Owners of apartments in the Mascot Towers development will be left with a hefty bill to repair structural damage as the building is too old to fall under warranty, with property experts calling for better consumer protections.
Residents were forced to evacuate the 10-storey Sydney building on Friday night after major cracks appeared in its beams.
Temporary building props were installed in the carpark earlier this week due to the “rapid deterioration” of cracks within a primary support beam, residents were told.
Under NSW law, building defects are covered under warranty for six years after completion of a development.
Stephen Goddard, spokesman for the Owners Corporation Network — an advocacy group for owners in strata schemes — said owners of apartments in the decade-old Mascot Towers development were no longer covered by the statutory warranty period and would now be left with a hefty bill.
“Consumers have nowhere to go in these sorts of situations, there’s nobody for them to sue, there’s nowhere for them to turn,” Mr Goddard said.
“People have more consumer protection buying a fridge than a million-dollar apartment.”
The owners corporation would now pay for the cost of repairs to the building by raising strata levies, he said.
Mr Goddard said 80 per cent of all new apartment buildings were constructed with structural defects, many of which do not appear until the six-year warranty has passed.
“Anybody looking to purchase in a building less than 10 years of age is foolish because the defects will not have yet surfaced,” he said.
“Don’t buy anything less than 10 years old. You never buy off the plan, it’s unsafe to do so,” he said, adding that buyers should not assume any modern apartment building had been built to code.
Mr Goddard, who is also a strata lawyer, said the High Court had recently confirmed that developers and builders do not owe owners corporations any duty of care because owners corporations do not exist at the time of registration of the plan.
He called on the NSW Parliament to create a statutory duty of care to better protect consumers and said, so far, there had been no political incentive for governments to do so.
“Most of our parliaments are on a sort of junkie hit when it comes to the building industry, ” he said.
“The more they help the builder build, the more stamp duty they get, the more council and water rates come in.
The structural problems in Mascot come six months after 3,000 residents of the Opal Tower at Olympic Park were evacuated from the building after major movement was detected.
Buildings become ‘toxic’ to buyers
Mr Goddard said the implications for owners in these buildings could be ongoing.
“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,” he said.
“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.”
MGM Properties principal real estate agent Michael Xylas has a one-bedroom apartment in Mascot Towers on the market for $740,000 which he said was now unlikely to sell.
“Obviously, I don’t think anybody will be in a position to commit to buying a property with a building that’s got problems,” Mr Xylas said.
“It’s very damaging for the vendor who was counting on selling this property.”
Mr Xylas said gaps in the strata system meant there should be annual checks by certifiers to ensure buildings’ structural integrity.
“I think there will be a lot more scrutiny on the construction side of buildings now, so building inspectors will be doing thorough checks on buildings prior to making any recommendations,” he said.
“There’s a number of buildings that I know that there’s been no checks and only when something does happen that all of a sudden they start getting engineers to do reports on buildings,” he said.
“So, I think as part of any strata now there should be an introduction to make sure that there’s a certifier or an engineers’ report done on an annual basis.”
Apartment expert and columnist, Jimmy Thomson, said many new buildings seemed to be constructed to lower standards as builders and developers attempt to cut costs.
“We all know that every new apartment block in Sydney has problems of some sort — most of which can be fixed.”
Common problems included water leakage and lack of fire protection, Mr Thomson said.
Major structural defects were much less common, but it was hard to put a figure on it, especially when they happen outside the statutory warranty period.
“It’s very hard to find out how many there are because the last thing that owners in a building want to do is publicise the fact that they own apartments in a defective building,” he said.
Mr Thomson said prospective apartment buyers need to do their due diligence to make sure the developer is reputable before buying.
And for those who own in buildings that are less than six years old, ensure the entire development has been thoroughly inspected for defects.
Premier Gladys Berejiklian said the Department of Fair Trading would investigate the cause of the structural damage at Mascot Towers and the Government would do everything in its power to hold whoever was responsible to account.
Ms Berejiklian conceded more needed to be done to ensure consumers, given the large number of people living in strata developments.
“We’re doing everything we can to support all residents in these circumstances and more importantly trying to get on the front foot to ensure that these type of situations don’t arise in the future,” she said.