The appointment of a NSW Building Commissioner in 2019 was unambiguous. The aim was to put consumer and public interest at the centre of advocacy, policy advisory and industry engagement to drive long term structural change that restores consumer confidence in the NSW residential market.
Restoring confidence required core objectives:
- attract consumers back to the market by demonstrating measurable progress
- make developers visibly accountable for the buildings they build
- transform the Building Regulator from reactive to proactive
- apply digital assets to target the riskiest players
- facilitate new market led technologies that help consumers to make informed choices
- restore insurer confidence in the NSW market
- lift industry capability and incentivize good player behavior
It is time to account for progress. The reforms prioritised improving how new buildings would be made, followed by steps to ensure that apartment buildings be properly maintained.
The reforms necessitated achieving agreement amongst all stakeholders that no single player was the sole source of the issues that had fed into the race to the bottom that prevailed in recent years. There were many fingers in the pie.
Important new legislation was required. The Residential Apartment Buildings (Compliance and Enforcement Powers), and the Design and Building Practitioners Acts provided the legal framework for the broader transformation work that followed. The Building and Developer Certifiers Act and Practice Standard have been brought into alignment with these Acts.
There is growing acceptance that the NSW reforms are not about red tape, but more-so drivers of improved productivity and value. The reforms show that they are good for all.
The reforms have recently been extended to cover boarding houses and aged care facilities.
Implementation has required a steady hand to balance the opportunity to be hard on the most delinquent, while ensuring the least burdens were placed on those who evidenced their trustworthiness. A carrot and stick approach has been applied.
From the outset there was no challenge to the strategy to go hardest on the 20-percent of players who collectively accounted for most of the damage to consumers. These players were involved in a disproportionate number of developments. This in part explains the sad fact that 39 per cent of apartment buildings constructed in the past six years had one or more serious defects in the key building elements of their common property.
The players in this group have been the most challenging as they posture with denial, then confrontation and sometimes litigation as their first response ahead of just getting these defects rectified.
NSW Fair Trading has embraced new proactive capabilities.
The data now speaks. More than 6500 new apartments have already been subject to DBP Act Declared Design audits with this number growing by at least 500 new apartments a month.
More than 20,000 apartments have benefited from RAB Act audits. There are ongoing private and local government certifier audits which are lifting the game everywhere. The message to developers, builders and certifiers is that its not a case of if, but when audits occur.
The journey is not complete. It is however pleasing to see a refreshed and confident Fair-Trading team led by Assistant Building Commissioner, Matt Whitton. This bodes well for restoring strata community confidence that a modern and well-resourced regulator may be a better first choice for help, as opposed to litigation, expense, stress, and uncertain alternates.
The CONSTRUCT NSW reform strategy initially prioritised the making of new compliant apartment buildings. This will continue, but it is now time to see how strata owners with serious defects in their buildings may be helped.
The initial work has been implementing Project Remediate to provide eligible building owners with a pathway to replace flammable cladding on their buildings. This is now followed by Project Intervene, an initiative to assist owners of eligible buildings constructed over the past six years to address serious defects in the common property of their buildings. This initiative commenced in November 2022.
Project Intervene is already working on more than 30 buildings where developers and builders will be required to go back and repair their defects. It is important however that owner expectations are not overly elevated, as making good defects is often complex and involves practical solutions.
There will need to be a new level of multi-party collaboration to ensure the best outcomes for all are achieved. The focus will be on fixing not fighting.
For the longer term, there is no value in simply relying on a stick being taken to the riskiest in the industry. I estimate that 20 per cent of developers and builders remain in the risky category. It will be for NSW Fair Trading to graft away in this space, as they have and will.
Other parts of the reforms involve new customer facing market led tools like iCIRT ratings where developers and builders seek independent assessment of their capabilities, character, and resilience with these benchmarked with like-minded peers, to re-enforce their brand and trustworthiness.
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A 5 star rating system now enables consumers to access for free, a growing public register of rated players who have a minimum of 3 stars or better. Consumers can now access iCIRT ratings to help them to make more confident choices in selecting an apartment in NSW when they set out on one of their most important lifetime investments.
The NSW reform momentum continues. Purchasers of new off the plan apartments will soon be able to select developers offering 10 year warranty insurance applying from day one when these buildings are completed.
I believe NSW is now becoming a first state choice in which to invest in new apartments. While there is no substitute for astute purchaser due diligence in making their apartment development choices, consumers should now be more confident.
The OBC has effectively created a sub-industry construction boom with the ambitious timeline of Project Remediate. Facade design companies certainly aren’t lining up to be a part of the project, and even if they were, the capacity to handle all of this work is very questionable.
If the facade industry, like most consultant industries, was already operating at, or near, full capacity, then you only have to wonder what the effect will be when trying to push through all of this work in a short-timeframe.
You can have all the bells and whistles in the world to regulate a sausage factory, but if you ask it to operate at >100% capacity… it’s only a matter of time before serious problems arise.