Buying heritage homes: Worthy asset or time consuming hindrance?

Heritage character homes have a lot of charm, but many investors may wonder whether they're worth the hassle.

They can prove to be valuable assets, given their rarity. There is a fixed amount of colonial era stock on the market and the owner of a circa 1820 home won't need to worry about an oversupplied market when it's time to sell. Many of Australia's heritage properties are also located in well established suburbs which deliver strong fundamental value to the local homes.

Living in and maintaining a heritage house can also be a rewarding experience for owners, given their beauty and histories.

But for owners who want to update their homes, reconfigure them or subdivide, heritage restrictions can prove both costly and time consuming.

Local councils may enforce heritage overlay protections for houses or sites considered significant to the local area's heritage.

Not every property considered a "heritage place" by council will have rigid restrictions to changes. If you own a house with a heritage overlay, however, you may need a permit to demolish or remove any part of a building, subdivide land, carry out construction like fence building, display any signs, or paint any external unpainted surfaces. While the exact protections vary between councils and for individual buildings, there may also be restrictions to external re-painting, internal changes and trees on the property.

Earlier this year, Cherie Barber of Renovating for Profit told Property Observer investors must understand exactly what kind of heritage protection exists over the property, noting the difference between heritage listed properties, and those that fall within heritage and conservation precincts.

"One is individual, and one is blanket," said Barber, with entire suburbs often considered heritage and conservation precincts.

"The council is saying, 'we're going to be very particular about the development in the suburb. We want all the houses to retain the underlying fabric of the suburb.' So they're very particular about the exterior. Those properties usually don't have any restrictions on what you can do internally."

Although properties in heritage and conservation precincts may not have all the restrictions that apply to individual heritage listed properties, renovating them can still be a costly process.

To obtain approval for changes to a property, renovators and investors are often expected to provide reports from experts in heritage constructions, at their own cost. The process is often also laborious – Barber advised renovators of heritage suburbs to expect delays with paperwork.

"The typical lead time in approvals is four to nine months in my suburb, and each report can be thousands of dollars," she said. In Barber's experience, reports alone sometimes cost as much as a renovation, with $70,000 spent on reports for an extension for a property in a heritage and conservation precinct – despite the fact the property itself wasn't heritage listed.

For those anticipating a tussle with council over a renovation – which may be decided in a court – it's worth building the cost of consultants, experts, reports and legal proceedings into your renovation. Architects, heritage experts and town planners, who can all provide you valuable advice, can also all charge heavily for the service.

If a heritage renovation dispute does make it to Land and Environment courts, Barber said with expert witnesses charging $250 to $300 an hour, costs can spiral to close to $100,000.

The process isn't for the faint hearted – or those without some major capital.

"For newbie investors, that's the stuff that can send you bankrupt," said Barber.

The variance between councils, states and individual properties can also make the process difficult, with some having more lax or strict controls than others. The unpredictability of councils and the subjectivity of their terms can throw up unexpected roadblocks for owners – ones that are both difficult to navigate, and difficult to afford.

The process, Barber said, is not one for the beginner renovator – nor someone who's hoping to work alone.

"You've got to be savvy," she said.

"You need a good team of professional experts around you. You have your trade team and your professional team – 'the suits'– your town planner, your architect, your lawyer, your structural engineer. And when you're working on a heritage property, you're going to need the suits more than the trade team," said Barber.

Picture: Fortuna Villa in Bendigo, picked as one of Property Observer's favourite heritage properties covered throughout 2013