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What does practical completion mean?

Practical completion means that the building work is at a stage where the house can be reasonably capable of being used for its intended purpose. When the builder is satisfied that the house is ready for inspection, you will receive a notice of practical completion.

It is recommended that you take care when inspecting the house with the builder to satisfy yourself that the builder has reached the practical completion stage. You should be reasonable, but not rushed into signing your acceptance that the house has been practically completed.

It is important that you do not overlook any major defects. It may be a good idea to employ an independent and reputable building consultant to assist you with this inspection.

Once you have moved in to your house, it may be difficult to prove that a defect was caused by the builder. In addition, once you've moved in, it may be difficult and disruptive for workmen to rectify any problems.

By law for contracts between $7,500 and $500,000, the builder is liable to make good, without additional cost, defects in the building work notified in writing within a minimum of four months from practical completion. Check your contract for the exact period of notification of defects.

Many builders offer a structural warranty which may be for up to 30 years covering the structural integrity of the building. However this may vary in both timeframe as well as what is covered for different builders.

If a dispute occurs about who is responsible to rectify a fault, you can take the matter to the Building Disputes Tribunal for determination.

What is an NRAS consortium?

A NRAS Consortium is a company that manages your tax incentive with the Government on your behalf. They make sure your tenant remains eligible so that you will receive your tax credit each year from the government.

The consortium will then charge you an annual audit fee ranging somewhere between $500 - $700 p.a depending on the consortium.

Eligible tenants are individuals or families who are considered to be on moderate incomes. There are income limits for tenants and they must prove their salaries before applying, to be an 'eligible' tenant.

Once this is confirmed, then they can request to be your tenant and if agreed by you, become your tenant and receive a rental discount of 20% on your property.

There is no shortage of tenants will to take advantage of the 20% savings on there rent, particularly given that there are around 1.5m households who currently fall in this category

What are NRAS properties?

NRAS is short for the National Rental Affordability Scheme and was legislated by the Government in 2008 and strongly supported by all political parties.

The scheme was implemented to deal with the massive short fall of affordable housing in Australia. The National Housing Supply Council estimates by 2013 there will be a deficit of affordable dwellings of more than 200,000.

The purpose of NRAS is to supply quality rental homes at reduced rents for the large number of Australian families unable to buy their own homes or to afford the full cost of market rents. Affordable housing is aimed at helping semi professionals such as policemen and woman, social care workers and teachers live closer to where they work.?

There are three parties involved the Investor, The Consortium and The Tenant

Purchasing an NRAS approved dwelling is exactly the same as buying any other investment property. You own own the property and retain possession of the title and you may choose opt out of the NRAS scheme at anytime.

The benefits to you as an investor you will receive a tax credit each year for 10 years with the minimum tax credit of $9,524.This tax credit increases each year with the rental component of CPI.

A government approved consortium is appointed to manage the tax incentive on your behalf and appoint a tenancy manager to manage your property.

As the investor you have the option of choosing your tenant from a shortlist or you can rely on the agent to handle all of this for you.

Your ??eligible?? tenant will then pay rent at 20% below market value rent.?

Think about selling before you develop your property

Many property owners that consider developing their properties only consider their options for marketing at the very end of the development.

However this can often result in them not achieving their desired outcome in the most cost effective and timely manner.

It is advised that a marketing strategy be considered prior to the commencement of the subdivision process. This is because there is no point doing the development if the property cannot be sold at the end of the project.

Your Development Consultant or local real estate agent may have had experience with marketing developed properties and may be able to provide an insight into the most effective strategies which result in the highest returns.

Unethical agent get slap on the wrist

An agent who sold an elderly woman's property to a friend of his brothers for hundreds of thousands below the true market price escapes with a slap on the wrist.

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In 2008 the agent sold the property for just $135,000 which sold just 3 years later for over $491,000.

After investigation from Consumer and business services (formerly OCBA) they decided not to suspend the agents license despite finding the agent guilty of unprofessional conduct. The only penalty on the agent was a $14,000 fine for unprofessional conduct.

At a time when the Real Estate profession is doing all it can to improve training and education, and legislation is becoming more and more cumbersome it is dissappointing that when there is a flagrant abuse of a clients trust that nothing is done about it.?

Fortunately in this example the Public Trustee reversed the sale and ultimately sold the property for $491,000 so the victim received the proceeds of the sale.