OCN MEDIA RELEASE: 19 August 2019

‘Hands Off’ regulation leaves thousands of apartment owners ‘out in the cold’

“The residential building industry has abandoned apartment buyers and the risk of costly defects has been shifted onto innocent apartment home buyers left devastated by sub- standard work” Jane Hearn, Director of the Owners Corporation Network said today.
The Owners Corporation Network (OCN) is the only association of apartment owners whose sole purpose is to be an independent voice for strata owners.

“Self-regulation was introduced in the name of housing affordability but buildings standards have declined, consumer protections wound back and even the government will not insure residential high-rise buildings”, she said.

“The Four Corners program aired on Monday night reveals the extent of the problem, especially in NSW. It is self-evident that NSW has systemic failure in the industry and in the regulatory system,” she said.

According to the Four Corners report, 667,000 new apartments have been built in the last 18 years with 70% or more handed over to unsuspecting owners with building defects. NSW fared worst with 90% of new buildings defective. Waterproofing and fire safety are the most common defects, both of which are essential to building amenity or safety.

“In NSW, someone can build over three storeys with less scrutiny than a regular home builder. It is too easy to avoid warranty obligations by using $2 companies, and leave innocent buyers, many on fixed incomes, with millions of dollars in rectification bills”,
“Four Corners has uncovered the legacy of extreme hardship for far too many apartment owners including bankruptcy, being forced out of their homes, or both. These are innocent victims of systemic failure and they need help”.

“Law abiding citizens pay their stamp duty and their taxes – they expect government to regulate to protect them. It is a massive breach of public trust”, she said.

“NSW has no Building Commission, and no coordinated strategy to assist owners with flammable cladding or other major defects when there is no one to sue. Victoria has started down this path with an assistance package to remove unsafe external cladding and other Governments should follow suit.”

OCN has recommended to the NSW Government that it:
(i) Develop a strategy to finance and ensure rectification of buildings with flammable cladding as a priority. Create a single agency and provide a coordinated strategy with clear information and guidance to the industry, local council and strata owners.
(ii) Look into funding options for owners left with significant defects and no-one to sue, such as long term no interest or low interest loans – the commercial rate of 7% is not acceptable.


In the past few weeks OCN has recommended:

–  a properly resourced building commission and the introduction of a ‘clerk of works’ type role – someone who is responsible for point in time inspections as a construction project progresses;
–  retrospective non-delegable statutory duty of care across all practitioners to overcome a High Court decision in 2014 that found a builder did not owe an owners corporation a duty of care.
–  requirement that to build over 3 storeys the builder must be licensed personally with licensing criteria in line with the Home Building Fund criteria (solvency and integrity) applied to people who build low rise, and the skills needed for high rise building;
–  single unique ID for the building license holder that is traceable across all corporate entities;
–  a licensing presumption that a residential licensed builder will operate through one company;
–  fix the current home warranty provisions in the Home Building Act that have been made more complicated by amendments and court decisions;
–  move Australia to the global standard of a 10-year home warranty period backed by compulsory insurance.

The NSW Department of Planning housing data for the Greater Sydney Metropolitan Area shows the total number of approvals in the last 12 months (website says to May 2019) was 41,365 and total number of completions was 46,020.

Total number of applications for residential a high-rise development approved in that period was 18,812. OCN is waiting for confirmation on the number of completions.

The OCN submission to the Building Stronger Foundation consultation paper: https://www.ocn.org.au/topic/inquiry-regulation-building-standards-building-quality-and-building- disputes

Media comment:
Jane Hearn, OCN Director: 0432 618 937