Six months into the task of rebuilding confidence for purchasers of new residential apartments in NSW, state Building Commissioner David Chandler claims the game is already changing.
Mr Chandler, speaking exclusively to Flat Chat, believes that legislation currently going through parliament will have a very early impact.
However, in the interim, he says prospective purchasers should do more checking themselves of developers, their past projects and feedback from buyers before they buy new and off-the-plan apartments.
‘There are more than enough good developers out there that would easily pass a check into their recent projects and customer experiences,’ he told us during an informal chat. ‘I would not hesitate to buy an apartment off these players if I was looking to purchase in the market now.’
But his message is pretty plain to other less reliable developers: ‘Look out, cowboys!’ he says. ‘The game has changed.’
“Basically, 20 percent of developers are cowboys and 20 percent are borderline to OK, and 60 percent are fine,” he said. “We will focus on the bottom 20 percent and start cleaning them out.”
He says it’s not hard to spot those players that have a background in pheonixing, not paying their subcontractors or having left behind a “chain of lousy occupancy certificates”. He adds that the good players – developers, builders, contractors and certifiers – as well as consumers, are all calling for action.
New powers to deal with shoddy developers
The Commissioner says he should soon have substantial new powers to deal with shoddy developers. With these powers the Commissioner will then launch a team of 30 auditors to oversee the final stages of certifiers working up Occupancy Certificates.
These auditors will forensically check the work of certifiers to ensure they meet the requirements of a Certifiers Practice Guide now being finalised by the building regulators office.
The practice guide will not create new requirements, it will focus on what should already being done and whether that meets the Building Code of Australia. He believes certifiers will be pleased that such a benchmark will make their job clearer to developers and builders from here on.
Mr Chandler says he is also developing new tools that will help assess the riskiness of building compliance by aggregating the backgrounds of the developer, builder and certifier on a project basis.
His office will use this tool to identify about 10 percent of projects approaching completion and to apply an audit of the Occupancy Certificate lead up.
Mr Chandler makes the point that purchasers rely on Occupancy Certificates to be trustworthy as they transition from being a depositor to an owner.
He says he believes that most certifiers are very professional and want to be part of assuring good buildings. Often, they become the meat in the sandwich, their fees are screwed down and they are under too much pressure to just sign off. This needs to change. He hopes that certifiers will now price their services to do the full job.
Occupancy certificate standards
The NSW government has mandated the Building Commissioner to drive change in the industry and to rebuild confidence amongst its customers – especially for off the plan apartment sales. Early emphasis to lift occupancy certificate standards will be a first step.
Mr Chandler emphasises that he believes that by and large the industry has good players building quality buildings and that it is the contagion of less than 20-percent that cause the greatest number of serious defects regularly reported in the media.
He says, his work is focused on curtailing the bad players while enabling the good players to be recognised. This will take a few years to achieve, he feels that the message is already getting out: “if you do not build it right there will be consequences.”
The new Certifiers Practice Guide will place a strong emphasis on structural integrity, waterproofing, the “skin” of the building, fire safety and possibly even acoustics. These are the material defects that cause the most impact on apartment purchasers.
Design and building laws
The new Design and Building Practitioners Bill will be an important part of turning the industry around. Mr Chandler credits the drafters of the Bill with tackling the root cause of poor building outcomes. He believes that bad outcomes can be traced to inadequate design and then leaving builders to work it out on the project.
This weakness is then passed to sub-contractors who are literally told to sort it out. These contractors are all calling for more complete designs where they can properly price the work and do it right.
Mr Chandler says he has spent considerable time with owner organisations, strata managers and the key industry players; almost all are in support of the government’s plan to turn the industry around.
Chandler points to the Minister for Better Regulation Kevin Anderson’s commitment and drive to get this done.
“This is a once off opportunity for the construction players to reset and become a more customer facing industry,” he says.
Once the good players can be shown to deliver trustworthy buildings, he believes that insurers will more confident to acknowledge their work. Chandler has already commenced exploring how a 10-year first resort insurance product could be offered by good developers to future purchasers of new off the plan apartments.
“We want to get the insurers to feel confident enough about the good developers to start offering building construction insurance,” he says. “And when one lot has a building that has insurance cover, and the guy next door doesn’t, guess where the purchaser is going to go. Market forces will make the whole industry lift its game.
David Chandler says there’s not a lot he can do about buildings that are out of warranty period. His focus is to protect the purchasers of the thousands of apartments expected to come on stream every year from here on.
And then there’s existing older apartment blocks, many of which are falling into disrepair as owners’ corporations try to hold down levies by not carrying out essential repairs. This will be the next area to which the Commissioner will turn his attention.
“It is no good building confidence in new buildings if that risks being eroded by problems if buildings are not looked after properly,” he says.
“There is a lot to do, but with a unique level of cross sector support for change and reinstating confidence in the industry there will be many dividends. Increased housing supply and importantly, economic activity and jobs will benefit.”