Buying guides guard against dodgy developments

After a series of high-profile buildings with serious defects was followed up by a once-in-a-century pandemic that wiped out a key tenant market, it’s no wonder that Australian property investors have become somewhat wary of apartments.

And while investors will have to hang on until Australia’s borders reopen to welcome international students back into key CBD apartment rental markets, respite is on the way for prospective buyers worried about building faults.

A pair of new initiatives promise to put investors at ease when it comes to defective buildings, in an effort to stoke confidence that they can return to cultivating capital growth in the apartments sector.

Researchers from UNSW Sydney’s City Futures Research Centre and the University of Technology Sydney have jointly created a defect rectification guide, in partnership with the Strata Community Association NSW.

The guide is designed to help prospective buyers, owners and strata managers to navigate the process of identifying, documenting, reporting and rectifying building defects in strata schemes.

UTS professor of construction management, Martin Loosemore, said building defects had been a particular concern in New South Wales for many years.

“Parts of the industry have been worried about building defects for some time before Opal Tower put it on the political map,” Prof. Loosemore said.

Opal Tower was not an isolated case, with residents of Otto Rosebery in Sydney told in October 2019 that their balconies could not be leaned on, while Mascot Towers residents were evacuated in June this year after major cracks appeared on the building’s support structure.

In Melbourne, residents of the Australia 108 building reported significant movement and large cracking sounds in the tallest tower in the Southern Hemisphere.

Across Australia, combustible cladding is also a major concern for apartment buyers, in addition to other issues with construction materials.

The NSW government responded to the problems by altering its laws and regulations covering builders and engineers, introducing a statutory duty of care for builders to property owners and a registration system for building designers, builders and engineers.

Building designs in NSW would also have to be declared compliant with the Building Code of Australia, while architects and designers are required to have adequate insurance under the reforms, which were put in place in June.

Strata Community Association NSW president Chris Duggan said the universities-developed guide represented the interests of all stakeholders in the multi-residential industry.
“With the state’s reforms and the Building Commissioner reshaping construction quality, this guide complements the retrospective effort of the strata industry in educating managers and assists consumers to deal with the practical realities of defects,” Mr Duggan said.

UNSW City Futures Research Centre senior lecturer Laura Crommelin said the guide covered all levels of defects and their severity.

“Major defects are the ones that are the main point of concern for owners, and a lot of the advice is particularly relevant if you’re dealing with significant issues, where there’s lots of cost and complexity about getting it fixed,” Dr Crommelin said.

“The reality of strata is that the cost is a shared, collective financial responsibility, and it can be complicated to agree on an approach...which is what this guide aims to assist with.”

Consumer advocate and property industry lobbyist Sam Reece has also aimed to address the lack of resources available to prospective apartment buyers, creating a free kit in collaboration with builders, surveyors, structural engineers, insurers and lawyers.

The kit is part of Ms Reece’s nationwide campaign to help avoid the financial and emotional distress from rogue developers building poor quality apartments, and was developed in collaboration with the Western Australian state government.

Ms Reece, the founder of Australian Apartment Advocacy, said the kit was designed to help owners identify possible defects, have confidence in a building’s construction, understand the life cycle of ownership and to completely understand buying an off-the-plan or existing apartment.

“High rise defects are a problem in every state and territory, it’s not unique to one state,” she said. 

“And it’s not isolated to one type or one part of the buildings – defects exist across a range of areas of apartment construction across the board.”  

Ms Reece said that she discovered the need for such a kit after research by Australian Apartment Advocacy identified a dearth of information available for prospective buyers and apartment owners.

“Apartment buyers have no way of knowing whether they are buying from a gold star company or dodgy brothers,” Ms Reece said.

“Unlike buying a home, when there is a defect in an apartment it can have huge ramifications for the entire block and it involves a number of parties including the certifier, developer, builder, strata manager, body corporate and the owners themselves to work proactively.”

Ms Reece said the she hoped the education initiative would put developers on notice that buyers across Australia would not be left facing the consequences of poor quality construction.

“Be warned, when apartment buyers are coming to view an apartment, this kit arms them with all the information they need to fully understand the inspection and buying process and empower them to make an educated decision,” Ms Reece said.

“You wouldn’t dare take a holiday without travel insurance so why would you risk buying an apartment without the education kit?”