• Defects are likely, but often underreported
  • More robust documentation saw evidence of defects in more than half of apartments, with more than a quarter having three or more types of defects
  • Water issues were the most common

51% of Australian apartment buildings sampled in a new study were found to be riddled with defects, according to recent research by the University of New South Wales and the University of Technology Sydney.

The Cracks in the Compact City: Tackling defects in multi-unit strata housing report stated poor business culture, capacity to carry out construction, and regulatory oversight in parts of the building industry have made buying an apartment a lottery for many purchasers in Sydney.

The researchers found defects are likely but often underreported after looking at strata schemes registered over a 10-year period.

Analysing a random sample, completed in the Sydney, Parramatta, and Canterbury-Bankstown LGAs, evidence was found of defects in 26% of the 635 schemes.

However, researchers believe the real number is much higher with defects being masked by inadequate reporting and documentation.

With the more robust documentation of sample schemes available, there was evidence of defects in more than half (51%), with more than a quarter (28%) having three or more types of defects.

Water issues were the most common issues reported estimated to be present in 42% of the schemes with robust data.

Lead author of the report and planning expert with UNSW’s School of Built Environment Dr Laura Crommelin said, “Over the past 20 years there hasn’t been a thorough process of collecting information about the quality of buildings, and documenting issues with buildings.

“It’s currently almost impossible for a regular consumer to do proper research about what they’re buying, and this is in a system based on the idea of ‘buyer beware’.”

Dr Crommelin, lead author of Cracks in the Compact City: Tackling defects in multi-unit strata housing

Dr Crommelin said, with the drive to construct more buildings more quickly, the pressure for speed and reduced costs, plus the trend towards regulation, sees high-quality oversight and documentation among the first to be neglected.

Information unavailable to buyers

There is a very significant power imbalance between developers and buyers, according to Dr Crommelin.

“When you’re talking about individual consumers, who don’t know how construction works and don’t have the same negotiating power over the terms of sales contracts, you don’t have the same protections.”

Dr Crommlein said the lack of coordination between consumers and developers make it difficult for future buyers to know about defects or get them fixed once discovered.

Dr Laura Crommelin is a planning expert with UNSW’s School of Built Environment. Image – UNSW

“The good developers will come back, they’ll fix the problems, they want to make sure that their clients are happy because they care about their reputation.

“The real concern is the ones who do everything they can to avoid coming back to fix problems.”

NSW Building Commissioner

This comes after the NSW Building Commissioner announced 4 in 10 buildings “have some form of major defects”.

A new Strata Community Association NSW survey found it costs an average of $331,829 per building to fix with resolutions rare taking up to a year.

The common barriers to resolve defects found were sourcing funds, lack of awareness about rights and responsibilities, and disagreement among the owner’s corporation on the approach to take.

Waterproofing was the most common major defect, at 23%, followed by fire safety, at 14%.

Almost one in 10 buildings had structural and enclosure defects, including anything protecting homeowners from the elements.

NSW Building Commissioner David Chandler said the findings were nothing to be proud of.

Mr Chandler was appointed to the role of NSW Building Commissioner in 2019. Image – ANZSOG

“We would expect this (result) is the same situation in every other state.

“I can assure you that every other state in Australia will be looking at this (saying), “there is not much difference here””.

The Owners Corporation Network chief executive Karen Stiles said, “As the peak body for residential strata owners, (the network) strongly supports research into the incidence and impacts of serious defects.

“The more we know, the better we can tackle the systematic failures (that) cause so much suffering for affected owners and residents.”

Ways forward

The NSW government created the Office of the Building Commissioner to reform the building and construction industry after the Opal Tower fiasco in late 2018 and the Mascot Towers evacuation in June 2019.

With the reforms working their way through the industry, Dr Crommelin said cultural change takes time, and after more than 30 years of deregulation the government needs to play a strong ongoing role in ensuring industry transparency and accountability.

“When you have the kind of market dynamic where the vendors have all the information, you need strong oversight to make sure that power balance doesn’t warp the way the market operates.

“You need government to step in and play that tole on behalf of consumers because they can’t play it themselves.”

The recommendations made in the report to protect consumers include:

  • Require developers to produce comprehensive, consumer-friendly records to buyers
  • Ensure ongoing resourcing for a building regulator
  • Make defect inspection and reporting processes more consumer-friendly
  • Strengthen strata record-keeping and inspection processes
  • Keep improving government information collection, sharing and digitisation
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