Downsizing? Here’s how to dodge dodgy apartment buildings

Article published 23 August 2019

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A STRING of apartment buildings in NSW have been discovered to have defects and Victorian buildings have been found to have flammable cladding problems. As a result people have been forced to leave their homes with no return date in sight.

Seniors wanting to downsize into an apartment need to be able to trust what they buy. Any costly building defects or any evacuations and disruptions to their lives are not things anyone wants to encounter, but they certainly don’t want to encounter them in their retirement.

Private sector certification in NSW began in 1998, and while simplifying the building certification process, the change has also led to dodgy construction practices.

A NSW Parliamentary Inquiry into building defects has been launched.  A new Office of NSW Building Commissioner has been created. However, Australia is at the tail end of an apartment construction boom, so even if the new NSW Commissioner managed to clean up the industry instantly, there are an awful lot of apartments being sold that were constructed under the bad old rules.

To make matters worse, as it currently stands the responsibility for having defects in apartment buildings repaired ultimately often lies with the owners.

So if you are thinking about downsizing to an apartment, what should you do?

  • Find the builders’ previous projects and inspect them in person. Speak to people living in these buildings, preferably tenants, as owner-occupiers may want to cover up any problems for fear of compromising the value of their apartment.
  • Stay away from apartments in complexes more than three floors high as there are no home building warranties for blocks over three storeys high.
  • Have an independent building inspection completed. Make sure you don’t use the inspector recommended by the real estate agent or the developer, but invest some time in finding a reputable inspector.
  • Have a body corporate records search conducted. This is an inspection of all records held by the owners and can tell you if complaints have been made or if the owners have funds to make future repairs. Make sure you read and understand the report produced for you.
  • Watch out for any development where the developer’s company name has some qualifier, like the address of the property at the end followed by pty ltd. This could be intended to isolate the parent company, and its bank accounts, from your legal claims should serious problems arise.
  • Check if the developer has any court and tribunal decisions against them and to see any disputes in which they may have been involved.
  • Be cautious with apartments built after 1998 in NSW, 1993 in Victoria and 1998 in Queensland. In those years, self-certification was introduced
  • for apartment block building work, allowing developers to hire their own certifiers. Victoria and Queensland rolled it back because the system was being abused by developers and NSW is about to do the same.
  • An empty capital works (sinking) fund and perfunctory maintenance plan are sure signs that the current committee wants the next owners to pay for repairs and maintenance. Don’t be the next owner.
  • Buildings where the records seem too good to be true are often hiding something, usually to protect property values. You want to see records of problems addressed and resolved – not a squeaky-clean cover-up.
  • Very low levies are as much an indicator of neglect as peeling paint and rattling lifts.

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