I'm sure people know but this is a warning to ppl buying apartment in vic. My friend actually got a strata notice that cladding may need to be replaced in his apartment (approx 5 yrs old). May cost >$1million. Vic (unlike NSW) has a fund to cover certain costs so hopefully the cost would be minimised. He has said that every apartment in victoria needs this so I'd be careful before buying…
anyone have any other input about what's going to happen in NSW?
How do you check for water ingress issues?
Asking the OC manager of the property is probably the easiest. Then get a copy of previous Annual General Meetings where it is likely to be discussed and minuted. If a special levy needs to be raised then this will be noted in the OC certificate.
This all assumes that the water ingress issues have been found and/or quoted on. It also depends on how widespread it is and how the committee wants to go about fixing it. This will determine how much the project will cost and if special levies need to be raised.
How will you get AGM minutes where you are not entitled to them?
@serpserpserp: If an apartment is for sale, sellers are entitled to see AGM minutes, OC certificate etc. Usually they form the contract of sale. If not, you just need to contact the selling agent and they will provide it. You can also contact the OC manager separately for more information.
See Buying an apartment or unit - checklist
:
You can research the owners corporation by reviewing:
The Vic government is/has started a levy fund for cladding replacement. This levy is now put on any new building permits for new projects to a certain project cost. Just another slap in the guts for the building industry and the developers.
Just another slap in the guts for the building industry and the developers.
Don’t worry. The buyers are paying for this.
In the end yes, but we are still talking a sizable amount to a small developer. It just makes it harder for them to get projects off the ground.
i heard it is only $600 million..divide that by how many apartments. then prob not much
The size of the developer isn't going to matter a wit to anyone if another Grenfell happens.
Builder, no matter how big or small, never lose even a single (profanity) cent. I have no sympathy for builders. There is a special area reserved in hell for second-hand car sales agents, estate agents, builders, lawyers etc etc.
Wait, are you showing sympathy for the building industry and developers who were (collectively, not every individual one) responsible for turning buildings into firetraps in the first place…?
Not all Builder's and Developer's are sharks and doggy. I put it back on the VBA for not capturing the issue in the first place. Now everyone has to pay for it.
Sorry, this isn't directed at you personally but this has cropped up a lot lately so:
DODGY not doggy.
/PSA.
Anyway, I'm not saying all the developers or builders were being deliberately dodgy, but it was certainly caused by them trying to source the cheapest materials which could, iirc, meet the requirements for being acceptable substitutes, and not actually meeting the defined standards.
I might be wrong on this point and you're definitely right that the industry standards (and government regulatory standards) which allowed these materials in the first place are also certainly to blame.
And no, you don't see governments rushing to refund the stamp duty revenues they collected on the back of the property boom.
@HighAndDry: There was cladding that was acceptable previously and now defined as not. Yes there were builder/developers using inferior products from China. They are at fault for that. I was just saying that all this now has to be covered by everyone not just those that tried to go the cheap.
Can I just say also balconies in apartments are not meant to be an extra storage space to create fire hazards, and design requirements maybe should include a greater storage space not just 6 cubic meters for each apartment.
@Melb69: Would be really interested in more info on this. So who defined it was "acceptable" and under what conditions was it considered "acceptable". My understanding is the Victorian Government wanted to ban this cladding, outright, but the Feds said it was still OK as long as it was used for low rise buildings. So, at what point, was this cladding OK'd, by a Government authority, for high rise buildings - because we need to have a serious poke at them.
I have no issue with "it is covered by everyone" in the same way as "everyone" contributes to third party person insurance. Unfortunately it is difficult to work out, upfront, who are going to be "gaming" the system and, by the time the damage has been uncovered, then these people have set themselves up so they don't have to provide restitution. If it was easy to get the money off the people who caused the issue in the first place, then we wouldn't have this mess - we would already have the money to fix it. In the meantime people are sitting in buildings that can go up like Roman Candles. Let's face it - the builders and developers, as a collective, caused this issue in the first place. Expecting them to kick in a bit to fix the issues is not completely out of line.
I do agree with you on the balconies. We also should have a maximum people in a flat rule, so we don't see the case of apartments full of students using blankets as separators.
@try2bhelpful: When the first Melbourne apartment went up that cladding was Alucobest. A product from China which was not strictly compliant ie tested. This then set up the VBA to look at other similar cladding. The German made Alucobond was like an industry standard product which was compliant and tested. Now it can't be used for high risers. Its the nature of the product itself. 2 aluminium panels sandwiched between a plastic substrate with adhesive. Also that UK apartment disaster was exasperated because the way the cladding was installed. There was a large gap from the panel and the external wall frame, so when the flames ran up in between that space it created a chimney stack affect.
