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Would you advise a friend not to buy off the plan?

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There was a survey of 500 apartment blocks conducted earlier this year by NSW Building Commissioner David Chandler’s team.  It found that more than one-third of new buildings had serious defects.

However, just as chilling was the claim that 90 per cent of strata managers and committee members said they would not recommend buying an apartment off the plan to a friend, family member or business associate.

Defects can be fixed.  Once confidence has been erased, it’s hard to build it back.

The reticence of professionals and residents can partly be explained by their not wanting to be responsible for dropping someone they care about into a world of potential emotional and financial pain.

It doesn’t mean that they would never go down that road themselves, if they felt suitably well-informed and equipped to deal with most misfortunes that might arise.

However, those potential problems can’t be shrugged off.  Karen Styles, Executive Officer of the Owners Corporation Network – the peak body for apartment owners – recently reiterated her vow never to buy an apartment that was less than 10 years old.

Doubtless, part of her thinking is that after 10 years you probably know what problems the building has had and whether or not they have been fixed.  If it’s still standing after a decade, you can be pretty sure it’s solid.

That said, the owners of Mascot Towers apartments probably thought that too before their unit block started sinking into the ground, around its 11th birthday.

Unless you are prepared to do the legwork yourself, checking the bona fides and track records of the developer, builders, architects and certifiers, why would you recommend an off-the-plan purchase to someone close to you? Your misplaced confidence could lead to years of misery for someone else.

This is the dilemma facing David Chandler. His job is to increase confidence in the NSW apartment building industry when many of the people living and working in it have very little themselves.

Actually, his challenge is to create confidence, a quality that’s clearly absent in the apartment building industry right now.

He knows the best and probably only way to achieve that is to cut through all the flim-flam of glossy advertising and broken political promises and inject some reality into the equation. And that presents him with a unique conundrum.

He needs to show that things are getting better, but to do that convincingly, he must reveal how bad things really are.  And every time he highlights a problem with a building, a developer or a section of the industry, he slightly erodes the confidence he is trying to build.

For instance, Mr Chandler is reportedly targeting the 11 worst certifiers in NSW – those who have been associated with the most failed projects in the past – demanding to see details of their projects that are nearing completion.

This tells us that there are a lot of suspect certifiers in the state.  But it also signals that someone who understands their shortcomings is on to them.

It’s all about confidence. The proposed voluntary star-rating that Mr Chandler has introduced will, theoretically, see the best developers subject their projects to close scrutiny and presumably be rewarded with symbols of excellence.

They will be encouraged to use their stars in advertising material.  Those who can’t might as well replace the stars with question marks on their brochures.

Confidence can be elusive but people in the industry are already defining projects and professionals as pre-commissioner and post-commissioner.

That should at least give David Chandler some confidence that he is on the right track.

This column first appeared in the Australian Financial Review where Flat Chat is published every Saturday.

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