• Table 6 Summary of different classification approaches in defects reports.
    Table 6 Summary of different classification approaches in defects reports.

Poor capacity to carry out construction work without any regulatory oversight in parts of the building industry has made buying an apartment in Sydney a lottery, according to a report published by UNSW Sydney and the University of Technology Sydney (UTS).

In a systematic review of strata schemes registered over a 10 year period, researchers from UNSW’s City Futures Research Centre and UTS found that defects are commonplace and often poorly documented.

The researchers analysed a random sample of half of all strata schemes completed in the Sydney, Parramatta and Canterbury-Bankstown Local Government Areas (LGAs) between 2008 and 2017.

They found evidence of defects in 26 per cent of the 635 schemes in the sample.

But the researchers believe the real number of defects is much higher, masked by inadequate reporting and documentation.

For the sample schemes with more robust documentation available, they found evidence of defects in more than half (51 per cent), with more than a quarter (28 per cent) having three or more types of defects.

The most common defects documented were water issues, conservatively estimated to be present in 42 per cent of those schemes with more robust data.

These findings align with estimates released earlier this week by the NSW Building Commissioner, based on a survey of strata managers, that four in ten buildings have “some form of major defects”.

To make matters worse, when information is available it is not as accessible to buyers as it is to sellers – a situation the researchers call ‘information asymmetry’.

The problem is not simply that there are defects, but also that it is so difficult for prospective apartment buyers to know about defects ahead of purchasing, or to have them rectified once discovered.

After the Opal Tower fiasco in late 2018 and the Mascot Towers evacuation in June 2019, the NSW state government created the Office of the Building Commissioner to reform the building and construction industry, a move that the report authors applaud.

Some of the recommendations the report makes to protect consumers include:

  • developers being required to provide new owners with a comprehensive, user-friendly building manual
  • continued strengthening of the building inspection regime, including post-completion
  • strengthening NSW Fair Trading’s capacity to respond to reports of building defects
  • making sure that pre-purchase strata reports are high quality, so that purchasers can do their research about existing buildings.

For further information: Cracks in the Compact City: tackling defects in multi-unit strata housing