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Enhancing Community Living Enhancing Community Living Lessons learnt from the Opal and Mascot Tower sagas Inside Your rights as a property owner Who is responsible when it comes to building defects Avoid unexpected costs from building defects Image by MDRX / Wikimedia By maintaining the properties and investments of our customers, we aim to for the better and to create a sustainable future. Liveability Certainty Harmony Introduction The recent incidents at Sydney’s Opal and Mascot Towers, and Melbourne’s Spencer Street cladding fire have raised increased focus and debate around building safety and compliance for strata living. According to the Australian Bureau of Statistics, a significant increase in the construction of high rises has occurred over the last 30 years. With more people adopting a strata lifestyle, it’s become crucial to shape community living the right way - from smart building design, through to the construction and management of our everyday living. This means gaining knowledge of how a strata property works, what your rights and responsibilities are, how you can protect your property and who can help navigate the world of strata living. That’s why we not only focus on delivering superior strata management services in every way we can, but are also dedicated to prioritising safety and compliance and enhancing community living. 2 PICA Group | Lessons learnt from Opal and Mascot tower sagas – July 2019 PICA Group | Lessons learnt from Opal and Mascot tower sagas – July 2019 3 Lessons from Sydney’s residential Who takes care of what in the building defects bond scheme? building, Opal and Mascot Towers Property developer Inspector Owners Corporation (OC) Allocates the money for a Provides an interim defects If the reports from these bond before the project begins report to the owners inspections reveal any defects, 2% building defects bond and inspection corporation within a the OC can cover the costs of Is NSW’s 2% building defects Appoints an independent year and a final defects correcting these defects from scheme – what is it? inspector from the strata report within two years of the bond bond scheme enough? inspector panel to oversee the completing building work According to this scheme, property developers must inspection and submit reports If no defects are found within set aside 2% of the contract price as a bond before an afterwards Ensures there is no these reports, the OC must In January 2018, the New South Wales government occupation certificate is issued for the building work. conflict of interest with the ensure the bond is returned to amended the Strata Schemes Management Act 2015 This applies to all multi-storied buildings that are purely Bears the costs of the interim developer’s project the developer (Act) which contains new laws related to building residential or mixed-use residential buildings under and final reports from the defects. The new laws introduced the building defects strata management. inspections and ensures their bond and inspection scheme to protect the interests of timeliness property owners in case the building developed defects The owners corporation can use the building bonds after construction. However, following the scale of to cover costs for rectifying defects identified in the damage from building defects such as the Opal Tower interim and final reports provided by the developer. case, the question of the hour is if the scheme is all it If the building has no defects, the bond can be is cut out to be? returned to the developer once the building work has been completed. Mascot Towers Image by Damian Shaw Is the building defects bond and inspection scheme enough? Opal Tower Image by Bates Smart It is a start, and a well-intended pre-emptive step from the New South Wales government. However, the million-dollar question is whether the 2% defects bond is enough to combat the effects of structural defects and security lapses in buildings or to cover the actual costs from damage to property and life. Here are a few considerations: This bond may not be enough to cover costs The building defects bond scheme does not 1 of correcting core defects of a building that 4 cover defects in commercial buildings, which are not evident in the initial report but get appears to be a serious limitation of the magnified over time through wear and tear. Most of scheme. This may be an important factor in the case these buildings are constructed in haste for commercial of mixed-use properties. purposes and compliance may often be sidelined in the interest of profit. The bond scheme is associated with the 5 regulations that covers the appointment of With residential and mixed-use high-rise inspectors by developers. This is problematic – 2 buildings, the scale of damage to life and often the inspectors are not independent professionals property is compounded. Sometimes one kind who can provide unbiased reports. This highlights a of damage to the building’s exterior may affect the conflict of interest on the part of individuals involved in inside of the building or private property of owners, the building project. compounding expenses from repairs. Inconvenience and stress to general life, 3 caused as a result of building defect related emergencies can be another factor worth noting. Residents are evacuated en masse, and without enough notice to take stock of the situation or plan their way around it. 4 PICA Group | Lessons learnt from Opal and Mascot tower sagas – July 2019 PICA Group | Lessons learnt from Opal and Mascot tower sagas – July 2019 5 The state of things in Queensland: The QBCC can conduct regular audits to ensure any lapses in building and construction compliance are In the Sunshine State, the government has been dealt with as early as possible so that Queenslanders taking proactive steps to ensure compliance within the safety is not compromised. In addition, the government building and construction industry. has enabled a Board of Engineers and Architects to conduct investigations into the professional conduct of The government conducted a comprehensive those occupations and submit regular reports. examination of the building and construction regulatory system in 2016 and introduced the Queensland With respect to cladding regulations, there have Building Plan (QBP) the following year. been sturdier strides. The idea was to tighten existing regulations around In October 2018, the Building Regulation 2006 compliance and introduce necessary reforms. was amended to ensure cladding replacement was Moreover, the regulations empower the Queensland prioritised in buildings across Queensland. The new Building and Construction Commission (QBCC) to laws state that building owners must register and investigate and take disciplinary action against non- comply with the combustible cladding checklist. They compliant building licensees. must have the necessary certification to prove their buildings are fire-safe with regard to cladding. In 2019, the Queensland government is set to make reforms around the independence of certifiers so that they are not unduly influenced by builders and developers. The QBP will strive to improve professional standards and ensure compliance of certifiers. The state of things in Victoria: property owners and judge their loan eligibility and many are unwilling to do so. The loan does not also In 2015, the multi-storied Lacrosse building in guarantee lower interest rates. Melbourne caught fire due to inflammable cladding. Victoria state laws require compliance from builders Following this incident, the Victorian government and developers whenever there are new plans for overhauled its regulations around cladding and construction or renovation. Sadly, most of these banned the use of Aluminium Composite Panels mandates fall through the cracks. Compliance failures (ACPs) as cladding. and ineffective regulations are highlighted in accidents The 2017 report by Victorian Cladding Taskforce from building defects when it is usually too late. highlighted that more than 1400 Victorian buildings New South Wales laws have certain pre-emptive What property owners in Queensland and Victoria should know could have potentially unsafe cladding. Additionally, an provisions, such as the 2% building defects bond audit by the Department of Health and Human Services scheme, to keep non-compliance in check from revealed more than 1000 publicly-owned buildings and developers and builders to a certain extent. However, Compliance and safety is a huge issue within the building and construction industry, with at least eight hospitals that need their cladding to be Victoria does not have any similiar precautionary replaced due to non-compliance. Since then, incidents measures in place. So, developers have no such country-wide implications. So, there is much debate across Australian states regarding the continue to occur, including the recent Spencer street gaps in regulation and how they should be addressed. obligation to secure the building defect related costs tower fire in Melbourne. prior to construction. The reports highlighted that accidents from building By state law, builders are required to provide To prevent building defect-related incidents in the future, the New South Wales government aims to come down hard defects are usually a result of using sub-standard domestic building insurance to property owners. on corrupt certifiers and audit at least 30 per cent of the buildings for non-compliance every year. The state has also building materials and a lack of tighter regulations However, this warranty may not be enough. Builders authorised various agencies to carry out investigations to get to the root of the problem, find the factors that could have around compliance. only need to provide this insurance when the cost caused the damage and identify non-compliant parties. To ease the financial burden for owners who might of building work under the contract is more than $16,000, which includes all labour and material costs. In the meantime, other Australian states are also closely monitoring the situation and gearing up to tighten their have to tear down their buildings in order to facilitate So, property owners have limited claim to having regulations.
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