There has been a large amount of media focus on the tragedy that occurred at Grenfell Tower and whether the same thing could happen here in NSW. On the same day as that tragedy we actually posted an article about the watering down of the protections for people purchasing brand new apartment blocks (that is, 'off the plan' purchases) and the impact that this might have on apartment blocks in NSW.
(If you don't know why we are talking about Grenfell Towers read about it here.)
A Choice article from September 2016 cited similar concerns regarding the lack of protection for apartment owners. That article actually specifically cites a strata block that discovered it had flammable cladding, but the developer refused to rectify the problem. The developer offered instead to install sprinklers, this would have been unlikely to stop the tragedy that unfolded at Grenfell.
As Choice notes, the strata board are left with a choice between the risk and cost of litigation, or accepting the 'offer' from the developer. The cost of rectifying the defect is $20 million, roughly $40,000 per owner.
The problems associated with developers are complex, for instance sometimes the developer company no longer exists when the problem becomes apparent, or the company has gone broke, or the company simply delays and waits to see if the strata board are really willing to litigate.
We used to have in NSW a home owners warranty scheme, we still do but it doesn't cover apartment blocks over three stories. While this scheme is problematic (namely because of the incredible cost that it puts the home owners through to make a claim) it is better than nothing, which is essentially what many strata boards have been left with. While strata boards have the usual protections of the Australian Consumer Law, if the company no longer exists this will probably be worthless. An insurance scheme ensures some protection down the road, but the NSW government has removed this requirement when it exempted developers of large apartment blocks from the scheme.
What should I do?
Don't purchase a property without obtaining proper legal advice, including advice regarding the potential risks associated with strata purchases vs freehold purchases (that is apartments vs houses).
If you are purchasing off the plan then you should research your developer and see if they are a company created solely for the purpose of this development.
Lastly, you might contact a member of the Liberal Government and ask them whether they are proposing to do anything to protect people purchasing strata properties in NSW, particularly in light of their desire to increase development of new homes in NSW. You might contact Stuart Ayers, who is our local Liberal member in Penrith, or Anthony Robers who is the Minister for Housing and Planning.
If you would like to read some more of our articles about Real Estate or Property law, then please click on the link to the left.