A heritage home can appear to be a wonderful investment. Heritage properties are rare and can provide good long-term growth. When renovated, heritage homes can sometimes help an investor make a lot of money in a short period of time. So, why do we consider them to be “risky?”
The very thing that makes them desirable, their heritage status, also makes them risky due to council regulations. An obstinate local council can turn a heritage property into a nightmare due to excessive restrictions on subdividing, renovating or altering them in any way—this can be devastating to a small investor with limited resources, especially if the property is not in good rentable shape to begin with.
If a heritage home has been deemed to have significant historical value to an area, the local council may “protect” it with a heritage overlay, which will force the owner to obtain a permit for pretty much anything that changes it, including external painting, subdivision, demolition or removal of any part of the home. Some properties may even require permits for internal painting or tree planting or removal.
Be mindful that every property in a heritage and conservation precinct doesn’t qualify as a heritage property. A heritage property is an individual designation, while a heritage and conservation precinct covers an entire suburb. Heritage and conservation precincts often allow most internal renovations while making it extremely difficult for external ones because they want all of the homes to retain the characteristics of the suburb from the outside.
The High Cost of Doing Business
In addition, heritage and conservation precincts often bury properties in paperwork, causing long delays and financial hardship to small investors. Reports that must be submitted before the council will even consider renovation, can cost as much as $70,000. Witnesses and consultants can cost from $1,000-$10,000 each.
Assembling Your Team
At the very least, before buying any heritage property or any property in a heritage and conservation district, you must put a team together. Start with a buyer’s agent, an attorney, a town planner, a structural engineer and an architect. Also, make sure that you have adequate funding, because you may need up to seven figures before you ever get the property renovated. As always do your research before you buy to avoid making costly mistakes.
Call Investors Edge today on 1300 472 427 to learn more about buying heritage properties in Perth and other areas.