IN view of the history of the apartment development industry …
PERHAPS developers may have good reason for diverting attention away from where the defects arise? …
KEY POINTS …
–helping owners corporations resolve problems caused over the past decade
.by way of 20-year very low interest loans to affected strata titles
-the regulation of the industry needed to be overhauled
The Insurance Council has criticised state governments for a failure to implement the recommendations of a report written by former senior public servant Peter Shergold and lawyer Bronwyn Weir, completed in February 2018.
- DEVELOPMENT OUTRAGE
Immediate reforms: Triguboff’s Meriton wants building industry change
By Jacob Saulwick and Tom Rabe
JULY 12 2019
Harry Triguboff’s Meriton wants immediate reforms to the construction industry in NSW to stop substandard buildings from going up, as a growing number of experts argue the government should issue low-interest loans to apartment owners battling defects.
The perception of a crisis in Sydney’s residential apartment market snowballed this week after theHerald revealed another evacuation of a unit block at Zetland, while the Premier conceded that self-regulation had failed.
VIDEO: Owners and former tenants recount chunks of plaster falling from the ceiling ?
Some in the development industry have warned that buyers could be scared off by the focus on apartment defects. But a spokesman for Meriton, whose ubiquitous apartment blocks (everywhere) have made founder Mr Triguboff one of the country’s richest people, said the company had * “full confidence that everything will be resolved.” *
However, the Meriton spokesman also said the government should “immediately” implement a simple change to industry practice.
“We think the process can be improved, such as the engineers should be checked on their designs by an independent engineer like in Victoria where the private certifiers are required to do so,” the spokesman said.
Others have argued for more substantial reforms.
An indication of the scale of the problem in the apartment market has been the retreat of providers of professional indemnity insurance for certifiers and building surveyors.
The NSW government has proposed to allow building certifiers to operate without insurance for claims relating to cladding, while the Victorian government has proposed similar changes.
*David Chandler, an adjunct fellow at Western Sydney University who led the construction of Australia’s Parliament House, said governments needed to focus on getting private insurers back into the market, through convincing changes to building regulation.
But implementing such a plan would probably take at least three years, Mr Chandler said. In the meantime, the government could restore confidence in the market by helping owners corporations resolve problems caused over the past decade.
“That could be by way of, say, 20-year very low interest loans to affected strata titles who could scope and apply for the funds necessary,” Mr Chandler said.
“These loans would be set up by way of a special levy and owners could pay instalments in the normal way or if unable to defer these – they would be then payable at each sale point of a property. There would be no impact on individual mortgages or finance arrangements – other than to reinstate value.”
Marcus El Safty, a consulting engineer who had been engaged by the owners corporation at the recently-evacuated Mascot Towers, said offering-low interest government loans to strata committees would be a “great idea.”
Mr El Safty said the cost of those repairs could then be spread across manageable repayments “over a period of time, by already distressed owners.”
“It will restore property value, to a reasonable extent, and give confidence to lenders and purchasers,” he said.
In the longer term, Mr El Safty said, the regulation of the industry needed to be overhauled. “The whole thing is dysfunctional.”
Chris Johnson, the chief executive of the developer lobby group Urban Taskforce, said a lack of consumer confidence in the apartment market could emerge as a “big problem.”
“I think there could be a real lack of consumer confidence that could well start occurring by people saying, ‘Well, look, I just don’t want to buy one of these,” he said.
“I think the government needs to underpin some confidence level back by saying that, number one, that there be an independent engineering report on engineering for certain buildings.”
A third Sydney apartment block is now under scrutiny over severe defects and safety issues.
The Premier, Gladys Berejiklian, said this week that self-regulation in the industry had not worked. Her government is consulting until the end of the month on a “Building Stronger Foundations” reform package, which includes the creation of a building commissioner, and the registration of more participants in the construction process.
*But lawyers and other industry groups have argued that more substantial changes are needed.
*Stephen Goddard, a spokesperson for the Owners Corporation Network, said the possibility of low-interest loans was a “public conversation worth having to protect the interests of the innocent.”
“Access to low interest loans, repayable over five to 10 years, is an important lifeline to consider,” he said.
State and territory building ministers are meeting in Sydney next Thursday to discuss the regulation of the industry.
*The Insurance Council has criticised state governments for a failure to implement the recommendations of a report written by former senior public servant Peter Shergold and lawyer Bronwyn Weir, completed in February 2018.
“The current state-by-state approach is disjointed and inefficient,” an Insurance Council spokesman said.
Ken Morrison, the chief executive of the Property Council, said the Shergold/Weir recommendations had the support of the industry, which wanted ministers to “absolutely commit to locking down these reforms for once and for all.”
“Overwhelmingly, people should have confidence in the quality and safety of our built environment,” Mr Morrison said.
Jacob Saulwick is City Editor at The Sydney Morning Herald.
Tom Rabe is a journalist with The Sydney Morning Herald