“Real Consumer Protection” for Buyers of Off-the-Plan Apartments

“Real Consumer Protection” for Buyers of Off-the-Plan Apartments

Owners Corporations in NSW

On 2 June 2020, Residential Apartment Buildings (Compliance and Enforcement Powers) Bill 2020 (NSW) (“the Bill”) was introduced in the NSW parliament.

The Bill was the result of significant and widely covered structural building defects that had plagued apartment buildings in Sydney – namely Sydney’s Opal and Mascot towers.

On 1 September 2020, owners corporations and Committees in NSW will be granted increased protection with the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (“the Act”) coming into force.

Karen Stiles of the Owners Corporation Network (a non-profit advocacy for owners and owners corporations) called “real consumer protection” for buyers of off-the-plan apartments. And it couldn’t have come sooner.

We speak with and work with many (too many) Committees and Owners Corporations that are enduring the stress and costs of building defects.

 

Owners Corporations in Victoria

Whilst Victoria may not have had two large towers with significant structural issues, it doesn’t mean that there are issues out there.

There are still many owners corporations in Victoria facing building defects – namely issues with cladding, water leaks, and, build quality.

Will the Victorian Government undertake their own review in this respect?

 

Combustible Cladding is Currently the most Significant Building Issue Facing Owners Corporations in Victoria.

While Victoria may have been spared critical structural issues that afflicted NSW, the number of buildings with dangerous cladding in Victoria is more than double the number in NSW.

Based on public domain information, there around 1070 buildings in Victoria with dangerous cladding, compared with 405 buildings with flammable cladding in NSW, as at 31 July 2020.

The cladding issue has been ongoing in Victoria for several years. It is visible, dangerous, affects hundreds of high-rise residential buildings in Melbourne, and there is no clear pathway or time frame for completion of rectification works nor resolution of the vexed issue of how it should be funded.

The Government has guaranteed funds for only the 15% of buildings deemed to be the highest risk (approx. 160 out of the estimated 1070 buildings), and expects all other buildings with non-compliant cladding to finance the rectification works themselves, presumably by their Owners Corporation raising a levy. There is no consumer protection, indeed quite the reverse with some buildings also finding it difficult to obtain re-insurance; and the flow-on effect could see resale of apartments becoming more difficult.

All because due diligence wasn’t carried out by the Building Industry before allowing Aluminium Cladding to be used as a façade on many high-rise buildings!

Owners should not be required for pay for rectification for something that was totally out of their control. The Government needs to hold the Building Industry to account and examine procedures that allowed this disaster to happen. They should also find a fair and reasonable method for funding the rectification.
 

Background

Three fires in high-rise buildings in a little over four years from late 2014  – Lacrosse and Neo in Melbourne, and Grenfell Tower in the UK  – were found to have been caused by combustible aluminium cladding.

The Owners Corporation at Lacrosse in Docklands sued all the entities associated with the design and construction of the building for $24 million dollars. The Builder L U Simon was initially found guilty, but his defence of being unaware that the cladding was combustible was accepted and damages were shared (not equally) between the architect, surveyor and fire engineer.

L U Simon was also the Builder for the Neo building in the CBD.

The Lacrosse Building is the first building we know of where rectification is complete – but they had the funds to do it!

 

Timeline of Events

Lacrosse Building Docklands 24th November 2014 no lives lost

https://www.melbourne.vic.gov.au/sitecollectiondocuments/mbs-report-lacrosse-fire.pdf


Grenville Tower London 14 June 2017 loss of 72 lives

https://www.archpaper.com/2020/03/new-details-grenfell-fire-details/


Neo 200 Melbourne CBD 04 February 2019 no lives lost

https://www.abc.net.au/news/2019-02-04/spencer-street-apartment-fire-melbourne/10776018

In each of the fires, Combustible Aluminium Cladding was responsible for the dramatic acceleration of the fire, but was not responsible for starting them.


The Victorian Cladding Taskforce was established 03 July 2017

https://www.planning.vic.gov.au/__data/assets/pdf_file/0019/426034/DELWP0124_Victorian_Cladding_Taskforce_Final_Report_July_2019_v9.pdf

The Victorian Building Authority (VBA) were given the task of identifying all commercial and residential buildings with combustible cladding. This was mostly carried out on foot by VBA and Local Council officers.

https://www.vba.vic.gov.au/

1069 residential buildings were identified in a VBA Audit as having combustible cladding. This list has never been released.

Some Local Councils were involved in identification of buildings with suspect cladding. They have also been responsible for serving Building Notices and Building Orders for non-compliant cladding on Owners Corporations.

The State Government announced they would fund the top 15 buildings deemed to be at greatest risk, and made an offer of cladding ‘rectification’ loans that could be paid via one’s council rates to everyone else. To take up this offer owners corporations would first need to pass a Special Resolution. The offer was withdrawn a few months later, probably because no building took up the offer!

In July 2019 the Cladding Taskforce was replaced by Cladding Safety Victoria (CSV).

https://www.vic.gov.au/cladding-safety

The role of CSV has been to work with the OCs of buildings referred to them by the VBA, to establish whether they are eligible for government funding and assist them in working through the rectification process to completion.

Currently 200 + buildings are at  various stages, but there is no indication yet if any building has completed the process.

 

We Live Here – Advocacy Group for Owners Corporations

We Live Here is an advocacy group that arose from the long-running Watergate case that was established 16 months ago (from April 2017) with the aim of giving a voice to and protecting the rights of owners and long-term residents in apartment buildings. Until now residents have been the forgotten people in the debate on short stays, particularly those of us living in buildings classified as residential, such as mine, which are not designed for quasi-hotel-style accommodation.

 

We Live Here has a supporter base representing almost 500 buildings throughout the greater Melbourne area and beyond, including interstate and overseas, and also includes individuals such as architects, lawyers, town planners, academics, councillors, politicians et cetera who are interested in what we are doing. We note that there are over 1.6 million people living in an owners corporation in Victoria, which represents over a quarter of the total population, and that figure is only going to get bigger. So it is vital that our voice is heard.

 

If you would like further information about We Live Here, Barbara can be contacted by email at barbara@welivehere.net or visit We Live Here

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