Defects affect owner confidence

Defects affect owner confidence

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An Australian Apartment Advocacy survey with 1,050 apartment owners nationally has indicated that the presence of defects affects owner confidence levels with both referring apartments as well as purchasing again.

The survey, the first of its kind Australia wide and which was distributed in conjunction with strata company Smarter Communities who manage over 5,000 strata communities nationally, comes hot on the heels of both the Mascot Towers and Opal Towers crisis in 2019.

60% of the NSW respondents (which represented 30% of the overall sample) reported having a defect in their apartment with 55% citing water penetration from outside, 51% internal waterproofing issues and 45% structural cracking.

Similarly, 59% of Victorian respondents (which represented 28% of the overall sample) reported having a defect in their apartment with 58% citing water penetration from outside, 39% internal waterproofing issues and 39% structural cracking.

However, unlike the rest of the Nation, NSW owners were more proactive, with 61% indicating they had undertaken a building inspection (compared to 49% in Victoria), and with 48% of these in the last two years.

Samantha Reece, Director of Australian Apartment Advocacy (AAA) stated that while 30% of those with defects had reported they had been fixed, the remaining 70% had in the majority been waiting up to two years for any action to be taken.

“This research is disappointing as there appears to be very little recourse for owners to fast track repairs and for developers and builders alike to be held accountable,” Ms Reece said.

“Furthermore 84% of the NSW respondents were aware of who was responsible for fixing the defects, but 57% of the repairs lay with the Owners Corporation adding further expense to owners. In addition, 24% of those with defects also lacked confidence that they would be repaired at all.

“With this in mind, 66% of those that experienced defects also stated it had impacted their decision to buy an apartment again and 39% of this sample would not recommend apartments again (while 31% would).

“In contrast for the 40% that had not experienced defects, 62% would recommend apartment living on par with AAA’s national survey in January 2019.”

The research also found:

  • The issue of defects was highest among buildings up to 14 years in age
  • 35% stated they had found the identification of defects extremely stressful
  • 33% stated that they were not inconvenienced by the repairs and
  • 33% only moderately

Ms Reece stated that while the NSW Building Commissioner David Chandler was seeking to implement changes within the sector, buyers also needed to be more conscious when buying and then owning an apartment.

“There is no doubt that defects are applicable to any new build – whether that is a stand alone house or apartment,” Ms Reece said.

“However, buyers should consider engaging a buyer’s agent prior to settling and Owners Corporations need to also be proactive with undertaking annual building inspections to ensure any issues are identified in a timely fashion.

“Strata Managers certainly play a major role in working with Owners Corporations for identifying and reporting any defects and the more experienced companies can assist with easing the stress of this process.

“There is no doubt that 80% of the building issues can be attributed to 20% of developers and hence buyers need to undertake vigorous research and only buy from trusted companies.

“But ultimately we want the State Government to be more heavy handed with those developers and builders that are repeat offenders in order to create greater consumer confidence.”

The AAA is now calling on the NSW and Victoria State Governments to implement a suite of changes including:

  • Creating a portal so apartment owners who are waiting longer than 18 months for repairs can report the matter for further investigation and then enforcement by the relevant authorities
  • A grass roots education campaign be implemented so buyers are aware of how they can minimise the likelihood of building defects
  • Builders and developers who are repeat offenders (3 strikes) have their registrations revoked
  • Benchmark research be undertaken with all new buyers over a six year period to ensure actions taken by the Government create more buyer certainty and confidence

In conclusion Ms Reece stated that affordability was a major driver for NSW apartment buyers and hence they needed to feel confident that their purchase offered longevity and security.

“The average difference in median price for a house versus a unit in NSW is $400,000 and buyers can avoid up to four years in savings if apartments are their preference,” Ms Reece said.

“There is no doubt that if we wish to maintain that apartments are the preferred choice then we need to offer a level of certainty and at the moment our regulatory systems are not providing this surety.

“We are confident that the actions currently being proposed by the NSW Government will bring about positive change but it is our role to advocate on behalf of our members.”

AAA is the voice for people who choose to own and live in apartments across Australia – representing 2.5 million voters nationally.

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