Faulty buildings have an impact on residents and can also spell disaster for property managers.
“Apartment block evacuated”
“Defects leave building empty”
“High-rise poses public risk”
The headlines surrounding Australia’s faulty apartment block scandal have not been complimentary.
Unsound buildings have resulted in residents being forced to evacuate due to water damage, faulty fire prevention systems and structural issues. Government handouts and insurance have provided short-term relief but many anticipate it being months before remedial work is complete. This has left many owner-occupiers and tenants with nowhere to live. The situation is also extremely problematic for investors, property managers and real estate agents.
With many cities struggling due to a downturn in the market this year, these structural issues are headaches nobody needs.
As the ABC reported in July, the Federal Government has brokered an agreement with states and territories to create a "nationally consistent approach" to reforming the building industry.
The key recommendations are:
That each jurisdiction requires developers, architects, builders, engineers and building surveyors to engage with fire authorities as part of the design process
Private building surveyors be given enhanced supervisory powers and mandatory reporting obligations
Each jurisdiction establishes a building information database that provides a centralised source of building design and construction documentation
Agreement across the nation to establish a compulsory product certification system for high-risk building products.
Who is responsible for structural issues?
The aim of the reform plan is to reduce the lack of ‘mea culpa’ when major issues arise with residential buildings.
The finger of blame is being pointed in all directions, with 9News reporting accelerated development in areas of growth and urban renewal — many in the form of apartment tower blocks — has spawned a “silent tsunami of building defects”. The news outlet’s investigation claimed these postcodes have “more than double rate of defects compared to those where regular planning rules apply”.
It is unlikely any builders/developers, Government bodies, town planners, building surveyors or architects will put their hand up and claim responsibility when cracks appear in a structure and put resident safety at risk. Nor will anyone admit fault when it is revealed the land site wasn’t suitable for such a building in the first place.
As a real estate agent or property manager, if you’re lucky enough to have avoided this issue so far, it’s essential to ensure the buildings you work with are free of similar complications.
Avoiding the fallout
It is potentially devastating for all involved with a property when issues cause evacuation and when damage bills begin to escalate. Problems can set financial growth back by years and make selling extremely difficult.
In worst-case scenarios, the owner can’t live in their investment, they can’t rent it out, nor can they insure the property or sell it to someone else. As a result, property managers and real estate agents also miss out on commission and profits.
Hopefully, the outcome of the Government’s proposal will be a more robust and reliable code of work and ethics which will result in safer residential structures and a better system of accountability. In the meantime, prevention is definitely better than cure. Before committing to manage strata properties or sell units off-the-plan, do your groundwork.
For buildings which haven’t yet been erected, talk in detail with the builder about how they will ensure compliance with regulations. Assess their past work and their reputation before you agree to represent them. Contracts are also important so it can be agreed ahead of time who is liable in the event of a structural issue.
When it comes to managing existing structures, due diligence is essential. As well as assessing areas like cladding and fire exits, request a building inspector to conduct a detailed report for the entire building. If there are signs of structural damage or faults, avoid being involved as a property or strata manager. If you’re already involved, take action immediately to prevent things from getting worse.
Even if you weren’t involved with the building process, your reputation will be impacted by a faulty building, particularly in an off-the-plan scenario. While it’s not possible to be completely bullet-proof, being highly selective about who you work with will minimise the risk of negative outcomes for you and your clients.
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