| by Kenneth Chase | 17 comments

Dodgy Property Developers Cutting Corners to Save Money (Apartment Tower Defects in Australia)

On Christmas Eve 2018, about 3,000 residents
at the 36-storey Opal Tower apartment complex in western Sydney were evacuated after cracks
were found in the foundations. Hundreds of residents have been in temporary
accommodation for more than seven months while repairs are still being completed. Due to a drop in value of their apartments
and a loss in rental income, the owners are seeking millions of dollars in compensation
in a recently-filed class-action lawsuit. The lawsuit claims a “breach of warranty”
and that the tower was “not designed or constructed with due care and skill”. Some of the apartments in the building cost
up to $2.5 million. Larger apartments were renting out for more
than $750 per week. The owners, understandably, are furious. How could a building that cost so much money
be of such poor quality? Just last month in June, residents were forced
to evacuate the 10-storey Mascot Towers in the inner-south of Sydney due to rapid deterioration
of cracks within a primary support beam. Under NSW law, building defects are covered
under warranty for six years after completion of a development. The Mascot Towers is 10 years old, so unfortunately,
the owners of the units have to foot the expensive repair bill themselves. Stephen Goddard, spokesperson for the Owners
Corporation Network (and a strata lawyer himself), spoke of the legal issues facing owners of
apartments in these towers. He said, “Consumers have nowhere to go in these sorts
of situations. There’s nobody for them to sue. There’s nowhere for them to turn. People have more consumer protection buying
a fridge than a million-dollar apartment. Anybody looking to purchase in a building
less than 10 years of age is foolish because the defects will not have yet surfaced. Don’t buy anything less than 10 years old. You should never buy off the plan — it’s
unsafe to do so.” Michael Xylas, principal real estate agent
at MGM Properties, has one of the one-bedroom units in Mascot Towers on the market for $740,000. He said, “Obviously, I don’t think anybody will be
in a position to commit to buying a property with a building that’s got problems. It’s very damaging for the vendor who was
counting on selling this property.” Mr Goddard also spoke of the ongoing implications
for owners. He said, “The building will become toxic, just like
Opal, where you won’t be able to sell out of it because people know of the structural
defects. For many years, ever-increasing property prices
have ‘wallpapered’ over the issue. We’re now seeing owners confronted with the
possibility that their investment may be lower than their outstanding mortgage.” Speaking about other ‘toxic’ apartments
in Sydney, owners of the ‘Sugarcube’ apartment development in the inner-city suburb of Erskineville,
were refused access to their apartments due to concerns over toxic land underneath it. Nick Rehac, one of the owners, bought his
apartment for $1 million last year, but has yet to live in it. He said, “I have no rights, I have nothing. I’m not allowed to stay here. We have no power. They took the money.” A spokesperson for the City of Sydney spoke
of the concerns. They said, “Several conditions require remediation
including contaminated groundwater and detection of heavy metals, hydrocarbons, and asbestos. The contaminants are believed to be associated
with the former industrial use of the site involving manufacturing activities. City staff have been in ongoing discussions
with the developer [Golden Rain Development], who has not complied with the development
consent conditions concerning remediation of the site.” But yet another apartment block was evacuated
in Sydney late last year in the inner-eastern suburb of Zetland. It was evacuated due to extensive water damage
and subsequent faults with the fire alarm system. It has now been empty for over eight months. Brisbane apartment towers have also been in
the news. Dr Louisa Carter purchased a new four-bedroom
sub-penthouse in The Johnson apartment tower in inner-city Brisbane back in 2017. Just days after moving in, the roof began
leaking forcing her family to move out. She said, “In the first big storm, suddenly there
was water pouring into the main bedroom. This is a state-heritage listed property — it’s
meant to be kept for future generations. We’ve got a colander for a roof pouring down
through the concrete.” Dr Carter has made a number of complaints
through various channels. She first raised issues with the developer
and the body corporate. She then complained to the Queensland’s Building
and Construction Commission (QBCC), who in turn demanded that the developer, Maxcon,
fix the leak. Some works were carried out, but the body
corporate’s insurance company found that there were still defects within the building. Dr Carter said she has lost thousands of dollars
after having to rent another property. She said, “We’re in limbo. We’re caught in a stalemate between parties
— I feel like collateral damage in a financial equation and it’s just not good enough — it’s
my home. My issue is, as an individual unit owner,
I don’t have any control over the common lot — the roof — so I’m caught.” Of course, there are many other stories about
apartment tower defects throughout Australia, but there are just too many to list here. Surely, these published articles are just
the tip of a very big iceberg. After reading the articles for myself, my
only piece of advice is this. Don’t buy a new apartment, especially if
it’s over three stories high. In most states, home warranty insurance is
not a requirement (or even available) for new apartments over three storeys high. If you’re going to buy an apartment, buy
a smaller, simpler one in a walk-up building. Too many things have been going wrong with
these big buildings of late. Unfortunately, while chasing the Australian
Dream, many of these residents have found themselves in the midst of an Australian Nightmare.


