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‘A quiet haemorrhaging’: After Opal, Mascot Towers where to next for apartment owners

Opal Tower and Mascot Towers have both been involved in high-profile mass evacuations in recent months. Images: AAP

Residents of Mascot Towers in Sydney were evacuated on Friday (14 June) evening following persistent cracking, with residents concerned they will be required to foot the bill to repair the building that has now fallen outside of warranty cover.

The emergency repairs could be as high as $5.5 million, according to reports, and it’s an issue that could come to plague many more apartment owners.

According to studies by the University of New South Wales’ City Futures Research Centre, 85 per cent of high-rise buildings in NSW built since 2000 have had some form of defects.

And, warns the executive officer of the Owners Corporation Network Karen Stiles, this can have devastating effects.

While the dramatic Christmas Eve evacuation of Sydney Olympic Park’s Opal Tower, and now Mascot Towers, have grabbed headlines, Stiles told Yahoo Finance that there is a “very quiet haemorrhaging” occurring in the background.

“The problems [in high-rise buildings] have been there for a long time but - generally speaking - people have been loathe to speak out about them because of the stigma attached and the loss of value,” Stiles said.

“People have [had] to move out for extended periods of time or are forced to live through a reconstruction and all of the emotional and financial and physical impacts that go with that,” she continued.

“There are enormous problems out in high-rise apartment-land in new apartments.”

It’s a high-rise problem with no easy solution

Mascot Towers renters have been told that insurance will not cover temporary accommodation, with owners also told alternate housing may not be covered.

To make matters worse, the building is considered too old to fall under warranty, prompting concerns from property experts that the owners will be required to pay for the damage.

“We are working under a 20-year-old system. In modern Australia we need to move with the times and we just haven’t. The building industry has let everyone down,” Builders Collective of Australia president Phil Dwyer told Today on Monday.

“It is just disgraceful what we have done to those residents, throwing them out on the street without any support, let alone what we have done to their building’s value.”

Stiles said for NSW apartment owners, recourse for building defects is practically limited to suing the developer, a process she described as lengthy, expensive and emotionally draining.

While NSW previously had a Building Services Corporation which had the power to hold builders to account, that’s since become defunct.

Additionally, successive studies and recommendations on the prevalence of building defects have largely fallen on deaf ears, Stiles added.

“There is no consequence for bad behaviour and in parallel … the only way governments have responded to the cataclysmic increase in building defects in the past decade or so is to erode consumer protections.”

And an apartment problem that could have devastating effects

The June 2017 Grenfell Tower fire, which killed 72 residents, was a stark reminder of the devastation unsafe building practices and materials can cause.

But the Lacrosse fire in Melbourne in November 2014 could have ended a similar way, Stiles said.

“We were very lucky with that particular fire that everything went right for the owners and residents of that building,” she said, explaining that the fire brigade had good access to the building and the wind was blowing in the right direction.

“We're fortunate in the sense that our buildings are sprinklered… but certainly if you've got a high rise tower with hundreds of people and a fire racing up the facade for example, or the cracking we saw at Christmas, you've got the recipe for a large disaster.”

What do home-buyers need to know?

Stiles recommended against purchasing newly built apartments.

She said she’d be “very careful” purchasing properties younger than even 20 years, as even properties of that age could have flammable cladding.

For buyers who do want to purchase a newly built property, research is key, with buyers encouraged to research the developer and builder’s history.

Buyers could even visit previously built high-rise apartments and ask residents there if they’re happy with their homes.

The ASIC company register also helps potential buyers gauge the quality of the home they’d be purchasing. Stiles said if developers or builders have previously been directors of companies that have gone into liquidation, purchasers should take extreme care.

“That's a favourite habit of builders looking to avoid defect rectification costs,” she explained. “They simply go into administration.

Is a policy solution on the way?

Following a major review into the building and construction sector by Western Sydney University Chancellor Peter Shergold and lawyer Bronwyen Weir which made 24 recommendations, the NSW government announced it would appoint a Building Commissioner who would audit those in the industry.

NSW Better Regulation Minister Kevin Anderson said on Saturday that the government will appoint Commissioner, and will make an announcement on the topic in July.

Premier Gladys Berejiklian said the NSW government will also introduce legislation to overhaul the construction and building sector to parliament this week, with a goal of reforming the troubled sector by the end of the year.

"(We want) to give people that extra level of confidence that not only will people be held accountable, but we expect the highest level of compliance in addition to people sticking to those rules,” Berejiklian told reporters on Monday.

However until these reforms are in place and buyers can purchase homes with more confidence, Stiles’ advice is clear.

“The Owners Corporation Network would strongly caution people who are thinking about buying into new buildings to think again.”

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