Leave vacant and plan our build or tenant?

Hi all

We are looking to build our home this year.

Wondering whether we should rent the house for six months while we plan our build (project home) or whether we leave it vacant in ''hope'' that we finalise the approvals and are ready to construct in the next couple of months.

My gut feel is it will take longer than a couple of months planning and getting our home right. As much as we want to commence asap and move in, we do want to get it right.

Do you think it is worthwhile tenanting instead of leaving the property vacant, which will help us manage cash flows.

Tax is not a consideration here.

thanks
Monalisa
 
Definitely put a tenant in. You'll need the income to help you with holding costs, and the timeframe with council could well blow-out. Then there will be the matter of securing construction finance, and then getting things tee-d up with your chosen builder. You may have to wait until he/she finishes another client's build before commencing on yours.

Others might disagree with me, but getting all that organised within 6mths might be a bit tight, so in this regard you might as well pop a tenant in there for 12mths. If the approvals come through before then, you can use your time to plan your build with precision.

Another thing to consider is taking a look at your insurance policy. Often, if a property is vacant for more than a certain period of time (it's either 60 or 90 days), if you need to make a claim the excess that is charged is substantially higher (presumably due to the fact that the insurer considers an empty property is a more likely target for theft / damage / arson). You also need to remember the risk of squatters moving themselves in. Apparently it's harder to get them out than people with an actual tenancy agreement in place.
 
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thanks JacM for your response - we are going through State - CDC, which is apparently much quicker than council.

I think we will go down the route of renting the property, and including access to the property for planning (if required) on the lease.
 
The longest part of the building process is the lead-up to get to council, not the approval process itself. It took around 6 months or so from signing up with a builder to having the plans ready to go to council.

I would get a tenant in too.
 
Realistically you have 6-7 months until you are ready to turn soil even if you have a builder chosen already which you may not,so add time for choosing a builder, negotiating price and inclusions, survey, etc.

If I was a betting man, I would suggest that you wouldnt be building until November as you still havent settled. Maybe use these next weeks for getting the builder part of it chosen?

Put in a tenant on a 6 month fixed lease, and ensure you get a valuation at end of lease for CGT purposes as this will be your PPOR.
 
The above views may be correct from an investment view however from a construction point of view I would demolish now.

With an existing house the soil under that house will be dry while the area outside the floor plan will be wetter. If you quickly demolish and rebuild with a different floor plan this can be a cause of differential settlement in the new house.

Often builders prefer the whole site to equalise for moisture content through a winter before the rebuilding starts.
 
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Dave's suggestion get a valuation done pre-demolition. Be warned. A diligent valuer will discover the DA and should value the house at the highest & best use so don't be surprised if you get a lower valuation than expected. You should brief the valuer to provide two vals: one taking into account the da, the other assuming that there isn't a da as the house won't be considered at demolition cost but depreciated value.
 
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