive problems and delays. Capable site supervisors are essential to successful duplex construction.
Special Case – Knockdown/Rebuild
When the project is a knockdown/rebuild, unexpected costs are possible. Therefore, efficient demolition, thorough council documentation and proper rubbish removal are all important. Once demolition is done, the site must often settle for a month or two before it is safe to pour the concrete slab for the new structure.
Property Management Concerns
Any duplex developer must remain vigilant once the project is complete. Sharing a common wall is not necessarily appealing to every prospective renter or buyer. Over time, a rented duplex may get rundown. Disputes between those living in adjacent homes are always possible. Finally, property values may be volatile in some areas, so expected returns may not always materialise.
Despite the potential issues, many home buyers and investors find that successful risk management is possible. Successful duplex construction comes with many potential rewards.
The Expertise You Need
For the expertise you need to pursue your dream of asset accumulation through duplex construction, consider Champion Homes Duplex Builders. Let us put approximately two decades of experience to work in helping you to minimise risk and maximise value. Please contact us today to schedule your complimentary consultation.