And they reckon we're dodgy!


By: Murray Johnson
The Building Commission doesn't like owner builders. Big builders like owner builders even less. Perhaps they think it makes them look bad that a bunch of amateurs can actually do what they do and save money that they consider to be rightfully theirs. If you can look up the Yellow Pages and phone three plumbers to get the best quote to fix your leaking tap. Then make sure it's fixed before you pay, you've basically got the skills you need to be a builder. Building a house just involves coordinating a lot of similar tasks... from finding someone to draw up your plans to finding someone to paint your lounge, or doing it yourself.

I'm a journalist. I've got some skills after nearly 30 years in that business, but any joker who can kick a football or has an opinion can write a column and get paid for it. That's life. The Journalists' Union doesn't say you can't write a letter to the editor because you're not a registered writing practitioner. It doesn't make you take out compulsory insurance in case you libel someone, cock up your tenses or mix your metaphors. Unfortunately the building and insurance lobbies have a bit more clout than the writing lobby.

Hence the push to discourage owner building and ensure that building is left to the "professionals". It started a few years ago... no doubt under pressure from the big end of town when they noted with horror that a growing percentage (37% up from 26) of the state's lucrative domestic projects were being registered as "owner builder" jobs. The Government and Building Commission were (and are) so slack that they've never bothered to get accurate, detailed figures on "genuine" owner building. They're not interested.
Until now a landowner could register as an owner builder to do a big multi-unit development ­ even though commercial builders were sub-contracted to do all the work. Registered builders still write "owner builder" on the permit form when building their own homes and further inflate the owner builder statistics. Unregistered builders get their clients to register as owner builders so they can avoid registration and insurance red tape.
By the Building Commission's own admission even those trying to start out legitimately in the building industry have been forced to do similar "work arounds" because of the way Victoria's insurance system works ­ or doesn't. Even legitimate registered builders are forced to put their private family homes up as a guarantee before they can get insurance to build a house for someone else ­ and they're liable for defects for 10 years. Anyone starting out, who doesn't have a track record, finds it almost impossible to get insurance.
That suits the big builders because these tradesmen all end up having to work for them, rather than for themselves.

In Queensland .6 per cent of every building project goes into a TAC-style government insurance fund to fix building problems.
After the bankruptcy of Avonwood Homes left 563 houses unfinished and led to the $5.3 billion collapse of housing insurance giant HIH you might think Victoria would look at the Queensland model. The lesson for the Government should have been "don't put all your eggs in one basket" because big builders and big insurance companies make a big mess when they fail. Small is beautiful and owner building is small.
But the trouble is that big builders have big bucks and big influence on Government. And a lot of the building industry has its snout in the insurance ripoff trough, so nothing is being done about that core problem.

Instead the Commission decided to go after owner builders and pitched its unnecessary "crackdown" to the Government as a "consumer protection" issue. The Commission's own consultant's report found no evidence of consumer complaints or insurance claims worth mentioning in relation to owner building.

Much owner builder work is done by sub-contracted tradesmen rather than the owner builder him or herself. In many cases, as with plumbing and electrical, this is mandatory. You can't even put a sheet of tin on a roof any more unless you're a registered plumber. All major jobs have to be covered by contracts and warranty insurance. Owner builder work has to be inspected and approved by a registered building surveyor at every stage.
Owner builders already have to provide independent "defect reports" and take out insurance to protect purchasers for 6.5 years after they complete a project if they sell. Surely that's enough regulation.

Make no mistake this owner builder crackdown is not about consumer protection. It's about money and lots of it. The domestic building market in Victoria is worth $9 billion a year. The owner builder share ­ 37% of that ­ is more than $3 billion per year. Say it slowly ­ three thousand million dollars.

The Building Commission did not consult real owner builders in its review of owner building, but instead involved insurance companies and big builders who are eager to pick up those $3 billion spoils.

Even at 1 per cent of project value (owner builders tend to get ripped off many times that much for no good reason) the compulsory insurance of owner building in Victoria is a handy $30 million a year earner. It's actually much more because there's contract insurance, plus site/public liability fire/theft insurance plus warranty insurance if you sell within 6.5 years of completion.

So what are the changes and who will benefit?

Owner builders already pay millions of dollars to the Building Commission in fees when they obtain their building permits. The new regulations will make them pay even higher fees because owner-built housing projects will be valued at commercial building rates, rather than the actual owner building cost. That's right. If you can build a house for $120,000 like I did, but a big builder would charge you $200,000 ­ you'll be levied at the $200,000 rate when you apply for a building permit. That makes as much sense as making me pay income tax based on what I would earn if I were a brain surgeon. It's crazy.

The Commission's brochure for owner builders says when applying for an owner builder permit: "Owner builders are required to provide sufficient information to enable the building surveyor to estimate the value of the building work. It must include the commercial rate of labour and materials, as well as GST. The value of the building work is based on what the owner would reasonably expect to pay a registered builder under a major domestic building contract."

That's beautiful... you've got to calculate GST on services you have no intention of purchasing! Then pay the Building Commission's tax based on that.

