The University of NSW (UNSW) has issued a new report on Defective Buildings in new apartment developments.
Titled ‘Cracks in the Compact City: Tackling defective buildings in multi-unit strata housing’[1]. The report highlights the need to reduce risks arising from the problems for new strata owners, the costs for rectification and makes 30 recommendations for improvement.
The report found that out of the 314 NSW strata schemes assessed, 51% had evidence of at least one defect, and 12% have evidence of at least ten types of defects. The most common defects were the ‘big three’, water 42%, cracking 26%, and fire safety 17% issues.
Using the case law data from the NSW Home Building Compensation Fund (HBCF)[1] the report shows the median estimated costs and the ordered payout is $500,000 for defective buildings, with the largest figure mentioned $14.3 million. Approx. 1.4% of the strata schemes showed estimated rectification costs to be approx. 10% of the contract sum. In four instances the cost of rectification exceeded the original contract value for the development. The report stated that claims by some that ‘defects are rare and the defects ‘crisis’ is simply an exaggeration of cosmetic issues’ is not supported by the facts.
What can a prospective apartment buyer do to minimise defective buildings?
- The first is to wisely choose the developer and builder. Look for prior reports of poor quality and litigation
- Get an inspection by a qualified and reputable consultant such as a structural engineer and check with the strata manager regards any outstanding defects or litigation
- Are the Manuals properly compiled and readable or just a great mass of files and scanned images?
- Do the Manuals include the contact details and insurance policies of the developer, builder, designers, and sub-contractors/installers
- Is a copy of the occupation certificate included plus all the supporting compliance certificates from all parties? This includes each designer and consultant, plus sub-contractors and suppliers
- Check to see if the final as-built plans are included and properly labeled
- Does the Manual include a schedule of equipment and assets and a comprehensive maintenance schedule for all the elements?
- Are there copies of the various supplier and product warranties, remember these can be 5,10 and 20 years or more and can represent real value to an Owners Corp in later years long after the developer has departed
- Is there a copy of the essential services or fire safety schedule defining the items that must be maintained by the Body Corp?
- Are there copies of the designer’s final design reports including their safety in design assessment and any performance-based solutions (where the design deviates from the relevant codes)? This is especially important for fire services
- Does the Manual include copies of the signed commissioning reports for the various critical elements. Such are water tests for the roof, cladding, bathrooms as well as fire systems, etc
- Are there copies of the various supplier and product warranties, remember these can be 5,10 and 20 years or more and can represent real value to an Owners Corp in later years long after the developer has departed
- Is there a copy of the essential services or fire safety schedule defining the items that must be maintained by the Body Corp.
- Are there copies of the designer’s final design reports including their safety in design assessment and any performance based solutions (where the design deviates from the relevant codes). This is especially important for fire services
- Does the Manual include copies of the signed commissioning reports for the various critical elements. Such are water tests for roof, cladding, bathrooms as well as fire systems etc
You can also ask if the Building Manuals were created using OmTrak. The inbuilt QA and structured formats give owners a major advantage and demonstrate a commitment by the developer and contractors to providing a quality set of manuals. If you are concerned our team of consultants can assist in a high-level review of the Manuals.
Defective Buildings – wisely choose the developer and builder
[1] Crommelin, Thompson, Easthope, Martin Loosemore, Hyungmo Yang, Buckle and Bill Randolph, City Futures Research Centre, UNSW Sydney, Cracks in the Compact City: Tackling defects in multi-unit strata housing, Oct 2021
[1] The HBCF dataset covers all NSW multi-unit buildings of three or fewer storeys with builders insurance policies taken out between 2010 and 2020