Commish hands out gold stars, extends contract

Building Commissioner David Chandler is about to start handing out gold stars to the most reliable developers in NSW.

And he has announced that he has extended his contract with NSW government to September next year (2023)

Mr Chandler believes the resulting boost to the trustworthiness of apartment block construction, from the creation of the reliability ratings, will see major league insurers returning to provide warranties for the first 10 years of apartment blocks’ lives.

Apartment blocks in NSW (and elsewhere) have not been covered by effective construction insurance since the collapse of HIH Insurance in 2001.

At the same time, the apartment development industry has become synonymous with corruption, poor workmanship, high-rise collapses and “phoenixing” developers who abandon failed and defective apartment blocks only to reappear, doing the same, under another name.

However, Commissioner Chandler was upbeat and positive in a message sent out on Tuesday this week (April 26), celebrating the fact that 84 developers have signed up to be rated, the vast majority seeking gold stars.  

“I believe it is time to start discussing what a more resilient and trustworthy industry looks like and what it holds for consumers,” he wrote.

“A recent survey has pointed to a low level of public appreciation of the positive impact reforms in Class 2 buildings in NSW is starting to have,” he said.

“We need to address this as getting the industry’s confidence back is the objective of the reform effort and pain.

“While it is still important not to brush over the reform work to be done, there are great rays of sunlight emerging.

“This week the iCIRT momentum is showing important uptake strides,’ he said. The Independent Construction Industry Rating Tool uses a five-star system to rate builders on their apartment build, which must meet the minimum benchmark average of three out of five stars or above to be deemed “trustworthy”.

The data is being checked and processed by global credit check agency Equifax.

Ratings roll out

Mr Chandler reports that:

• there are now 84 committed rating engagements
• 88% are seeking gold ratings
• 20 players have completed their ratings process
• 10 have paid Equifax publication fees
• only a small number of engagements have not attained 3 gold star ratings
• 116 players are starting the ratings process.

“It is expected that there will be 45 completed ratings with 30 to be published by the end of May,” Mr Chandler wrote. “We are well on the way to having 100 rated developers and builders later this year.

He explained the significance of the ratings to the insurance scene in an accompanying post in Linkedin.

“The CONSTRUCT NSW Class 2 building reforms are now opening up an appetite in the insurance market to offer 10-year warranties for new apartment buildings,” he writes.

“These warranties would be available to purchasers from the day buildings receive an Occupation Certificate. They could be available as soon as 2023.

“Underpinning this possibility is changing market behaviour by developers, as recent NSW legislation influences the way new buildings are designed, built and certified.

“More trustworthy buildings are in sight. New models of building delivery such as Build-to-Rent (BTR) will also drive change, as sophisticated investors look to own more resilient buildings and apply longer ownership horizons of 20-years or more.”

He goes on to say that the Customer Experience will be paramount and that resilience, building placement, delivery quality and aftercare will becaome major factors in the provision of high-rise housing.

“These drivers will be market led as regulators focus on the residual risky players while insurers reward the trustworthy,” he writes, adding that ultimately the NSW reforms will drive insurance risk premiums down.

Term extended

Meanwhile, Commissioner Chandler has confirmed he has extended his term in the role for another year, while signalling a “pivot” to focus on “calling the customers back”.

Initially appointed for a two-year term, Mr Chandler has already had a one-year extension in the job— he will now stay on until September 2023.

“I really was set on going fishing on September 30,” the commissioner told a Property Council NSW event in Parramatta this week, according to a report in the Urban Developer website.

“And then I heard that a whole bunch of these guys, over here in this corner [developers], had already ordered champagne for a party on October 1. “And I thought wouldn’t it be fun to give them a reason to put the champagne back in the cabinet.”

Consumer protections and consumer confidence have always been at the core of his office’s work, he says, but it’s now time to take that message to the public.

“What we haven’t been doing in the past two years is we haven’t been talking to the customers. [The sector has] had a fabulous conversation with ourselves, but the people who are going to buy your product don’t know.”

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