The AS has new testing criteria for this cladding and it now doesn't comply as it can't meet the requirement to self support long enough in a fire. Partly due to the glue used. The face metal is fire resistant. I am not an expert, but this is from talks that I have taken.
Anyway we all agree it needs to be fixed and someone has to pay for it now.
Not so worried about the students, just that no smoking or flammable items should be on the balconies.
@Melb69: I think you mean "exacerbated" rather than "exasperated". Exasperated explains how the rest of us feel about this issue :)
Sounds like someone really dropped the ball on this one, and the "splatter" is across a large number of people. I think this is, partly, why the Victorian Government is kicking in some money and bringing in the new "funding" model.
I still query why a builder/developer would install, large scale, a product that had not been cleared for installation. Yeah, it might "look" like the compliant stuff but is it "actually" safe. I've seen some footage about how this stuff goes up, in the lab, and I wouldn't be too happy about having it on my building.
However, what has been REALLY highlighted here is that we need to do a lot more testing on products before they are allowed to be installed on buildings, the way they are installed needs to be dictated as well and that the inspectors have to be independent of the developers.
I put it back on the VBA for not capturing the issue in the first place.
Except the issue, which was brought into focus by a fire in the UK, was not picked up by any building authority across the country. Even Queensland, which has significantly tighter building regulations, has this to say on cladding:
https://www.qfes.qld.gov.au/buildingsafety/cladding/Pages/de…
I don't yet view builders as the sole problem. I'd personally like to see some of my tax dollars spent directly getting new housing projects off the ground (25% for social housing, 75% sold off privately). But your view that we're going to reach building nirvana through the regulators is insane. I have this weird feeling if we massively increased regulations in the building industry you'd be on here complaining about the over-regulation.
@markathome: Regulations need to be policed. Don't make up regs if you can't make sure they are adhered to. We don't need more regs. I am surprised anyone would want to build. There is so many hurdles.
@Melb69: I agree with you on the policing being deficit. We should NEVER have outsourced the inspections to private industry. Who would think that the people selecting the inspectors would be preferencing people who aren't pulling them up over breaches of the regulations. What we need is regulations that do actually stop people being put at risk by dodgy operators. The problem is, often, the holes are found after the damage has been done. "This regulation should apply", "yeah, but the comma is in the wrong place so I have a "get out of jail free card". Then they phoenix and start again.
@Melb69: I think your wording might be a tad wrong there. Maybe it should say - "don't make up new regulations if you refuse to police the current ones that should already apply".
Up until, relatively recently, most of the apartments in Melbourne were low rise affairs. Occassionally you would get a fire but it, usually, effected a small number of people. Now we have, virtual, cities in the sky. A disastrous incident can put hundreds of people at risk. I think a little "tightening" of the regulations a few more "hurdles" to ensure high rise safety are not out of order. Particularly as we seem to have, fairly spectacularly, got it so wrong in this case.
Who would want to build - the same people who made big profits cramming so many apartments on a block in the first place. So, now, they make less profit or people pay more for the apartment. Either way, hopefully, we avoid apartment blocks that look like Roman Candles and trap people up the top of the building to burn.
@markathome: The Lacrosse building fire in Melbourne's docklands occurred 2.5 years before the Grenville fire and made the risks of flammable cladding obvious.
It's not as if the risks were not foreseen. In some cases designs with flammable cladding were only approved when there was additional fire suppression measures (for example, external sprinklers). In other cases the approved design specified a less flammable cladding.
However, not all builders followed the approved design. In some case the additional fire suppression measures were not implemented and in others, the cladding was switched to a cheaper more flammable type.
@trongy: That's crazy. I thought I remembered seeing the Lacrosse building fire damage late in my Melbourne stay. However your timeline puts the fire six months before I moved to Melbourne. I'm definitely wrong, I'm just genuinely surprised. I still see those apartments come up for sale below market rate but they seem to be inching their way back to normal. Guess I'm not the only one with a bad memory.
@markathome: Human beings are very good at ignoring risk until it bites them in the backside. Presumably they hope that the Victorian Government will pick up the majority of the costs for replacement of the cladding.
You are kidding me, aren't you? It was the developers that were putting the cladding on in the first place. At least the Government is actually trying to offset some of the costs, per apartment, to cover the buyers that have been caught in the middle here. If the apartments were using quality stuff, in the first place, we wouldn't have this mess. I think this is a good way to ensure that amelioration works can be undertaken now. There needs to be real penalties for the cowboys, that could be used to offset the levy, but these guys tend to phoenix out then find somebody to act as their front man for the next round of "rip off the buyer". This mess was a clusterf*** of the building industry, the developers, the inspectors and the Government that decided to outsource the inspections to private industry.
Not new info, and this 'warning' is a little overblown.
This info, if relevant to the specific property, should be apparent during your due diligence checks before buying.
