There are mounting calls from angry apartment owners for the WA State government to introduce legislation to fund repairs to the growing number of defective apartment builds that have left owners struggling or unable to pay the unaffordable defect costs because their builder has gone into bankruptcy or receivership.
Owners say it’s unacceptable and an abdication of the Government’s responsibility to make them pay for remediation defects for which the owners are not responsible.
Typically, owners of apartments 4 storeys or higher have access to the six-year statutory warranty period for recourse with defects. This is not the case if the builder/developer phoenixes their company or skips town.
Thousands of apartment owners have contacted the apartment watchdog, the Australian Apartment Advocacy Group (WA) supporting its calls last month for the government to set up an apartment repatriation fund.
Owners say they are frustrated by the lack of legislative support and feel abandoned by a government that has created a system of defective apartment buildings.
North Coogee resident, 69-year-old Ms Bev Mainstone says she will be forced to sell her Pindan-built apartment because she can’t afford the increasing levies to cover the cost of the repairs.
An elderly 84-year-old resident who fears retribution for speaking out, says she has been waiting four years for the westerly winds whistling through the roof cavity of her apartment to be fixed and now prays the repairs will happen before she dies.
33-year-old first home buyer, Eric Soon says the owners of his now Psaros defunct property were forced to take out a $900,000 loan to have the cladding repaired to comply with Australian standards. Since moving in, Mr Soon has also lived with pulsating water and noise in his roof cavity when it rains and banging sounds when it’s windy.
26 apartment buildings with 1600 residents have been identified by the watchdog with Pindan, Psaros and Diploma builds containing defects, including significant structural, water, fire, balcony, cracking and elevator problems.
Australian Apartment Advocacy CEO Ms Sam Reece says this figure may just be the tip of the iceberg.
When the Diploma Group collapsed several years ago, residents at Queens Riverside in East Perth were left with non-compliance defects and owners hit with bills to pay for a malfunctioning complex thermal power system.
Ms Reece says the human impact of the building defects crisis in the state is devastating and says the McGowan government has a responsibility to look after its people and set up an apartment repatriation fund to solve the growing apartment defect crisis.
“It’s a crisis that isn’t going to go away,” she said.
“This is the dark side of the government’s high-density plans for Perth.”
“It’s systemic and, like a disease, it’s infecting apartments across the city.”
To address the issue, owners support Ms Reece’s call for a repatriation fund:
- Levy legislation: The government needs to legislate a 2% builders levy to take care of owners left out of pocket from defective apartment builds.
- An Apartment Repatriation Fund: Establish a compensation fund that allows apartment owners to claim on the fund for defective designs, faulty workmanship, use of wrong materials or failure to comply with the Building Code.
- Fidelity Guarantee Account: Allocate a portion from the estimated $50 million sitting dormant in the Real Estate Fidelity Fund established in 1974 for West Australians left out of pocket from criminal and fraudulent actions of licensed real estate agents or a settlement or business transaction. Apartment owners left without any recourse in the last 12 months can utilise these dormant funds to allow work to be undertaken to repair defects.
Eric Soon wonders whether he would have been better off buying a 3-storey apartment that would see him protected by the legislated Home Indemnity Insurance for owners.
“This is the first home I have ever bought, and at night it sounds like I am living in a tin shed,” said Mr Soon.
“It’s taken the joy out of owning my first place.”
“I have had to go into more debt to pay for the cladding and other defects on top of my mortgage.”
Ms Mainstone says a repatriation fund dedicated to apartment owners would give people confidence they would be protected when buying into apartment complexes.
“I sold the family home with the dream of enjoying a modern, maintenance free lifestyle but it’s only given me problems, not peace,” she said.
“These developers have lined their pockets because of the governments push for more apartments; they have used cheap materials, often imported products that are not certified for use in Australia – why am I paying for this?”
“The water membrane is faulty, the windows weren’t sealed, there is water in the concrete and the fittings and screws are rusting and the company that created this mess has cranes all over the sky, it’s not right.”
Ms Reece says the Apartment Repatriation Fund will go some way to restoring buyer confidence in the apartment market that their apartment will last the legacy, retain its value and be a safe home.
“An apartment isn’t just an investment or a building – for a growing number of us it’s our lives and our livelihoods.”
“Western Australian residents are being robbed of the great Australian dream to enjoy their own home.”