Demolition needs to be considered as a possible option where there is significant damage to the cladding, the internal and external structure (walls and floor), flooring and internal linings, as it may be easier to start from scratch rather than try and repair the building. However, in most situations, recladding is usually a cheaper solution than demolition and rebuilding.
Before committing to this strategy, answer these questions:
- Are you satisfied the damage is significant enough to warrant demolition and not repair?
- Is there a financial benefit to the owner? The actual cost of rebuilding will typically depend on the value that can be extracted from the land.
- Has a full cost/benefit analysis of the various options been carried out by a quantity surveyor and possibly a valuer?
- The problem is gone.
- The owner has the option of selling the land and buying elsewhere or having a new home built on the site that is Code compliant, built to the latest standards, specifically tailored to their needs and in a locality where they want to live.
- The owner may have the opportunity to redevelop and subdivide the site.
- The new building may require RMA consent. (This may also apply where subdivision is an option.)
- Temporary accommodation will be required during the new build, which will typically be longer than for a recladding project.
- Emotional attachment by the owner to the existing building.
- Consents will be required for both the demolition and, if undertaken by the current owner, the new build.
- Cost versus long-term value.
The cut-off point is difficult to define but will be influenced by the following:
- The owner’s wishes and their financial situation:
- Do they want to rid themselves of the problem building and start from scratch?
- Can they afford the extra cost that may be incurred? (It may be that the extra cost of demolition over repair will be mitigated by the owner downsizing the new dwelling and/or redeveloping the site.)
- Do they want to get rid of any stigma associated with the existing building? (A remediated building will always be recorded as such on official BCA records where consented work is carried out, and the potential stigma that it has been a leaky building may be reflected in its value.)
- The extent and cost of repair proposed – How much less will repair cost than rebuild, and what will be the ultimate impact on the building’s market value? (In one case, repairs were estimated to cost 30% less than a rebuild, and this was considered acceptable. However, some valuers have opined that, even when a building is repaired, the stigma from having once been leaky may reduce market value by 10–15%.)
- The building itself – Is it stand-alone or part of a complex? (Demolition can usually be readily managed for a stand-alone dwelling, but for one dwelling unit within a complex, demolition may not be an option unless all units are demolished – a similar situation will occur with multi-storeyed developments.)
- The land value – What is the relationship between land value and house value? Does the site have development potential by being subdividable once the building is removed?
- Can the new building (with a similar layout) be constructed on the existing slab?
- Future needs and requirements of the building.
Updated: 9 September 2014