Most knockdown rebuild projects are completed by existing residents who want to replace their old home with a new design in the same location.

If this doesn’t apply, there are two phases you will need to budget for:

• buying a property to knock down – including legal fees and stamp duty
• rebuilding a new home on the property – including driveways and landscaping.

Most people choose to finance knockdown rebuild projects with a construction loan. These loans give you access to your money at intervals so you can make progress payments as the builder completes each stage of the build.

Typically, you’ll make a progress payment at different stages of the build, depending on your financing arrangements and the building work contract

• demolishing the old house
• laying the foundation slab
• exterior framing completed
• brickwork completed 
• lock up stage
• fit out stage
• practical completion stage

You may be able to borrow up to 95% of the value of the land and construction costs if you use a licensed builder. A financial adviser can help you work out what sort of property suits your current plans, understand your borrowing capacity, and organise the right loans.

It’s a good idea to get your loan pre-approved several months in advance so you have time to research and select your builder and obtain unconditional approval for your loan.

Make sure you consider all the key building costs, including rent if you need to live somewhere else during construction. 

Learn more

• Finance checklist | NSW Planning Portal 
• First home owner (New Homes) grant | Revenue NSW
• Home buyer assistance finder | NSW Government
• Home loans | Money Smart 
• Understand who's who in your build | NSW Planning Portal

Once you have an idea of how much you can spend, you will need to understand the limitations of the land and any laws for building on it, such as: 

• any heritage listings for the property 
• tree preservation orders, or trees that need removing 
• minimum green space requirements
• underground utilities and infrastructure provisions, such as sewerage, electricity, gas and water 
• any excavation required on the land 
• any drainage and stormwater issues from the property.

Soil type will determine the footings or slab requirements for your design. Make sure you test the soil and confirm it will support your new home before committing to buying a property to knock down.

If you want to discuss your knockdown rebuild options with a builder, they might ask you to provide a Section 10.7 Planning Certificate. This will give them a detailed assessment of the site’s zoning, planning controls and other property constraints such as land contamination, level of flooding and bushfire risk.

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Choosing your builder is a critical step. Ideally, they will specialise in knockdown-rebuild projects and work with you to find the right home design to suit your needs. Look for experienced builders with examples of previous and current projects or visit specialist knockdown and rebuild centres and display homes.

Your builder will coordinate the building works as project manager. 

This role includes:

• supervising and coordinating each trade
• sourcing and coordinating delivery of materials
• quality assuring the entire process.

Learn more

• How to select a builder | NSW Planning Portal  
• Selecting a tradesperson or builder | NSW Fair Trading 
• Check a builder or tradesperson licence | Service NSW 

Some large knockdown rebuild companies offer an all-inclusive package and will engage a demolition contractor for you. If this applies, you can skip this step.

If you’re dealing with a smaller builder, you may need to find your own demolition contractor.

Demolition work is dangerous and requires specific skills and training. If the building is over 6m high, you will need a contractor with the following licenses:

• a class 2 demolition licence
• an ‘unrestricted’ asbestos removal licence

Always check for a valid licence at Service NSW. If you cannot find a current licence, contact NSW Fair Trading to confirm that the company holds a contractor licence. 

It’s also a good idea to look for a contractor with a focus on recycling waste materials, including bricks, clean soil, metal, gyprock and timber.

Questions to ask your demolition contractor 

• Will you look after the demolition approval application process? 
• What happens if any hazards are found during site inspections or demolition? 
• Are you licensed to remove any contaminated materials from the site? 
• Will you look after the disconnection of my utilities and services prior to demolition?
• Do you have a waste management plan that includes recycling?

Most demolition companies use a cost per square metre to estimate the price. Other factors can affect the cost, including: 

• house size and building materials – brick and concrete are heavier and require more machinery 
• foundation removal – check if you need to excavate the foundations or tear up a concrete driveway 
• site access – steep blocks add complexity 
• vegetation – clearing trees and shrubs costs more 
• hazardous building materials – asbestos, contaminated soil and materials, lead, chemicals and mould can be expensive to remove.