The same brochure threatens "significant financial penalties" if owner builders fail to fully inflate the "value" of their project. My wife spent hundreds of hours building step by step a beautiful hardwood timber staircase from recycled Victorian Ash for our muddie. The full cost of getting a registered builder to scour secondhand yards, remove nails, hand dress each century-old plank and put together that work of art would be $20,000 plus. It cost us probably $300 for the timber. But if I cost it at $300 I will face "significant financial penalties" according to the Commission. That's just one little, but very real, example of how unjust and misguided and draconian the Commission's whole approach is.

Owner builders are also to be slugged with a new $75 fee on top of that bogus and grossly inflated building permit levy. The $75 alone will generate $600,000 a year for the Commission. All it has to do in return is buy $15,000 worth of computers and $120,000 worth of software... then send out "information kits". Good work if you can get it.

The $75 fee entitles you to apply for an owner builder permit, which (if granted) allows you to apply for an actual owner building permit. This Monty Pythonesque "permit to apply for a permit" will be issued to owner builders by none other than the Building Practitioners' Board. Yes, they've put the foxes in charge of the chook house and will charge the chooks for the privilege.

In this brave new world of owner building you will not only have to fund the Commission's negative propaganda in its war on owner building. You will have to sign and have witnessed a statutory declaration testifying that you have read it. Yes. The Commission has taken this extraordinary and unprecedented step to ensure that its fear mongering tactics have maximum effect. It knows if it forces all potential owner builders to read its anti owner building propaganda it will achieve maximum destruction of the owner building tradition.

The Commission's own report to the Government says it expects owner builder numbers to drop from 33,000 to 8000 thanks to the new laws, and admits "Some of this reduction may occur as better informed owners decide to proceed with a registered builder." That's bureaucrat code for "We're planning to use the money of genuine owner builders to scare the bejesus out of anyone contemplating genuine owner building and thus frighten their collective billions into the arms of our building industry mates."

Already the Commission's "information" leaflets are littered with scary warnings about the dangers of time and cost blowouts, public liability, insurance and tax headaches, faulty workmanship and more. One of its owner builder information "seminars" recently warned of asbestos, bankruptcy and marriage breakdowns but failed to mention any positives for owner builders.
I know of mud brick homes built for $20,000. I built my own four-bedroom two storey mud brick house on weekends for $120,000 and by the time I'd finished it, it was valued at $240,000.
I know of one bloke quoted $150,000 for an extension, who ended up building it for $100,000 as an owner builder, with the help of an unregistered builder mate. He's not complaining and there are hundreds like him.
The whole building industry runs on unregistered tradesmen ­ who make big money for their registered "big builder" employers. There is no question of the quality of their work. The Commission and those big builders just don't like to see those little tradesmen making money for themselves, or saving money for punters in the burbs. Like the Building Commission, and big builders, insurance companies levy their premiums based on project value so all three have a vested interest in higher and higher building costs ­ which is completely at odds with the genuine interest of consumers.

Owner building is worth $3 billion to Victoria's economy each year. It provides affordable, sustainable homes to thousands of families. It frees up rental and public housing for those who need it. It creates a market for sustainable building practices. (Owner builders pioneered concrete slabs, material recycling, passive solar heating, solar hot water and power, waste water recycling and much more.) Owner building teaches skills, brings families together, and creates some of the most interesting and environmentally friendly homes in Victoria.
Anyone else would bend over backwards to encourage a $3 billion industry. But big builders and the Commission hope to hack this industry back to $900 million a year.
They are misguided as well as self-interested.
Many of the people who owner build their home or extension simply aren't in the market for a $250,000 display home at Taylor's Lakes and can't afford to pay $150,000 for a one-room extension. The reality is that commercial builders wouldn't touch most of their creative, innovative one-off mud brick projects or fiddly extensions with a barge pole.
The $3 billion owner builders spend in Victoria doesn't go into some hippy black hole. It goes to Bunnings, and Kennards, and small tradesmen and suppliers with a huge multiplier and employment effect throughout the economy.
It's about time the Building Commission stopped its exaggerated and disingenuous noise about "consumer protection" and gave owner building the respect and support it deserves. Culturally, socially and economically it is a huge industry and a perfectly valid ­ in fact vital ­ one for Victoria.
If the Commission wants to promote Big Building and Big Insurance to the exclusion of owner builders and small builders it should say so, and let the Department of Housing or some other body take responsibility for their management and indeed promotion.
If the Commission were doing its job and dared to make a genuine study of owner building it would find that the real issues affecting owner builders are finance, insurance, information, safety, red tape and access to reasonable material and trade prices. If it wants to keep taking millions of dollars a year off owner builders it should spend them addressing those issues, but don't hold your breath.

Make no mistake. The fix is in and all owner builders can do is amp up the common sense they've always had in spades, then use it to ignore the Commission's scaremongering and to hack through the red tape they'd like to choke us with. Support Owner Builder Magazine, and use this web site ( to swap notes and ensure that the proud owner building tradition continues into the 21st century when it is needed more than ever to ensure affordable, sustainable housing and the most basic human right ­ to shelter and feed your family.




Email: Murray Johnson (

Snail Mail: 106 Liberty Parade, Bellfield 3081 Victoria Australia

Phone: 0417 339 203