Jessica Osborne

In a market where defects abound and energy performance is often below minimum standards, how can you avoid buying an apartment that turns out to be an uncomfortable energy-guzzling or defective lemon? The Fifth Estate turned to industry experts for advice buyers can use to navigate the many potential pitfalls of buying either an existing or off-the-plan apartment.

Karen Stiles, executive director of the Owners Corporation Network, constantly hears stories about what can go wrong in buying apartments.

Karen Stiles, Owners Corporation Network

She says that if you are buying off-the-plan research is essential, because essentially the “dream purchase” is literally just that, a dream.

“The developer may not have even received development consent for the plans you are shown, so the finished product may be quite different to what you see in the brochure.”

Stiles says many conveyancers and solicitors don’t read the contract, because the fees they charge don’t pay for their time to do so.

“It is vital that you use a solicitor who specialises in off-the-plan purchases, and who will go over the contract and plans with you in detail, including double-checking all the inclusions.”

Energy efficiency

“Investigate its energy efficiency rating if it’s a new build, or updates and plans if it’s an older building,” Stiles says.

An energy-efficient building will be much cheaper to run, reducing those all-important ongoing levies. In addition, a well ventilated apartment or townhouse may not need air conditioning, which is expensive to run, she says. Buyers should ask for the levy schedule.

“Levies are every owner’s ongoing contribution to the upkeep of the common property. They will vary depending on the building’s size and complexity and the amenities provided. Lifts and pools add to the cost of running a building, as do energy inefficient lighting and ventilation.”

Treat sustainability as the new normal

Cecille Weldon, Centre of Liveability Real Estate

Cecille Weldon, program director of the Centre of Liveability Real Estate, says buyers should be looking for evidence of a property meeting the requirements of state compliance regimes for energy efficiency.

That means asking to see the NatHERS or BASIX certificate. It will have a QR code on it that also allows the viewer to find out all kinds of information about the property.

“Buyers need to start asking the questions,” Weldon says.

One of the issues is developers are presenting sustainability inclusions as “extras” when it needs to be the new normal. The sustainability aspects that are required for compliance with codes and standards are generally not being sold to consumers by the agents at all, Weldon says.

The two most important things to look for in terms of liveability are shading and insulation. Weldon says buyers should be asking for a copy of the receipt for the installation of insulation, and having a check done that it was installed correctly.

When buying off-the-plan, ask specifically about insulation.

“Don’t let them position it as an optional extra,” Weldon says.

Shade needs to be where the summer sun will have the most impact – generally the west and north. The property either needs to have that in place, or the buyer needs to be able to install it. And check that winter sun can get in for free warmth.

She says to make sure of the orientation of the building when buying off-plan.

“Pay the extra for a well-designed apartment.”

That includes looking for the ability to zone areas for thermal comfort, and also for effective cross-ventilation.

Weldon says it can be hard for people to understand the features that are in an apartment from looking at plans. It can also be a tough call to know how the property will perform in climate extremes and understand the principles of passive design.

“Responsiveness to climate extremes is just something our houses have to do now,” she says.

Now owned by CSIRO, the Liveability framework developed by Weldon has 17 core principles that buyers can refer to.

She says these are all things that can be capitalised on when the property is eventually sold or if it is rented out at any point.

“It’s driving a new value proposition.”

They matter because they impact on the ongoing spending on energy and water costs, and they also affect the degree of comfort.

“This is the shadow side of affordability – it is not just the cost to buy.

“Costing more to run and having less comfort is an equation that goes nowhere. It’s Just about having your best home.”

Get an architect or building designer to have a look

Principal of Envirotecture Dick Clarke says buyers should get plans looked over by an architect or accredited building

Dick Clarke, Envirotecture

designer before committing. That would cost around $200- $300, he says.

An experienced architect or designer will “go looking for the smarts”, Clarke says.

While the NSW planning rule SEPP 65 and the apartments design guide are leading to better outcomes than other states, these still allow for a certain number of sub-optimal apartments.

