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Calls mount for protection for Perth apartment buyers

Ritz-Carlton and The Towers under construction
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Residents at one of Perth's most exclusive projects, The Towers (photographed here while under construction), reported crooked walls, water leaks and uneven paintwork shortly after moving in. Photo: Shutterstock

Calls mount for protection for Perth apartment buyers

A campaign has been launched to protect Western Australian apartment buyers from the financial devastation of buying into a defective building, as the state government continues to push for a high-density future for Perth.

A campaign has been launched to protect Western Australian apartment buyers from the financial devastation of buying into a defective building, as the state government continues to push for a high-density future for Perth.

Australian Apartment Advocacy chief executive Sam Reece said a lack of protection for apartment buyers needed to be addressed if the state government continues to provide incentives for high-rise living.

In late 2019 the WA state government put in place stamp duty rebates worth up to $50,000 for an off-the-plan apartment, in order to turbo-charge development in Perth’s multi-residential sector.

But Ms Reece said an Apartment Repatriation Fund would be necessary to protect prospective buyers and owners of apartments that have been left facing high bills to repair defective buildings.

She said the status quo required residents and building Councils of Owners to track down builders and instigate legal action to pay the costs of repairing building defects.

“The government needs to legislate its activity around protecting apartment buyers,” Ms Reece said.

“They’re risking creating an apartment underclass of victims unable to pay for poor workmanship.”

“It’s very clear the current government wants to stick with its plan for higher density living in Perth and Metronet is still the centrepiece for that, but where’s the protection for those people buying into the dream of owning a home closer to the city?

“The crisis isn’t the lack of housing; the crisis is the regulatory failure and building incompetence that has left an entire apartment community unable to pay for the costs to fix building problems created by the builder.

“We don’t need to wait for major malfunctions like we’ve seen in the east – there are already apartment owners in WA living in a state of purgatory because of this. 

“It’s living hell and they don’t want it becoming public because it will damage the value of their property.”

Research by the Australian Apartment Advocacy showed if a buyer purchases a defective apartment then their chances of buying another apartment drops by 30 per cent, compared to a 65 per cent repurchase rate if no defects are experienced.

“With only 14 per cent of people saying they’d buy off the plan in the first place, the crisis is ‘where is consumer confidence’?” Ms Reece asked.

Specifically, Australian Apartment Advocacy is calling on the WA state government to introduce three levels of protection for apartment owners: 

  • Levy legislation: The government needs to legislate a 2 per cent builders levy to take care of consumers left out of pocket from defective apartment builds.
  • An Apartment Repatriation Fund: Establish a compensation fund that allows apartment owners to claim on the fund for defective designs, faulty workmanship, use of wrong materials or failure to comply with the Building Code.
  • Fidelity Guarantee Account: Allocate a portion from the existing $50 million sitting dormant in the Fidelity Guarantee Account established in 1974 so owners left without any recourse in the last 12 months receive funds allowing work to be undertaken to repair defects.

In addition to those measures, Ms Reece said the Labor government needed to audit 10-year maintenance plans, which are a compulsory requirement under WA’s multi-residential planning guidelines introduced last year.

“We need to ensure these plans are implemented properly, which means reserve funds are adequate and accurate and the plans are regularly reviewed and submitted at annual general meetings of the Council of Owners,” she said.

“Currently you can tick the box and say, ‘yes we’ve written our maintenance plan’, but closer attention to whether the plans are being implemented has to be given and it requires an audit.”

“Defects that go unreported or are not acted upon will ultimately endanger the lives of the residents so the plans and those writing them need to be policed and we need to make sure the Council of Owners are actively implementing the maintenance plans.”

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