The advice from Owners Corporation Network spokesman Stephen Goddard could not have been more blunt: Don’t buy apartments off the plan.
His actual words in an opinion piece in the Sydney Morning Herald were “prudent purchasers cannot buy strata ‘off the plan’ or, given that most defects emerge within a decade of construction, any residential strata building less than 10 years of age.”
Mr Goddard (pictured), a strata lawyer and veteran of many a unit block battle against dodgy developers, has a point, notwithstanding the fact that the Mascot Tower that started falling apart a couple of weekends ago is actually 11 years old.
All that shows is that even extreme caution will not protect you if you put your money into the wrong chunk of concrete and glass.
The OCN and this website and newspaper column have been making those sorts of noises for years, largely ignored or dismissed by a conga line of training-wheel Fair Trading ministers, some of whom have in the past seemed more concerned about the party donations (rather than guarantees) that they could extract from developers.
Their consistent failure to impose any sort of quality control on developers and builders have led us into a situation where we are simply waiting for the next brick to fall. The one thing on which all observers agree is that Opal and Mascot Towers are not the last examples of government and corporate failure that we will see.
And there’s a growing recognition that there are countless buildings out there, faced with serious defects, constructed by developers and builders who have shut up shop (only to reappear elsewhere with a different name).
There, the owners – the only body that has an absolute legal responsibility to maintain and repair – who have quietly decided to dip into their own finances to fix serious problems rather than have to pay for the fixes anyway but have the extra burden of loss of value when their block is identified as a “problem building”.
The systemic failure to protect consumers – investors, owner-occupiers and, ultimately, tenants – has a long history. Much of it goes back a couple of decades when self-certification allowed the worst offenders to construct buildings, some of which were so flawed that local councils wouldn’t issue certificates of occupancy.
The picture, outlined in bleak detail in a feature in the Sydney Morning Herald, revealed a rich vein of corruption, ignorance, incompetence and buck-passing. And that’s just NSW. In Victoria you need 75 percent of owners to agree to even seek legal representation, let alone run a case.
In Queensland, the system is so profoundly corrupt, that developers are allowed to sell management contracts that owners have no part in negotiating, zero chance of getting out of, and have to pay a premium on their levies to cover the managers’ cost of buying the contract in the first place.
The message to apartment owners from our state parliaments is, please buy these nice new shiny apartments – we need the urban growth – but don’t come running to us when they fall apart.
As apartment owners and residents, our place in Australian society is cannon fodder in the battle to house more people in our ever-expanding cities. The government is happy to take your stamp duty when you buy a home but turns their back as soon as things turn ugly.
The flammable cladding fiasco is just another example of corporate greed and political indifference leading to another bill landing in unsuspecting owners’ laps. The governments of both NSW and Victoria are happy to “assist” owners by telling them that their buildings are covered in this potentially fatal material – then follow up by insisting that if the block is more than six or 10 years old – or if the developer has gone to the business blender to emerge as another entity with no responsibility for previous misdeeds – owners must fix it and do so at their own expense, if need be.
So what can be done?
The first step would be to follow Stephen Goddard’s advice and don’t buy off the plan, and be very wary of new, completed buildings, especially those that are near the end of their six-year warranty period without defects having been identified and fixed.
Let’s face it, by continuing to gamble hundreds of thousands of our dollars on highly dubious investments, we are feeding their addiction. So just stop. It may be the only way to get the attention of the people who have caused this problem in the first place – politicians, developers and builders.
Apart from anything else, this recognises what a high-risk endeavour buying new and off-the-plan is. There was a time that your risk was potentially rewarded when the prices were lower and you gained when the market went up.
Nowadays, the chances are that developers have already factored future profits into the price – there’s no way they think you should get money they believe is rightfully theirs. So let’s boycott new projects until the developers and their mates in high places start offering some guarantees.
But doesn’t this harm the handful of good developers building quality projects?
Yes, possibly, but then they should get their own house in order (no pun intended) by calling out the crooks and cheats in their industry, rather than ring-fencing themselves against the common enemy – their customers.
And how about a star rating system based on defects discovered in developers’ previous projects and how they responded to them. And I mean a proper system, not like the ludicrous food labelling that seems to be designed to encourage us to eat more bad food (but feel less guilty).
How about making the developers of dodgy building personally responsible for the quality of their product for, say, 10 years, regardless of whether the company is still trading?
How about taking strata out of Fair Trading where it gets lost in the midden of broken kettles and dodgy mechanics? Strata should be part of a planning and housing super-ministry (although the Sir Humphreys of Fair Trading would never allow their fiefdom to be so diminished).
How about setting up a strata disaster relief fund, paid for from a combination of stamp duty and a developer tax, to fix buildings that start falling down (with persistent culprits charged more and good performers charged less)?
And how about all sides of parliament – government, opposition and cross-benches – admitting they and their predecessors got it wrong and are prepared to make restitution and help apartment owners out of the mess that politicians and their cronies created.