Yeah just your typical fear mongering for internet points.
How is it apparent? The list of affected buildings is still being kept a secret for fear of arson attacks. I am not aware of how a buyer can find out if a bulding is affected.
You can obtain a copy of the records of the body corp. If there's a cladding report, it would be there. It would also be in any insurance documents for the building if it's been recently renewed, etc.
Or walk around the building and look with your eyes. It is easy to spot cladding. Everyone is right it is legally required to be disclosed.
The OP's friend must have bought in new or near new.
I see cladding as an extra expense for replacement down the track. I'd rather buy buildings with exposed concrete walls, at least you know there is nothing more to worry about.
@capslock: It isn't about flammable or non flammable.
I don't buy apartments with cladding or over complicated balconies etc full stop. It just means more money down the drain when it comes to having the sinking fund to redo the outside.
It might not look glamorous but it is better than being awake at night wondering if you can afford to fix it.
An 11 story apartment built 20 years ago with only one side facing the street spent $7m fixing the concrete. Imagine if you have to take off the cladding flammable or not, fix the concrete and putting the cladding back.
Each to their own but I guess you're just here for a fight rather than about utility and financial sense.
@netjock: Here here.
Also. I’ll never buy a building with a flat roof ever again. Flat roof allows the developer to get an extra level of apartments in for more profit, but waterproof membranes are about $400k per building to replace, and need replacing every 10-20 years depending on the quality and installation.
Not true about every building.
Fear mongering at its best.
Good warning and this has or should've been part of standard due diligence for buyers and their solicitors for the past 2 years already.
~$1M is actually pretty good. Have seen figures for some buildings into the $20M range and higher.
my friend bought like 8 months ago and he wasn't informed by his solicitor ><
Ah, that sucks. Might also have been simply that the information wasn't yet available then, will have to have a look at the Vic inspection timetable to see if the building had been inspected and report obtained at that point.
Unfortunately conveyancing is one of those areas in which the basics have stayed the same for so long and which don't attract high fees so there's not a lot of incentive in keeping up to date with the cutting edge sometimes.
when i bought my first apartment, i didn't even realise the solicitor looked up on these things like building leaks etc, thought they just look at the contract do the bills etc.
Guess ultimately it's on the buyer to ensure they look at everything (this is why i tell people to read the strata reports of the last 24 months yourself!
@funnysht: Solicitors don't actually - structural issues are for the buyer themselves to be aware of since it's not technically a strictly legal issue. The solicitor doesn't attend open days or inspections after all.
But a lot of information is available in various disclosures which can, but not always will, shed light on these issues and in any case it's a legal liability so a prudent solicitor will at least warn buyers of the potential for these issues even if their existence isn't known.
Where can the Vic inspection timetable be found?
@kRaYziE666: Here's a good starting point:
https://www.planning.vic.gov.au/building-policy/victorian-cl…
are new apartment blocks being built meeting the cladding requirement? or are they being check after they're being built?
i think no one knew about the fire dangers till what happened in the UK
Or the fires in Melbourne apartment buildings
If car manufacturer finds that their steering wheel is flammable, no doubts that they will offer a free recall without question…so why not these apartment builders….
Car manufacturers stay around (and depend on brand reputation) much more than a lot of developers and builders.
Also (somewhat redundantly) the laws are different, which is why there was a raft of legislative changes around cladding after the Grenfell towers.
Exactly. Here it is OzBargainers: one of the few opportunities where you can legitimately discuss high-yield investment vehicles and what they are.
https://adpartners.com.au/what-is-a-special-purpose-vehicle-…
No one else wants to pay for your friends lack of due diligence Bud !
An option is for his to jump off the sinking ship and find a like minded individual .
not sure why you'd say that..I mean if i buy a car, i don't read up on the mechanics to ensure it is mechanically safe. Same should be building materials, i just ensure the regulation department did their research…
Eh, if you buy a car, you should definitely take it to a mechanic for an inspection.
have you seen the debacle about the claymore takata airbags, it being happening for cars over 10 years an it's still not resolved.
claymore takata airbags
That's horrifically brilliant. Don't know why I haven't seen them referred as this before lol.
is flammable
Passengers sits about 1m away from 50l of fuel.
World Tower in Sydney is having it's cladding redone over most of this year due to leaks, defects and non-compliances. It's also getting fire dampers installed in each apartment as currently doesn't have any. So not much different in NSW.
Don't quote me but that's a Meriton building iirc so it shouldn't have come as a surprise to anyone…
The government should have have to step in to help the strata owners.
It is their property therefore their responsibility to come up with the money or chase someone for negligence (if any can even be proven).
Government only steps in when there is (enough) votes to be won.
