Apartment owners have 'more consumer protection buying a toaster'


June 25, 2019 21:35:00

The quality of new apartment buildings has been in the spotlight since residents of Mascot Towers in Sydney were forced to evacuate more than a week ago.

Key points:

  • Apartment owners around Australia say they are being left to foot the bill for poor-quality construction
  • John Grant’s apartment building in Canberra has a defect bill estimated at $9 million
  • Melbourne apartment owner Andy White says the Government needs to step in

It follows on from the emergency evacuation of the 3,000 residents of Opal Towers late last year after beams collapsed.

But the safety of new apartment buildings is not just an issue confined to Sydney.

7.30 has spoken to owners around Australia who are worried they are living in structurally unsound buildings, with little choice but to pay for the defects themselves.

John Grant purchased an off-the-plan investment property in Canberra for $640,000 in 2011. But soon afterwards cracks began to spread throughout the apartment car park.

Concerns about the structural integrity of the building meant the foundations had to be reinforced with 45 props.

Mr Grant said they had been advised the defects could be fixed, but the repair bill was estimated at a staggering $9 million. If the owners end up having to pay for the rectification themselves it could cost each apartment owner an average of $75,000.

“There’s no-one who protects future apartment owners during the construction,” he told 7.30.

The owners have already had to spend $650,000 on expert reports and legal fees. They are suing the builder, developer and the engineer, and Mr Grant is calling for the ACT Government to issue a rectification order to force the builders to pay for the defects.

“When there is a problem, those responsible deny it, and they deny it vociferously, and it means that you have to go through lengthy and expensive processes to actually get a result,” Mr Grant said.

“Even then nothing’s guaranteed, and that’s a real concern with all of us owners.”

‘Grossly unfair for the people having to pay’

Nicole Johnston from Deakin University has just released a report into building safety. She says that would-be owners often have no way of knowing if there are structural problems with their apartments.

“Sometimes it doesn’t matter how much due diligence you do, you won’t know that these defects are coming,” she said.

Her report found poor waterproofing, unsafe cladding and fire risks were the most common problems.

“The costs involved in going through those rectification works is so much more than it would have been if the job was done right in the first place,” Dr Johnston said.

“So the costs in relation to rectify the fix is exorbitant, and it’s grossly unfair for the people having to pay.”

Federal Industry Minister Karen Andrews told 7.30 in a statement that states and territory governments were responsible for implementing building codes.

“I believe there is a crisis of confidence in the building sector that needs to be addressed,” she said.

The Property Council of Australia’s chief executive, Ken Morrison, argued that Australia had some of the best building standards in the world.

“Purchasers should take heart from the fact that most issues are relatively minor,” he said.

“The sorts of incidents we’ve seen in the media in recent months are quite rare.”

He said while regulations in the various states and territories differ, there was recourse when owners found their apartment had faults.

“If there are defects, then by law builders have to come back and fix those defects at their costs, and that system has been working well,” he said.

‘Stuck with a property that is virtually worthless’

Melbourne apartment owner Andy White said the system had not been working for him.

Following a fire in one of the apartments in his complex, it was discovered the building was covered in flammable cladding. But the builders went into voluntary liquidation in August 2018, meaning the owners will now have to cover the estimated $2-3 million rectification costs.

He said the apartment he bought for $320,000 was worth much less today.

“It’s a huge financial strain for most people, it’s taking a lot of toll on people’s mental health, to say the least,” he said.

“A lot of people are feeling frustrated and hopeless that they’re now stuck with a property that is virtually worthless at this point of time.”

He said it was too easy for builders to liquidate their companies if they found themselves liable for building defects.

“I just really want the Government to step up and sort out the legislation so that the people responsible for this situation are made to rectify it,” he said.

“By law at the moment we have more consumer protection buying a toaster or a television than we do an apartment.”

A spokesperson for Victorian Planning Minister Richard Wynne said the Victorian Building Authority was working closely with the affected residents.

“Our dedicated cladding taskforce is expected to finalise their final report in the coming weeks and will have more to say when we have assessed its recommendations,” the spokesperson said.








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