“But even those should have minimum standards of ventilation and daylighting.”

Clarke suggests looking at the neighbouring buildings and taking some photos around the site. Take that to the expert along with the floor plan and floor plate so they can assess the impact of adjacent properties on solar access and breezes.

Appliance energy

Other things buyers should look for are the energy ratings of appliances. Air conditioning should have a six star energy rating, and there should ideally be ceiling fans.

Once buyers move in, running both together will also result in a factor of four improvement in efficiency and efficacy, Clarke says.

Building defects

Almost every new building will have defects, ranging from minor to major water penetration or fire safety issues, Stiles says.

Reputable developers and builders will rectify any defects that manifest within the warranty period. But your life and finances could be ruined by years of fighting with dodgy ones, Stiles says.

Clarke says there are two major defects to look out for – waterproofing and external finishes and renders falling off or degrading.

He says the majority of new properties along the stretch of the northern beaches from Manly to Palm Beach had the scaffolding back up within three years to rectify major faults.

These include leaking patios and terraces causing external paint to bubble and come off.

“It is lazy materials selection and design,” Clarke says.

“There is no warranty for these kinds of issues.”

That means the strata body has to spend the hundreds of thousands of dollars for rectification, as these are issues that can eventually result in structural failure. That then means the sinking fund gets “ramped up dramatically”.

Generally, Clarke says if the schedule of finishes says “external painted render” it is a “warning sign”.

Check out a builder and developer

Buyers could get addresses of the developer’s previous projects and visit them. Ask those who live there how their experience has been, Stiles suggests.

Look at the quality of the builder’s previous projects too, and look at how long they have been in business under their current name.

Buyers can also access legal records to see if there is any history of litigation involving either builder or developer.

Check out the project marketing

Buyers need be wary of buildings that have been heavily marketed overseas, Stiles says.

“These may languish without onsite owners to take an active interest in maintenance and management.”

Include details of carpets, flooring, tiling, bench top finishes and inclusions in the contract, to ensure the property is not delivered with lesser quality inclusions.

Get every promise in writing.

“Agents are focused on making sales and have been known to be … creative.”

Location, location, location

Stiles also says it’s a good idea to start with a thorough scrutiny of the location.

Visit the local area at various times of the day, at night and through the week to avoid nasty surprises. And check with the local council about any proposals in the vicinity that might affect you, such as large developments or rezoning.

“It is essential that you research the critical elements of this ‘dream’ purchase. Get any promises made by the agent in writing,” Stiles says.

And don’t forget to read the strata by-laws carefully – can you have pets?

Think hard about the common property

Founder of Green Strata Christine Byrne says most buyers ignore the common property aspect.

This is a big mistake in a market where the three-storey walk-up is no longer common.

High-rise means a lot of plant and equipment, and this can be responsible for up to 50 per cent of the building’s energy use as a whole.

Byrne says it’s a matter of not just looking at the whole amount of strata levies a buyer is up for, but looking at the line items for energy and water when considering an existing apartment.

This may not be possible buying off-plan, she says, as there may be little information on what plant and equipment will be going into the building.

There are also often changes and cost-cutting that occur during the build that can change any initial information.

Byrne says NABERS for common property will be really significant in terms of what buyers can know about the efficiency of their building.

“People need to think about this now,” she says.

Even simple things can have a major impact on the levies and running costs, she says.

Centralised gas hot water systems, for example, are becoming common in mid and high rise. Even when the property has individual metering for hot water, she says a “common factor” is added to the calculations for an individual apartment that can add between 20 and 40 per cent to the owner’s gas bill.

Byrne says there are many issues with how strata buildings are constructed.

“Not a lot of thought goes into who has to pay for this stuff afterward.”

Embedded networks, which many developers are getting into, also have their perils. The end result is a complex contract with the provider that the individual owner is “stuck with”, Byrne says.

To change that means having to pay for a separate installation.

Buyers also need to be aware that a gym or a pool in the building is not a free amenity. The power and maintenance will add to the levies.

