A ten-year blueprint for reform to deliver better quality and more affordable apartments throughout Victoria has been unveiled.

(above image via Google Maps)

Apartment advocacy group Australian Apartment Advocacy (AAA) has released the Outcomes Report from its Victorian Apartment Think Tank event hosted in November.

The event brought together more than 75 delegates from across the apartment sector. This included developers, builders, owners, strata managers, architects, planners, government representatives, community housing providers and suppliers.

Its aim was to develop a five-to-ten-year plan to enable the sector to deliver apartment living options which are affordable, compliant with building codes and suitable for different household needs.

All up, the report made 31 recommendations.

These included:

• Having the Victorian Government change legislation to enable the sale of public land at lower than market value to community housing providers (CHPs) and to create a mechanism for consistent, long-term funding of affordable housing.
• Government financial participation in some projects to ensure viability.
• Enhancing the accountability of builders and developers along with registration and training for .
• Enforceable building quality standards (such as effective enforcement of National Construction Code provisions).
• Effective consumer protections. This includes adequate insurance both during construction and after construction (to ensure that defects are rectified) along with timely and effective dispute resolution with builder/developers and owners corporations.

The latest report comes as apartments are set to play an important role in delivering the Victorian Government’s target of 800,000 new homes over ten years.

Longer term, apartments will be critical as the state’s population is expected to reach 9 million by 2051.

During an interview following the report’s release, AAA chief executive officer Sam Reece told Sourceable that the think tank event aimed to deliver a holistic plan for the apartment sector.

As things stand, she says that much of the research published by either the Victorian Government or industry groups has focused on greenfield housing development.

Reece says that the importance of getting things right in apartments should not be underestimated.

As mentioned above, apartments are expected to play a critical role in meeting long-term housing challenges.

With this in mind, it is imperative that the sector delivers suitable living options for a wide range of households. This includes renters, first-home buyers, families and older Australians.

For individual owners, meanwhile, apartments need to be safe, healthy and free from serious defects and expensive rectification orders.

This is particularly important as owners of apartments in complexes which are of four storeys or greater are not covered by domestic building insurance.

It is also an area in which Reece says that governments have failed in the past.

“From an individual buyer perspective, if you’ve got a builder who goes bust and your apartment building is four stories or higher, you don’t have home warranty insurance (domestic building insurance),” Reece said.

“And so we are seeing a number of apartment buildings now where they are looking at four or five million dollars (across the whole building) for repair bills. This is just astronomical. It’s not appropriate and it’s not fair.

“Our research in 2023 which we are about to repeat now shows that up to 60 percent of apartments in Victoria as per the other states have defects.

“A lot of the people who are buying apartments are people who are looking for an affordable option in the suburb that they want. So they don’t have a spare $50k in their pocket. Or they are retirees who are on a fixed income. They don’t have $50k spare in their pocket.

“And so from our perspective, what we’re seeing is that the government has turned its eye for the last 20 years. This is why we’ve got this colossal problem that we have. There’s never a good time to start but you’ve got to start at some point. And especially (it’s a good time to start) if we’re going to be seeing major states start to move towards a 60 percent ratio of apartments versus 40 percent ratio for greenfield homes.

“So owners and buyers are due consumer protection. And they have that when they buy something under consumer law, it’s what they expect to get. And if you’re spending five hundred thousand dollars or five million dollars (on an apartment), you should still be expecting that your home will be a safe place to live in and that it will not cost you unnecessary expense because of the neglect of the developer or the builder or the subcontractor.”

(At Viv’s Place in the south-eastern suburb of Dandenong, for example, Launch Housing and ARM Architecture have partnered to deliver a seven-level apartment complex which is providing safe and permanent housing for up to 60 women and 130 children who are at-risk of family violence under a build-to-rent program.
Across its seven levels, the complex offers 60 apartments catering to varying household sizes (up to four bedrooms) as well as a resident’s lounge, family games area, a terrace and a garden.) (Image via ARM Architecture)

Asked about myths or misconceptions which exist around strata living, Reece points to AAA research which shows that 60 percent of people who move into apartments do so having previously lived in a home such as a detached house.

Many of these people have limited understanding of what it is like to live in strata. Many have positive perceptions about apartment living lifestyles (which AAA endorses) but have limited understanding about matters such as contractual terms, construction timelines, owner levies, strata committee responsibilities, defects, and consumer rights.

In addition, governments have failed to adequately supervise the sector.

Even in New South Wales – which has implemented a strong program of building reform – Reece says that there has been a lack of inspections and oversight during early construction stages.

This is critical as early-stage checks are needed in relation to items such as concrete, reinforcing, vapour barriers and waterproofing.

Asked about the most important recommendations, Reece says that three areas stand out.

First, it is important to deliver greater affordability and choice within the apartment market.

Toward this end, the report calls for the Victorian Government to change the legislation to enable publicly owned land to be sold to community housing providers at concessional rates. It also calls on the government to create a mechanism for consistent, long-term funding of affordable housing.

This, Reece says, is critical. As things stand, the private development market is not delivering apartments which are both suitable for families and affordable for lower to middle income households.

Where funding has been provided, Reece says that there are examples of significant innovation in affordable housing delivery.

At Viv’s Place in the south-eastern suburb of Dandenong, for example, Launch Housing and ARM Architecture have partnered to deliver a seven-level apartment complex which is providing safe and permanent housing for up to 60 women and 130 children who are at-risk of family violence under a build-to-rent program.

Across its seven levels, the complex offers 60 apartments catering to varying household sizes (up to four bedrooms) as well as a resident’s lounge, family games area, a terrace and a garden.

Should more funding become more consistently available, Reece says that more projects such as this could be delivered.

Next, Reece supports the government’s recently announced regulatory changes to improve consumer protection and to hold builders and developers to account.

In particular, she supports moves to develop a 10-year decennial liability insurance product to cover buildings of four storeys or greater.

As mentioned above, owners of buildings of four storeys or greater do not have currently any protection in the case of defective or incomplete work as these buildings are not covered by domestic building insurance.

As well as protecting buyers, Reece says that this could help to unlock more apartment projects by underpinning greater consumer confidence in apartment purchasing.

Finally, it is important to create a central repository of information for all buildings with all data stored electronically.

This should be held by the Victorian Building Authority (soon to be known as the Building and Plumbing Commission) and should be provided to the owners corporation.

This will provide readily available access to all relevant building information throughout the building’s operational lifespan.

Too often as things stand, Reece says that critical information about building plans, manuals, maintenance and warranties is not provided to the owners corporation upon building completion.

Often, she says that the local council is the only party who has possession of a copy of the building plans.

Above all, Reece says it is important to change current culture under which building defects are normalised.

“I often say to people ‘we can put man on the moon but somehow we can’t build an apartment building without defects?’” Reece said.

“There has been a high degree of complacency. There has been lots of excuses. There has been a lack of oversight.

“But the good news is, that is about to change.”

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