Are Fixed Site Costs REALLY Fixed?

29th July 2024

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This article explores the reality behind "fixed site costs" in new home construction, highlighting scenarios where these costs may change and offering practical tips for home buyers to avoid unexpected expenses.

Are Fixed Site Costs REALLY Fixed?

Introduction

Fixed site costs are a critical factor when building a new home, offering home buyers the promise of predictable expenses when preparing their block of land for construction. However, while the term 'fixed' suggests stability, the reality is that fixed site costs are not always set in stone. This article explores the circumstances under which fixed site costs might change and provides practical advice on how to avoid unexpected expenses.

What Are Fixed Site Costs?

Fixed site costs are the expenses associated with preparing a block of land for construction. These costs typically include:

• Earthworks and excavation
• Site leveling and retaining walls
• Drainage solutions
• Sewer connections
• Temporary fencing and site access

Builders often offer fixed site costs to provide buyers with greater pricing certainty, but as this article reveals, not all "fixed" costs are truly fixed.

When Are Fixed Site Costs Not Fixed?

There are several scenarios where fixed site costs might increase, including:

1. Differences in Engineering Plans

Sometimes, the engineering plan used to estimate fixed site costs doesn't match the reality of the block when construction begins. Minor changes in soil levels or block conditions can lead to additional costs for excavation, retaining walls, or fill requirements.

2. Screw Piles and Foundation Needs

If soil conditions are worse than anticipated, builders may need to use screw piles or deeper footings to ensure the stability of your home. This can lead to unexpected costs.

3. Rock Removal

If rock is discovered during site preparation, the cost of removal can vary significantly. While some builders offer fixed rock removal costs, most include fine print with exclusions or limits on this provision.

4. Proximity to Easements

Blocks with easements can be more costly to build on, especially if sewer ties or other services need to be relocated.

5. Utility Connections

In rare cases, blocks in older estates or non-traditional developments may not have readily available connections for utilities like electricity, water, or sewage, leading to additional expenses.

How to Protect Yourself from Unexpected Site Costs

• Review the Fine Print: Always read the builder's terms and conditions regarding fixed site costs.
• Ask for the Latest Engineering Plans: Make sure the builder is quoting based on the latest available data.
• Consult a Building Consultant: Before purchasing a block of land, seek advice from a professional who can assess potential risks.
• Consider Allowances: Where possible, include allowances in your budget for potential changes to site costs.

Key Takeaways

• Fixed site costs provide certainty, but they're not always set in stone.
• Changes in site conditions, soil quality, or engineering discrepancies can lead to additional expenses.
• Home buyers should ask detailed questions and understand the builder's exclusions and fine print.
• The best way to avoid surprises is to get professional advice before committing to a block of land.
• The Builder can only price off the information presented, so if those conditions change they are within their right to adjust costs accordingly.

Glossary of Terms

• Fixed Site Costs: Pre-agreed costs for site preparation and foundational work, intended to remain stable.
• Screw Piles: Deep foundations used when soil conditions are poor.
• Easements: Legal rights for utility providers to access parts of your property.
• Retaining Walls: Structures that hold back soil and manage changes in land elevation.

Frequently Asked Questions

Can fixed site costs increase after signing a contract?

Yes, if site conditions differ from initial estimates or if exclusions apply.

How can I avoid unexpected site costs?

Ask for the latest engineering plans, consult with a building consultant, and read the fine print in your contract.

What happens if rock is found on my site?

Depending on your contract, rock removal may incur additional costs unless your builder has provided a fully fixed rock cost agreement.

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process—completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips.

Explore more episodes at homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.