If asbestos needs to be removed from the property, make sure a licensed asbestos removal specialist does the work. Some demolition companies are also licensed to remove asbestos.

You will need planning consent for some types of asbestos removal. Remember: not all asbestos is visible. 

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If you’ve chosen to engage a specialist knockdown rebuild company, you should reach out to a sales consultant. The sales consultant will be your first point of contact and will help you choose and customise your home design. They'll be able to provide quotes and answer any initial questions.

At this stage you’ll receive a preliminary quote, which shows the expected cost of the build. Ask what you may be liable to pay if potential hazards are found on your site, and what they are liable to pay for.

Be careful to look at what is included and excluded in the package and use this to compare quotes between builders.

Be aware that this package price is the starting point quote, and a final price will not be settled until a contract is signed. This price may increase due to any:

• changes to your chosen design 
• changes to the size and complexity of build
• non-standard finishes and furnishings
• extra inclusions
• material costs
• tradespeople and labour costs.

You may also decide to work with a draftsperson or architect to create your own plans. Once you’ve narrowed down the builder you want to engage with, they can give you an estimate for the construction cost.

Some builders offer a ‘turnkey’ option. This is when all additions are included in the build that you may otherwise have to organise yourself, such as landscaping, fencing and driveways.

You may be asked to pay a small deposit at the preliminary quote stage for exploration works such as site assessments and soil testing. 

Learn more

• Questions to ask your builder | NSW Planning Portal

The process of knocking down and rebuilding a home can take up to 12 months to complete. You’ll need to factor alternative accommodation and any storage costs into your project budget. There are several options:

Live on site

If you have a larger block of land (and a small family), talk to your builder about installing a temporary granny flat or portable home on site . If you choose this option, check if you need consent or approval from your local council.

You will need to make other arrangements for power, water and sewerage during demolition. Make sure the terms of your contract set out everyone’s access rights. Be aware that the construction zone will have restricted access. Some builders need exclusive possession of the site for safety reasons.

Rent accommodation

Before you start looking at properties, it helps to make a budget and decide on the features you need in your home. This could include outdoor space for pets or easy access to transport. You may need to sign a 12-month lease or longer to allow for building delays and unforeseen weather. 

• Learn more about renting a place to live in NSW and your rights and responsibilities as a tenant. 

Stay with family or friends

You could save a lot of money by staying with family or friends for some of the time you are rebuilding your home. You may wish to write up an agreement for clarity around everyone’s expectations. 

• If you are sharing a rented home, NSW Fair Trading has information on types of shared living arrangements. 

Rebuilding after a natural disaster?

If you are completing a knockdown rebuild following a natural disaster, such as flooding or bushfire, contact your home insurer for help with alternative accommodation. You may be eligible for disaster relief and support from the NSW Government.

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You may wish to ask an independent planning consultant to assess the design against the relevant planning controls at your location. These regulations include:

• ensuring the home meets minimum sustainable design requirements
• protecting the amenity of neighbours
• preserving neighbourhood character. 

If you are buying into an estate, you may need to follow additional estate design guidelines. 

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Once you’ve completed the research phase and have chosen a builder, they  may ask you to enter into a preliminary agreement. This is also known as a preliminary quote, preliminary contract or pre-services agreement. It is not an agreement that involves residential building work.

This agreement will allow the builder to coordinate initial assessments of your site prior to designing plans or submitting applications.

Given the time and effort involved in these assessments, there’s usually a preliminary assessment fee charged for the agreement. 

Fees will depend on your builder, your land and chosen property. Check the cost and inclusions of these fees with your builder.

Learn more

• Preliminary contracts in residential building work | NSW Fair Trading

It’s time to think about your floorplan. A good floorplan will manage the flow of traffic in the house, use the home’s aspect to its advantage and contain noise to certain areas. 