Also, a claim on developers negligence is only beneficial to the lawyers. I’ve seen strata’s spend almost as much on legal fees as it would cost to rectify developer problems in the hope they can claim back, only to see the developer become bankrupt, and have to pay to fix the problems in the end anyway. In my opinion developers should be required to lodge a bond for all buildings they build for about 3-5yrs.
Not all, but many builders are very dodgy and are profit hungry first, concerned for their customers last. It’s not like your local Toyota dealer who really wants you back in 3 years to get the latest camry….
True, luckily the developers for my block after 10 years are still in business. Most people should really check to see if their developers are shady. They create a company to build the apartment and then wind it down.
@netjock: yeah, for 1 i refuse to buy anything inside of 10years old… but people should really check out a developers track record. Not just looking at their website to see their "projects", but actually seeing the entity they built those buildings under.
He has said that every apartment in victoria needs this so I'd be careful before buying…
Not every one, only the cheap nasty ones with the cladding the burns ;)
The older apartments are less likely to have the issue, unless they have been tarted up. The thing you need to check with them is concrete cancer, if the balcony leaks and how water tight the windows are. There may also need to be some major renos at some point if they have a lift. I would look for a good quality older apartment, in a small block, with no lift if I was looking at buying.
But not too old or it might be filled with asbestos.
ooh, you are quite correct there. You need the Goldilocks period between Asbestos and cladding; with a side order of looking for the concrete cancer and leaking balconies. Personally, I avoid apartments, but speaking of Goldilocks periods, I bought my place when the price was just eye watering, rather than "first born into slavery" levels.
The title should have simply been: Warning to anyone buying an apartment anywhere Australia: Don't.
It still boggles my mind why buyers keep flocking to these money pit shoeboxes like flies to turds, when they aren't even that affordable and they hold their value worse than a truckload of gold going off a cliff.
That's not even mentioning the fact that many of these modern apartment buildings will probably be condemned and demolished in the next 10 years due to egregious building code violations and safety issues.
Made Money Australia. You should run a show like that.
Many reasons:
It is actually more convenient depending on location. Living within 2 city blocks of Queen Victoria Market, large Woolworths, Big W and Coles. Within Melbourne Free tram zone.
Paying $5k body corporate a year is actually better than paying 2x Gym memberships (gym + pool in the building) at $1900 a year (yes there is discounts available) offset by lower council rates. Apartments are probably less than $1k compared to most house owners paying $2k - $3k.
It might make financial sense to buy a $400k 2BR apartment rather than a $700k house because you can't afford repayments on $700k house. Remember cash is king. If you find yourself paying 75% of your $5k a month towards your mortgages how do you live on less than $1k a month? The interest you are not paying the bank in interest you can invest (if you have discipline) and you could be getting 7% in the share market rather than pay the bank 3.5% non tax deductible.
From a cashflow prospective if you buy the right type of apartment you're cashflow neutral. The rent covers all your costs including principle + interest repayments. By the time you retire you put $100k down (20% deposit + stamp duty) but you get net $20k a year (assume $500pw gross rent). Which is 20% return not including time value of money
If #4 holds and most people could put deposit together every 3 - 4 years. Buy 3 - 4 and every extra cent you pay hits capital repayments and pay it over over 20 - 25 years meaning you'll retire with $80k a year income.
The trick you've pointed out is not to pick dog box size apartments. Most sell at 7% gross return but some of them are really bad.
I'll share my point here, i got a friend who was in the market looking for apartments as she wanted to buy closer to the city and she can't afford a townhouse, etc.
She liked 2 apartments and sent the Section 22 to her conveyancer. Luckily she was recommended a really good conveyancer by her friend and the conveyancer immediately asked for 'engineer reports' from those 2 properties and found that those 2 properties have those flammable cladding.
I think this post is not fear mongering. There have been people who only just recently got into the property market and may not pay attention to the recent changes that happened since Lacrosse and Greenfell. Mind you, i got a friend who lives at Lacrosse as a tenant and told me that they had finished fixing all the cladding issues with significant costs to the landlords but it's good to hear as my friend don't have to rush to get out of the apartment ever since the fire that happened 2 years ago.
If you are on the market looking for a property, get yourself a good conveyancer/solicitor who will pay attention to those details or ask for the engineer reports.
He has said that every apartment in victoria needs this so I'd be careful before buying…
This massive exaggeration is the fear-mongering part. Not all apartment buildings are affected and to try and paint it so is ridiculous and unneeded.
Due diligence, this is something that should come up in a building inspection.
Most if not all apartment buildings would by now have been checked for flammable cladding and provided a notice by the VBA if they do or don't have cladding. Either way, this should be a standard check when you ask for OC information and would need to be disclosed.
Buyers may think it's about location and views. Nope, it's about cladding and water ingress issues, the latter which can only show up many years after the building is built.