Going it alone

Construction can be a complicated business. There’s red tape to cut through, approvals to navigate, licensing and insurance to organise and financial implications in every decision. One of the options available is to assume much of the responsibility as an owner-builder, but you’ll need to understand the implications first.

What is an owner-builder?

An owner-builder is an individual who takes on the job of managing their own residential building project and holds the appropriate required permit to do so. Being an owner-builder means performing coordination and contracting tasks usually undertaken by a licensed builder.

What is owner-builder work?

Owner-builder work is generally any activity (including supervision and coordination) involved in construction, alternations, repairs or additions to a dwelling, including houses, terraces, townhouses, garages, swimming pools and certain other structures and improvements.

Owner-builder responsibilities

The owner-builder has a number of responsibilities including:

  • A thorough and clear understanding of plans for the proposed work
  • Ensuring all necessary council and local authority approvals for the work have been obtained
  • Obtaining applicable required insurances including workers compensation, public liability, homeowner warranty etc
  • Ensuring engaged contractors are appropriately licensed and hold insurance cover required for the type of work being done
  • Identifying and arranging required inspections throughout the entire construction process
  • Overseeing and supervising all contractors and tradespeople
  • Ensuring that the project meets with relevant legislation and other requirements
  • Provision of a safe work environment that meets requirements under local occupational health and safety laws
  • Warrant that the work and materials will be fit for the purpose and result in a dwelling fit for purpose/occupation


An owner-builder arrangement is not for the faint-hearted or the uninitiated, as there are many risks. Any work carried out must be in compliance with the relevant building acts and regulations within the relevant state or territory, so a thorough understanding of that legislation is a must. There are additional areas of risk that should be considered as follows.

Financial risks

  • Project cost increases and blow-outs that result from poor estimating or inefficient sequencing of trades
  • Additional works requirements due to faulty tradesmanship or non-compliance
  • Unforeseen variations from the original plan
  • Loss by theft or fire on site
  • Site protection costs including security and safety
  • Occupational health and safety claims
  • Adjoining property owner claims

Quality risks

  • Inadequacy of drawings or specification documentation
  • Standard of workmanship by others
  • Regulation compliance, including both construction and occupational health and safety
  • Technical ability to direct trades and assess workmanship

Time risks

  • Identification and engagement of suitable tradespeople
  • Coordination, continuity and completion of work

Future risks

  • Cost of providing insurance to prospective purchasers and claims by new purchaser within required statutory time period

Illegal use of licence

It is an offence for the holder of an owner-builder permit to:

  • Knowingly engage an unlicensed contractor (where a license class exits)
  • Lend your permit to another person
  • Refuse to disclose requested information to an authorised officer

Your builder may suggest you become an owner-builder, obtaining the required permit while they get on with construction. It is a serious undertaking, fraught with risk and responsibility. You should be clear about your builder’s motivation, as this approach may be masking a serious issue including their being unlicensed or unable to secure the appropriate insurances.

Owner-builder insurances

As an owner-builder, you must ensure that the appropriate insurances have been secured.

Home warranty

In many jurisdictions, it is a requirement that each licensed contractor (builder, tradesperson or project manager) who contracts directly with an owner-builder to undertake residential building work, provide home warranty insurance when the total contract sum exceeds a certain amount.

Workers compensation

Owner-builders must take out workers compensation insurance and ensure they are fully covered in respect of persons engaged to carry out work. Contractors engaged by an owner-builder may be deemed to be a worker of that owner-builder.

Contract works

This insurance should be obtained by both builders and trade contractors. It offers the home owner protection against loss and damage to materials and work. If the builder or contractor does not have a valid contract works policy, the home owner risks inconvenience, time delays and disputes if materials are damaged or stolen.

Public liability

It is strongly recommended that owner-builders take out a public liability insurance policy. This covers injury to family or members of the public resulting from the undertaken building work.

Each state and territory has different requirements for owner-builders, but all require a valid permit to be held before works can commence. Contact the agency in your region for more information.

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