Consider an energy-efficient passive design. This type of design works with the local climate and site, so your home needs less power to stay cool in summer and warm in winter. By making the most of natural light, ventilation and position of the sun, you can save a significant amount of money on your energy bills.

It’s also important to think of accessibility and safety, especially in terms of multi-generational homes with young children and ageing adults.

Learn more

• Passive design | YourHome

Your builder will conduct site assessments and request reports from specialists, so they have all the information they need to assess your land for construction.

Check with your builder if the costs and coordination of the site assessments are covered in your preliminary agreement. 

Your builder may engage industry specialists for you, or you may choose to hire independent specialists.

Learn more

• Common site assessment reports | NSW Planning Portal

The builder will create detailed drawing plans for your house once they receive the reports back from any specialists they have consulted.

Your chosen house design may be altered to suit your block, or any additional variations you have requested may be added to the plans at this time.

The builder will provide you with a more detailed cost estimate of your build, often called a tender. 

A tender considers your build site, particularly the soil conditions and slope of your block, BASIX requirements and zoning (flood and fire risk, and development guidelines).

It should break down all the costs for you, and whether those costs are fixed (the amount will stay the same) or variable (the amount quoted is subject to change).

Be mindful that there are often additional costs involved in build projects, including planning approval application fees, variations to designs, delays and materials.

If you have tenders from multiple builders, you will need to choose your preferred tender.

You may choose to:

• accept the price and proceed to the construction phase of your build
• choose a preferred tender to negotiate with on price, or 
• reject the price and retender. 

As part of your specifications to your builder, you now need to select fixtures, fittings and colours. 

• Fittings are freestanding items in your home, including furniture, certain appliances and décor.
• Fixtures are permanently attached to your home, including ceiling fans, electrical power points, toilets and sinks.

Some fixtures are more sustainable and environmentally friendly than others, so you need to consider which ones will help you get BASIX approval, which you’ll apply for in a later step. Choosing the colour palette of your home is another important design decision. You may wish to engage a colour consultant to help you pick out a colour scheme that complements your home, its surrounds and your lifestyle. 

Tip: Investing in quality fixtures and fittings for high touchpoints, such as door handles and taps, will help these items withstand daily wear and tear.

Your builder will provide you with a written contract detailing what is (and is not) included in your build. A contract can vary from builder to builder.

The contract outlines the rights and responsibilities of you (the homeowner) and your selected builder. It ensures both parties have agreed on the build expectations, cost and time frame. 

Builders often use NSW Fair Trading’s large jobs contract template for residential works costing more than $20,000. Be mindful that some builders prefer to use custom or industry contracts. 

Your builder must give you a certificate of home building compensation cover before entering into a residential building work contract for any agreement that costs more than $20,000, including GST. They cannot ask you to pay any money until they give you the home building compensation cover certificate.

It is also mandatory for your builder to supply you with a copy of the Consumer Building Guide and the contract checklist before entering into a residential building work contract that costs more than $5,000.

Learn more

• Home building contracts | NSW Fair Trading
• Home building compensation cover | SIRA NSW

You must have unconditional approval from your bank or lender before signing a contract. Unconditional approval means you’ve met all the conditions and the bank is ready to lend you the money.

It’s essential you completely understand what you’re agreeing to before you sign a contract, so take the time to read and review your entire contract. It’s worth following the guidance of NSW Fair Trading and working through the contract checklist, as well as seeking independent advice for anything you’re unsure about.

If there is anything you do not understand in the contract, ensure you:

• ask your builder
• seek legal advice, or
• call NSW Fair Trading for assistance.

You are ready to sign your contract if: 

1. you have answered yes to all the questions in the contract checklist
2. you are satisfied you understand your rights and obligations
3. you are satisfied you understand the rights and obligations of your building company
4. your deposit is no more than 10% of the contract sum.

Learn more

• Contract checklist | NSW Fair Trading
• Home building compensation check | Service NSW