David Mackay

Jul 7, 2019, 3:39 am Reply

3000 residents in 392 units. 7.65 residents per unit at full occupancy. The media must have used the overseas student crush loading occupation coefficient on that calculation. Given that Opal units were only around 85% occupied that figure would be around 9 residents per unit!

Ne on

Jul 7, 2019, 4:57 am Reply

'"Don't piss on my development and tell me it's Golden Rain"

Thamus Jones

Jul 7, 2019, 4:58 am Reply

Just the tip of a massive iceberg, many houses built in the boom also have major problems (although lower consequence than towers). Quality, cost and rapid build, you can only choose two of these parameters, this is a natural law.


Jul 7, 2019, 7:12 am Reply

Im surprised, shocked really that many of these City of Sydney representives aren't hiding and worried for their lives


Jul 7, 2019, 2:22 am Reply

mass immigration of unskilled workers working on student/holiday visas or put down as a manager then work as cheap labor which inturn undercuts aussies who would do a quality job but now the only way to compete is lower there quality. I lived in Sydney as a tradesman not related to the housing industry but i would drive around to different sites all over Sydney and i called it in 2016. My gf wanted to buy an apartment and i was like i haven't seen 1 aussie on these construction sites they are all back packers or students building them they will all fall apart and now look at them. not trying to brag just saying what the problem is and as a tradesman i know other tradies and they all say the same thing

Bill Hollingsworth

Jul 7, 2019, 5:04 am Reply

You are being a bit harsh on those poor struggling developers trying to make an honest buck or two providing all those lucky buyers with high quality units at rock bottom prices.

Andrew Chin

Jul 7, 2019, 5:29 am Reply

Shocking news indeed. I thought those conditions mentioned could only happen in public housings. What a shame!


Jul 7, 2019, 9:40 am Reply

Bunch of greedy pricks got shafted by another bunch of pricks. The taxpayer should not be liable for this stupidity/greed. Why would you pay a million dollars for a hole in sky…

Stan Sebastos

Jul 7, 2019, 9:53 am Reply

Corralling sheep. ….. corralling people into apartments no difference baaaa baaaaa baaaa

Aj Melbaus

Jul 7, 2019, 10:34 am Reply

Made In Australia

Jason 321

Jul 7, 2019, 10:47 am Reply

Looks like Immigration is working well in your city's lebo's and Chinese workers cutting corners thats your result. More shit buildings to crumble soon

Roger M.

Jul 7, 2019, 10:48 am Reply

This is what you expect in 3rd world shitholes not Australia, this is NOT acceptable. Why people put up with this I don't know.

Bugs Bunny

Jul 7, 2019, 1:02 pm Reply

@ 2:40 why is the pup’s face blurred out? ?

Thomas Ranjit

Jul 7, 2019, 11:20 pm Reply

People who are in renting if they go to tribunal for any bond claimed by landlord Inspite of renter going to the tribunal office and letting them know from certain specific dates will be out of country for vacation the tribunal holds the meeting in the absence of renter and gives all bond money to the landlord …….God sees everything and these scums will rot in hell

Tyson Collier

Aug 8, 2019, 1:33 pm Reply


Jade S

Aug 8, 2019, 5:53 am Reply

It’s all fun and games while the profiteering runs rabid.

The owners are complicit, they were expecting a bigger idiot to bail out their sh!t reasoning.

Let them eat cake

Lucifer Black

Aug 8, 2019, 3:04 am Reply

When the Lego towers are stronger than the concrete one's, there's a major problem with councilors that continue to allow more of them to be built ?
With whole councils being sacked of late, corruption within many of them, some now incarcerated as was Salim, a royal commission into all councils is paramount to find solutions to this growing problem, before the count is fatalities not buildings.

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