Owning your own home is something most people are delighted about. But do you really know the risks of buying property in Australia? In this article, we discuss the consequences of purchasing a property that contains unauthorised building works.
What is an unauthorised building work?
Australia has very strict controls over building works. Many forms of development and alteration require approval from the local council, known as development consent (development consent). In Australia, approval can be obtained by lodging a Development Application (DA).
Not all development and alteration works require consent before commencement. This includes some low-impact or routine activities.
However, some of these development and alteration works may still require a permit or council approval, and may need to undergo an environmental assessment before approval is granted.
Taking New South Wales as an example, the type of consent or approval a property requires depends on the scale of the building development and its potential impact on neighbouring properties (such as impacts on traffic, noise, privacy and solar access).
Generally, depending on the degree of impact, there are three categories:
- Exempt development is small-scale development that has minimal impact on the site, surrounding neighbours or the locality. It does not require any consent or approval from the council, provided it meets the relevant policy requirements — for example, erecting a small compliant fence.
- Complying development applies to routine development, including alterations, additions and ancillary structures. It can be used for specific development listed in the Code SEPP or the council’s LEP, and must also meet certain prescribed standards.
- Development Application is a formal development application. Alterations and constructions that may have a more significant impact on the environment and so on generally fall under this category. It is typically lodged with your local council, along with the relevant reports and plans, and you then wait for approval.
Why do you need to lodge a Development Application (DA)?
A Development Application protects the interests of all stakeholders — particularly those who may be affected by the proposed development. Generally, the larger the development project, the more likely it is to affect more people and the surrounding environment. Every project, whether large or small, is unique and can therefore have different impacts on the people around it. A Development Application helps assess several important areas of impact, including:
- The natural environment
- Heritage buildings or conservation areas
- Social impact on neighbours and the community
- Noise levels
- Waste
- Privacy
- Access to natural sunlight
- Traffic impact
Lodging a Development Application offers the following benefits:
- Ensures that property development does not have a negative impact on the environment.
- Balances public and private interests, ensuring that new developments fit the character of the area and align with the framework of the "public domain" (such as streets, laneways or others).
- Ensures your building structure is safe, has fire protection measures, and has adequate sunlight and ventilation, among other requirements.
Be careful — the property you purchased may contain unauthorised building works
Property settlement went smoothly? Your purchased property may still carry risks. We have received quite a few enquiries from people who purchased properties containing unauthorised building works. Enquirers report that the property they bought some time ago was suddenly the subject of a council notice following a complaint about unauthorised building works — yet the owner had no idea beforehand that the property they purchased had in fact contained non-compliant building works all along.
There are many types of non-compliant building works, for example privately built tool sheds, garages, added outbuildings and the like. Purchasers often overlook this when buying, assuming that a legally purchased property is foolproof once settlement is completed and that there will not be any issues.
Once a complaint of unauthorised building works is lodged, the buyer may face heavy losses. Either a development approval will need to be applied for, or the non-compliant structure on the existing property will need to be demolished. According to industry insiders, many properties in fact have issues with non-compliant structures. It is just that some people carry out more thorough due diligence before purchasing. And under the laws of certain states, unauthorised building works do not fall within the scope of a conveyancer’s or lawyer’s due diligence. That being the case, once a buyer discovers unauthorised building works after the fact, it can be very difficult to find anywhere to make a claim.
How should buyers protect themselves before purchasing property
- A buyer can approach the council themselves to check whether the property contains any unauthorised building works, so as to avoid only discovering this after the purchase;
- Purchase title insurance. Title insurance, also known as property rights insurance, is a form of protection: when your property covered by the policy has a defect in title, title insurance can protect you from financial loss and from having to pay related legal costs. Title insurance differs from other types of insurance in that it focuses on preventing risk rather than bearing risk. After you purchase title insurance, a title examiner will review the history of your property, seeking to eliminate title issues before you purchase. Although developers, homeowners and builders may all build unauthorised structures, for properties with higher risk — especially second-hand houses — owners can guard against potential losses by purchasing title insurance. Title insurance is a special form of insurance that protects buyers and existing owners from financial loss when problems arise with their property. These problems can include non-compliant buildings on the property or unapproved alterations and developments.
Final thoughts
Be careful — the home you carefully selected may contain unauthorised building works! These unapproved non-compliant structures may exist without the buyer being aware of them, even at the time of purchase or when settlement is completed. When purchasing property in Australia, buyers need to be cautious; if you have any related legal questions, please consult our experienced lawyers.
On matters relating to buying a home and purchasing property in Australia, we have written a series of articles for your reference:
Legal issues to be aware of before purchasing property in NSW
Buying a home with a deposit as low as 2%? Who is eligible? Be sure to take note of these!
Caveat — an effective means of protecting property interests
When buying a home in Australia, should you engage a lawyer or a conveyancer?
