New building laws won’t stop dodgy developers cutting corners
The Sunday Morning Herald
12 September 2017
With the home unit building fervour in NSW in full swing, the
occurrence of substantial defects in new construction is a massive
It is common for large-scale apartments of 100 units or more to have
defects costing $5 million to $15 million to fix. Many strata owners
end up paying for the repairs themselves after protracted efforts to
get the developer, architect, engineer or builder to fess up.
Recent and proposed changes to NSW strata and building laws have been
accompanied by bold press releases promising that effective regulatory
reform has at last arrived. However, a close reading reveals a
different story. These changes are merely placebos.
As a waterproofing consultant with more than 40 years in the industry,
I have analysed a myriad of building repairs and defect cases and have
found the systemic, expensive-to-fix defects have their origins
primarily in the decisions and directions of the developer or
developer/builder and are not so much the fault of the tradies as is
This is particularly evident with the more rapacious developers and
developer/builders who don't care about the end result once the
pre-sales contracts are snapped up. Cost minimisation lies at the heart
of these developers business model.
This attitude, while now the norm in Sydney, is by no means universal.
Developers and developer/builders who have a reputation to maintain,
who care about the end result and eschew the skimping, cost-driven
mentality certainly exist, but are in the minority.
And when a developer is solely profit-focused, the major defects have
their origin at least two years before the workers arrive. It goes like
The developer saves on consultant fees by only paying the architect or
structural engineer enough fees to get building approval, but not
enough to provide working drawings or address design anomalies between
documents. Defects often originate in the gaps between professional's
drawings. It is common for architect's drawings to say one thing and
the structural engineer and hydraulic engineers drawings to describe
something quite different, and there is no time or budget for
reconciling and closing of these gaps.
Once development approval is achieved the lowest-bid builder is asked
to "value engineer" the design to effectively screw down his price or
otherwise the next builder in line will get it.This builder is then
contracted to take over full design responsibility at the reduced
price. To afford this the builder is reliant on the subbies to design
the details for free.
Cost minimisation lies at the heart of unscrupulous developers' business model. Photo: Ross Taylor
Since time is now of the essence to meet the developers' sales program,
the key designer of the details often will, by default, become the
brickie or formworker who has to make it work as best they can.They
have to change things on the go to make it fit the space or more
importantly, the budget, available.
Compounding the errors is the dizzying array of new building materials
arriving on site. These are often nominated, once again by the
developer, for their speed of installation and lower cost – not their
longevity, track record or beauty.
Many strata owners end up paying for the repairs themselves. Photo: Ross Taylor
The latest changes in the Home Building Act were promoted as providing
protection from these practices. The reverse is the case. Under the
recent changes the definition of the type of a "major defect", which
draws the maximum six-year warranty period, has now been tweaked
(actually, diluted) to include only the most extreme type of failure –
the type that almost never occur. All the rest of the expensive
systemic defects such as leaks and cracks, the ones that happen most of
the time, only attract a two-year warranty. However, the causes are
usually deeply hidden and the effects don't emerge for three or four
The arrival of the Strata Building Bond scheme has also been much
heralded. It is scheduled to commence in January 2018. The scheme
allows for a building inspector to be appointed to review the building
for defects and provide a report. But the building inspector can be
appointed by the developer at any time within the first 12 months and
can submit the report as early as 15 months after the building is
completed. At 15 months the major defects are still in hibernation
awaiting three or four good hot summers and several more drenching
rains before they emerge.
Defects often originate in the gaps between professional's drawings. Photo: Ross Taylor
The new "independent inspector" is to be selected and paid for by the
developer. Like the building certifier system before it, there is a
fundamental conflict of interest built into the system.The building
inspector in the proposed system will rely on the developers for repeat
business. As one certifier recently confided "you challenge them at
While the legislation provides for the owners corporation to have a
right of refusal of the developers appointment , the strata committee
will still be unpacking their boxes when this is going on.
Major defects can have their origin at least two years before the workers arrive. Photo: Ross Taylor
The developer is to deposit a bond amounting to 2 per cent of the
building contract to pay for any repairs found by the building
inspector that haven't already been dealt with by the builder. However,
we often find that the defect repair bill on an average block of units
is about 8 per cent of the original construction cost. The owners will
cop the 6 per cent difference or commence legal action.
Legislation like this certainly doesn't provide protection to
consumers. It is defective legislation for defective buildings. Laws
are needed which create a level playing field of compliance
expectations rather than a sanction-free race to the bottom. Detailed
working drawings on the key defect issues by qualified architects and
engineers must be made mandatory prior to development approval.
Bring back the long-lost clerk of works role to the building sites to
check that the works are carried out in accordance with the drawings,
codes and standards. This overcomes the problem of design on the run.
There is a desperate need for better consumer information calling out
repeat offenders so that better informed purchasing decisions can be
made. Name and shame legislation would help raise the bar. The
government needs to create an environment that supports good behaviour
and calls out the bad.
Ross Taylor is the managing director of Ross Taylor & Associates.
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