There’s an apartment building crisis in Australia.
Residents of some apartment buildings in Australia are still unable to return to their homes after structural defects were found. They are waiting for repairs to be made before they could move back. Some vowed never to return, spooked by safety concerns. The value of their apartments have plummeted. Who would want to buy and live in such an apartment?
A number of Australian apartment buildings have been in the news this year. And not for a good reason.The building industry is in crisis.
A Fourth abandoned tower is ` one of many more to come
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Melbourne’s Tallest Tower Rocked By Defects claims of loud cracking sounds and windows which are jammed shut and would no longer open.
When the Victorian Building Authority visited the site of the 319 metre Australia 108 building and asked to see the building plans, it was not a good sign. This 100 floor tower with more than 1,000 apartments is still under construction. There are some people already living in it from earlier phases.
The builder denied that there was any structural problems with the building.
“There is absolutely no risk to current residents. Some minor defects may occur from time to time after the handover of apartments.”
The VBA’s interest in the building was highly unusual and suggested that the defects are serious said Phil Dwyer, president of the Builders Collective of Australia.
`Minor’ was exactly what the developers of Sydney Olympic Park’s Opal Tower said about its defects before problems with the building’s structure were found, causing residents to evacuate in haste.
Australian Apartment Buildings with Defects So Far …
- Sydney: Olympic Park’s Opal Tower 36 storey with “defects” evacuated on Christmas eve, 2018
- Sydney: Mascot Towers 7 storey with “defects” evacuated on June 14, 2019
- Sydney: Zetland’s Garland Lofts, 30 lofts with water damage $1.2m apartments are unsaleable after the building was abandoned 8 months after secret evacuation of the loft over severe water & fire safety defects.
- Sydney: Erskineville’s Sugarcube Apartments & Honeycomb Terraces — 4 storey built on contaminated ground — are still uninhabited
Sydney’s Opal Tower, $170m 36 storey apartment complex, 392 units
Loud cracking sounds were heard on Christmas Eve 2018 leading to an immediate evacuation of the Opal Tower building.
It found parts of the tower were constructed using “lower-strength concrete” and that “under-designed” critical support beams had burst under extreme pressure.
Damage was found on 10 levels of the 36-level building, as well as in a basement level.
Four months after the evacuation, 169 of the 392 units are still empty. Residents and owners are still in temporary accommodation or sleeping on a friend’s couch, while waiting for repairs to be completed.
Decisions could take some time as the owners corporation would need to make sure that all decisions are made with a proper process. A detailed plan of the repairs to be made would be required, to keep track of what’s been done and how much it was costing.
Investigations can cause delays to repair work and residents would be unable to return to their apartments. Months can pass by…
Apartment Building Defects: What Is The Process?
- Attention being drawn to defects in the building — the Building manager being notified by residents/owners or cleaners if they are not on site at the time/after-hours. All eyes & ears can help to keep your building safe.
- Owners corporation being notified and Special General Meeting to discuss. To check if the builder’s warranty still applies, to check if defects are covered by insurance.
- Inspection by the builder/developer
- Inspection by the State Building Authority
- Inspection by (more than one) engineers: Reports could take 2–3 months
- Owners corporation to hold a Special General Meeting to discuss the engineers & builder’s reports, to discuss and ask for quotes to repair the defects
- Owners corporation to ask the state government for help which may include financial assistance for temporary accommodation
- Owners corporation to discuss and make decisions on quotes received to repair the defects and to decide on Special Levies to pay for the repairs
- Owners corporation to formally consent for repairs to commence
- Repairs carried out and checked to comply with higher building standards
Opal Tower’s builder, Icon Co, had put aside only $1 million for defects. They claimed to have spent over $24 million in repairs so far.
Opal Tower unit owners have launched a class action law suit against the NSW State Government. Sydney Olympic Park Authority (SOPA) is the owner of the land on which Opal Tower was built.
Sydney’s Mascot Towers — 7 storey, 132 units
If the building was too old for the warranty to still apply, the owners would need to pay for the repairs themselves. This was the case with the 10 year old Mascot Towers.
Residents of the 132 units in Mascot Towers were evacuated with only ONE Hour’s notice on June 14, 2019 after cracks were discovered in the facade masonry and primary support structure.
Mascot Towers owners were devastated to learn that they had to pay an initial $1.1 million to cover emergency repairs.
The NSW government’s assistance package of one-off emergency loans to cover temporary accommodation was a relief but what happens if no one was found to be at fault or if there was no insurance payout? It was unclear if they would have to pay back those loans. Plus it was only for three months.
Mascot Towers owners were hit with a bill of at least $10 million or about $76,000 per unit, per news on August 4, 2019. This is only for Stage One of the remedial works. The money is to be paid in Quarterly instalments over 15 years. Would more repairs be necessary during this 15 year period?
Where would they find this money? Some have tried asking their banks but their banks said “No, sorry.” Some owners may be forced to abandon their apartments and declare bankruptcy. What would happen to the building if the remaining owners cannot afford to pay the share of unpaid levies?
What’s happened to the equity in their home? Would they be able to find anyone to buy it after the repairs? Many questions remain.
The Australian building industry is in crisis with these building defects scandals and the combustible cladding which could cost the industry at least $6.2 billion to fix.
Owners have little to no protection against inferior building works. The developer or builder could de-register their company or put their company into receivership to prevent claims made against them. This was what Zetland Garland Loft’s developer did.
“The company’s directors, Janet Pennington and Phillip Bartlett, notified ASIC on May 19, 2014, that it had appointed external administrators, and the company was officially deregistered on February 19, 2019, an ASIC spokesperson told The New Daily.”
Pheonixing — the illegal practice in which directors liquidate a company in order to avoid paying debts, only to re-emerge under a new guise — was also said to be rife in the sector, according to many of the submissions.
Mandatory Homeowners Warranty Insurance is needed but how much would be the premiums after Opal Tower and Mascot Towers?
Building standards also vary between states. There must be a Federal, unified approach to protect future buyers and owners of apartments.
Do you live in an apartment building? How safe is it? Please check with your Building manager and/or Strata manager.
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