Renovate Or Detonate - As seen in Domain.com.au - By Claire Halliday

Right area, wrong house? Take a look at the options.

Ever feel as though you're in the right place but the wrong house? Some say ''sell''. Others say ''renovate''. Then there are those in the rebuild camp.

Each strategy has its hurdles and benefits, and the decision needs to be set against the individual circumstances at the time, taking finances, feasibility and flow-on effects into careful consideration.

If the neighbourhood already serves you well, with access to shops, schools, transport and other services at your feet, making the most of your existing position could be the best option.

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After all, with a recent Archicentre report tallying up the costs of home buying and relocation - including agents' fees, stamp duty, loan fees and removal costs - at more than $50,000, staying put is usually more affordable.

So, do you renovate or detonate and start again? It's a question that's equally relevant to those just entering the market.

Suppose a house on the market catches the eye of a prospective buyer because of its location or ''potential'' - even though they know the house, as presented, is not right for their needs.

At first glance, renovation may seem like the easiest option. When the house is eventually sold in years to come, one benefit is that investment in the family home does not attract capital-gains tax.

According to Dorienne Harel from Harel & Grove Architects, though, would-be renovators should do their sums carefully.

''Nowadays, land is so expensive, clients just can't afford to buy a property and do it up. What they'd rather do is buy the property, knock the house down and build multiple units,'' she says.

In the south-eastern suburbs, including Caulfield, St Kilda, Elwood and Bentleigh, where the majority of their clients are found, Harel describes the practice as ''a definite trend''.

With careful planning, savvy developers are left with their own new home, plus extra dwellings to sell off or rent out. Exactly how many units depends on the land size and accessibility.

Then there are issues around council restrictions and covenants, and the very real possibility that, through the planning-permit application stage, objections from neighbours may add lengthy, expensive delays.

''The first thing we look at is, 'What's the maximum we can get on this property?' then we take it from there. The most common practice is to put two or, at the very most, three units so the owner is still left with a decent-size property to live in and still have a great property to rent out or sell and get some good return on it,'' Harel says.

While tight budgets have led to waning interest in single dwellings with large, high-maintenance gardens and swimming pools, outdoor living remains part of the Aussie lifestyle, with barbecue areas and space for outdoor entertaining still requested, ''just at a lesser extent'', Harel says.

In an average multi-unit development, Harel says, many clients opt for three bedrooms to a unit. Often, though, it depends on council parking requirements.

''Having two bedrooms per unit only requires provision for one car space,'' she says, pointing to council regulations. ''As soon as you have a third bedroom, you have to supply an additional car space.''

If development is not the preferred path, the decision to renovate, upgrade or remodel the existing residence may be the favoured option. Harel says any renovations need to be undertaken with a clear understanding of the family's lifestyle - right down to the small details of furniture items they might wish to incorporate into future redesigns.

So, what are the risks of renovating an existing structure?

''There are so many unknowns,'' Harel says.

She says that once a builder is on site, closer inspection of that 70-year-old house that seemed rock-solid may unearth ''potentially problematic issues''.

''Obviously, you don't have any of that in a new build because you're starting with a clean slate,'' she says.

Andrew Whitelaw is a partner with building and construction specialists TressCox Lawyers. He provides advice on various issues around planning requirements, building contracts and the specific roles of individual contractors.

When buying a property to renovate or detonate, Mr Whitelaw says the purchaser needs to give ''careful consideration to the requirements to 'build' - whether it is a new home or an extension and alteration''.

''Homework should include not only making inquiries with the local council in relation to any heritage overlays that may apply to the property or planning restrictions that may be applicable, but also as to the cost of such works,'' he says.

Although disgruntled home owners often engage legal advice only when everything is going wrong, Mr Whitelaw believes it is beneficial for owners to develop a working relationship with an architect, draftsperson, building consultant or builder before any planned purchase. A simple inspection before purchase is a great way to become aware of any issues the untrained eye might miss.

As to builders who have been sourced for quotation purposes, Mr Whitelaw recommends checking whether the builder holds a building licence and is registered to carry out domestic building works in the appropriate category for such works (preferably an unlimited registration for domestic building works).

''It is also recommended that a number of references be obtained from owners for whom the builders have previously carried out works, and a request should be made to inspect homes that have previously been renovated or built,'' Mr Whitelaw says.

As for whether you should renovate or detonate? Unfortunately, Mr Whitelaw says, ''there is no rule of thumb as it depends on the location of the property and the extent of the works to be undertaken''.

''The requirement for a planning permit differs between councils,'' he says. ''As a guide, if the outward appearance is to change, an inquiry should be made of council.''

As for construction works, Mr Whitelaw says a building permit will be required for most renovation works to be undertaken and will always be needed for both the demolition of an existing residence and the construction of a new dwelling.

For the director of Firstangle in Bentleigh, sustainable-building designer Mark Iscaro, working with the existing structure is always a preference.

Financially, too, there are benefits for the owner.

''If I build a brand-new house on a brand-new block of land, there are moving costs and stamp duty and conveyancing fees. This way, they have equity in the home they already own,'' Iscaro says.

Before purchase, Iscaro recommends a site visit to ensure he can make the client accurately aware of the available options, dictated by a combination of council laws and site-specific restrictions.

''I'll take the address and I'll actually call council and have a chat about what the clients want to do and whether planning is required. Then I can go back and tell the client what they have to go through and what the costs will be.''

While it's not always possible to keep an existing residence and turn it into a contemporary family dream home, Iscaro's passion for sustainability means he salvages whatever he can, including bricks and timber.

''Every project I work on achieves a minimum energy star rating of 7.5 stars,'' he says. He's ''pushing the envelope'' at present to complete a property with a nine-star rating. Renovating or rebuilding with such care and consideration for things beyond mere budget means a variable time frame.

''Anywhere from three months for a simple alteration to 12 months to 18 months for a heritage renovation or unit developments,'' he says.

''It's not always a straightforward process.''

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