“Pool heating is quite an issue. There are pools being heated 24/7 to ridiculous temperatures.”

Byrne says buyers should also be asking who will be managing the building, and who will be used for maintenance, and undertake due diligence on them.

Other considerations

Ask questions about internal finishes, Clarke says. So if there is going to be a floating timber floor, for example, ask how it will be made and installed.

Look for LED lighting, but not cool white everywhere as it is not right for human night-time diurnal rhythms, Clarke says.

Look for blinds or the ability to install them.

And just because the plan shows great big windows in bedrooms, it may not mean effective cross-ventilation.

“There is a little bit of tension between large openings and safety and preventing falls from heights,” Clarke says.

Under NSW legislation no bedroom window at height can open greater than 10 centimetres unless it has a security screen installed. 10cm is not enough opening for effective ventilation.

Clarke says buyers can get some good information from, or “if they feel a little brave”, consult the NSW Apartment Design Guidelines. The principles in them are applicable to any major city except the far north cities like Darwin.

Advice from a developer

Managing director of Josh Develop and former real estate agent Jessica Osborne delivers the Buyers Guide to

Builders consumer education program.

Osborne says buyers should engage their own building inspector to look over plans pre-purchase and to attend the site regularly to see what is being built is what they contracted to buy.

“Another thing to consider when looking at the floorplan in both established or new construction, is what are the common areas directly affecting your allocated unit,” she says.

These include common walls, stairwells and foyer areas.

Check also what the square meters of your unit actually comprise, does it include a garage or storage in the internal area figure?

As well as considering passive design in terms of solar access and orientation, Osborne says buyers should consider the thermal properties of the construction materials.

“In unit construction concrete is common material and has a greater thermal mass. Concrete can store heat during the day and then as the temperature drops, it lets the heat out into your apartment.”

The question to ask is, does the developer plan to use shading, green wall gardens, the ability to purge heat at night, sufficient cross ventilation, or other suitable design feature that may assist to reduce solar gain based on the construction material?

Osborne says that in terms of energy efficiency, the onus needs to be put on the industry to include things like bulk purchasing energy systems for anything over 25 units, for example a solar power system included in the body corp to supply power to owners’ lots.

There needs to be water catchment facilities where the building has its own in-built grey water systems for things like toilets and laundries and common area gardens.

“I understand the need for developers to reduce construction costs, however units are the biggest pull on the grid with not only coverage of land [gross floor area] but the airspace footprint contributing to consumption costs,” Osborne says.

Hire an independent building consultant

Osborne says that any floor plan is interpreted by a number of different trades, and when they vary from the plan or install things incorrectly the builder’s site manager should be picking up on it.

“However this may not always be the case, or from my experience I’ve seen doors go on the wrong way and had to flag it after a site visit,” she says.

Buyers, however, can’t just visit a site, only someone certified and inducted can. That is where hiring an independent building consultant or surveyor to do the checks on a buyer’s behalf can be a sound decision.

Osborne says that while changes to finishes or inclusions can happen, floor plans should not be changing.

“When you sign a contract of sale and to receive building approval from the council, floor plans, engineering plans, property cited on the land, floorplates, etc, all need to be approved and certified.

“Any changes or variations to this needs to be communicated with the buyer and relodged for approval to council if that be the case.”

Other things buyers should look at in terms of energy efficiency and comfort include simple things like is the kitchen located on the western side?

“If so, you could be cooking dinner in a furnace if it is.”

Look at what types of design or physical features will be or can be employed to combat this kind of eventuality.

“Consider the placement of each area in the unit as a relation to where the sun is at its hottest throughout the days.

“The nationwide website has some great resources and you can even download a seven star energy rating home floor plan.”

The BASIX website also has good resources.

Osborne says buyers could also have an energy assessor do an as built assessment for an off-plan property, or check out an existing one before committing.

Question everything

Above all, buyers should not be afraid to ask reasonable questions about everything, including the Body Corporate Disclosure documents.

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