With apartment prices rising slower than that of houses in Sydney, many prospective buyers are taking a good, hard look at high-rise Sydney apartment living.
But with a new report showing more than a quarter of Sydney apartments have at least one flaw, due diligence is more important than ever.
The Cracks in a Compact City report from the University of New South Wales (UNSW) provides a sobering look at the state of Sydney apartments.
Researchers looked into 635 strata schemes registered between 2008 and 2017, finding 26% contained defects but added that a lack of reporting means the figure is “likely to be a poor estimate of true defect prevalence.”
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In fact, in roughly half the schemes (314), where more robust data was available, 51% of apartments had at least one defect and 12% had 10 or more defects.
Of the reported problems, 42% were related to water issues such as water-proofing, or water entering from outside and 26% were for cracking.
While the researchers highlight that their data doesn’t show the severity of the defects, for instance, if cracking was cosmetic or structural, the median value of payouts ordered under NSW legislation (repair costs plus litigation fees) of $500,000 was cited as an indication of the potential financial impact of the flaws.
The Cracks in a Compact City report aimed to address a lack of data around apartment quality in Australia.
Its major finding was that there is still a long way to go in systematically documenting building flaws to provide Sydney apartment buyers with accurate information on which to make informed decisions.
“Currently, it is very difficult for apartment buyers to tell a good-quality apartment from a poor one, as information is lost or hidden,” the report states.
It called out all players in the value chain – designers, developers, and builders – saying that while some realised their reputations rested on good outcomes for their customers, poor culture in the industry meant it has been “too easy for developers to escape their responsibilities and to pass off poor quality buildings as ‘luxury’ products.”
Prospective Sydney apartment owners should, of course, do their own due diligence.
As with any property purchase, a building inspection is money well spent. However, according to Fair Trading New South Wales, building inspectors “will normally only inspect and assess the condition of the interior and immediate exterior of the unit”.
To get a more thorough understanding of the condition of the entire Sydney apartment strata development, buyers should also ask the inspector for a “special-purpose” property report, often called an apartment inspection report or strata inspection report, or commission one separately.
These inspections can unearth problems throughout the building or complex, including common areas, parking, roofs, and basements, which as a strata owner you will ultimately have to pay to repair.
Unfortunately, as the UNSW study unearthed, there are no standards for these inspections, so always check beforehand to get a list of areas that will be looked at.
For buyers of new Sydney apartments, the situation is even more challenging, with the report noting: “In the (new) apartment market, apart from the price and some pictures in a glossy brochure, off-the-plan buyers are almost completely in the dark as to what they are buying.”
But it’s not all bad news. Since researchers began their study, the NSW government has established the Office of the NSW Building Commissioner (OBC), to lead a “once-in-a-generation reform of the design and building industry”.
The resulting Construct NSW strategy provides a mandate to put measures in place to “ensure buildings are safe and secure throughout their entire useful life” and “improve the quality and amount of data captured”.
While the reforms predominantly target new construction, they importantly give the OBC power to order rectification of defects for up to a decade after a certificate of occupancy has been granted.
So, if the Sydney apartment complex is less than 10 years old, strata owners have recourse to have the builder/developer to fix their mistakes.
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Words by Erin Delahunty