Does the Building System Fail Home Buyers? 4

Thursday, November 5th, 2015
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The reaction to the Docklands fire has left hundreds of consumers in the lurch, forcing us to ask who today’s building system truly serves.

Imagine you are a first home buyer, someone looking to downsize, or an investor, and you purchase an apartment off the plan. The apartment complex is then built and approved by all the gatekeepers, passing your own inspection of the apartment, and the final process is to put the title in your name by your lawyer.

With all the checks and balances done, you are now the proud owner of your new property, well satisfied the processes the Government has put in place on behalf of the building industry will protect you from any and all circumstances that may arise from such a purchase in Victoria.

After all, the builder was registered with the Victorian Building Authority (VBA), which aims to protect consumers for what is in most cases their biggest purchase. The VBA is also in charge of regulating the building surveyor that issued the certificate of occupancy and the land surveyor that surveyed the property into the various lots to allow the titles office to issue the titles. And then we have the conveyancer/lawyer to ensure all is above board in regard to buying a property in Victoria.

We have every reason to believe our property purchase is satisfying and secure…don’t we?

Of course, the fire in the Lacrosse apartments at Docklands underscored some ways in which oversights slip through regulations, which leads us to this week’s development and announcement made by the Melbourne City Council.

The council has issued rectification demand orders to 500-odd apartment owners of the Larcrosse building who are now facing a $40 million dollar rebuild of the fire damage.

What on earth has this fire got to do with the owners of this building? They did not build the apartment building; they only purchased an apartment from the builder/developer as an innocent consumer, and expected to be protected.

The council decision will see this matter in the courts for years, with only heartache for the innocent apartment owners who face a financial drain that will drag on and on. The only beneficiary will be the legal profession.

This issue is not confined only to the Lacrosse building, as the same circumstances are impacting on smaller developments and have been for some years. The Government has been aware of these issues, and their response has hardly been one of action.

Back in 2002 when the HIA Last Resort consumer protection scheme was introduced for the small builders under the banner of this 10-point plan, the Government was to introduce consumer protection for high-rise dwellers.

“Owners of high-rise dwellings will have access to a last resort catastrophe fund,” stated point four of the plan.

Big business thought otherwise, however, and Government seems to be unable to understand the building industry and keep pace with the direction it has taken.

For the past 13 years, we have been trying to influence our political leaders to apply proper and appropriate consumer protection for our industry, which we are happy to provide and pay for. However, governments have been reluctant to do so. Perhaps this is because they do not wish to weather the trade association backlash if that change were to be made or because their income stream from the premiums we pay would evaporate if the current regime – which many consider to be “junk” insurance policies – were to be altered.

We as small builders pay many tens of millions dollars annually supposedly to protect our consumers, but in reality we protect next to none, and most of what we pay goes to private enterprise while affected consumers that should be protected languish for years devoid of any form of protection from our current system.

The Lacrosse building has some 500 consumers that are expected to pay millions of dollars in rectification works that they have absolutely nothing to do with. The Government has failed to step up with real answers and solutions to the impact of the fire and its questionable product use.

Government in this case must be brave and take responsibility and manage the set of circumstances that exist on behalf of our industry as we have reached the stage we must respectfully demand our industry be managed appropriately as loose talk and promises will no longer wash.

The time has come for immediate change!

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  1. howard ryan

    Well said. This matter was discussed at the recent ABCB seminar in Qld. I attended this conference and was astonished to learn that the PCA (Certifier) and the Builder were not taken to task due to the poor manner the Alternative Solution and Performance of a building product was handled. Any wonder we are in this mess….. HJR

    • Phil Dwyer

      Thanks Howard, its a long battle to get some sensibility into our building system, its management, and consumer protection.

      Until we effect change many more good people, and those who believe we have a system of fairness will be adversley impacted on, and there will be many that may not recover from our short-comings.

  2. Simon Andereson

    Any idea that consumers should have to pay for this is nonsense – they did not develop, build or approve the building and should not have to pay for its rectification

    One thing which I would like to know is where is the developer in all this? Much media attention has been focused on the builder (who clearly built an inferior product) but is it not the developer who sold properties to these owners which were not fit for purpose? Should the developer therefore not be forced to pay the rectification cost for selling a product which was clearly not up to standard?

  3. Brett Bates

    I'm based in NSW so don't know how the Victorian Act works precisely but if it's in any way similar to the NSW Home Building Act (which I am fairly certain that it is) surely the statutory warranty provisions for all licensed builders (which is now 6 years for major defects here) would apply equally in Victoria if the builder/developer hasn't already gone broke and/or disappeared? Using non-compliant external cladding on a multi-storey apartment is a major defect in anyone's language! Time for the owners corporation of that building to ring the lawyers I think.