In this week’s podcast we chat about a report which reveals that one-third of 500 unit blocks inspected in a survey had serious defects, from leaking bathrooms, to fire safety issues..
And there’s the stomach-churning claim that some units face remediation bills that will cost more than half the purchase price of the apartments.
We also look at a small scale developer who has been ordered by a court to pay more than $1million in compensation, plus legal costs, after their attempts to blame everyone else for the problems in their property fell on deaf ears.
We touch briefly on the revelation that the two tradies per apartment limit on apartment renovations doesn’t apply to unoccupied units – they can have as many as they want provided they don’t go over the one worker per 4sqm limit
And we examine how out-of-date community title laws have stymied pet owners’ attempts to enforce the new by-laws on pets.
Finally, we follow Sue’s story on Pinchy the crayfish whose rescue and survival is worth of Disney movie.
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TRANSCRIPT IN FULL
We’re going to be revisiting some well-worn paths this week, but each of them has a bit of a twist, Sue Williams.
They certainly do!
A couple of stories about defects. We’re going to be looking at renovations in apartments during lockdown (again), because it’s even worse than we thought. We’re going to be looking at pets, but not in strata; in community schemes. And, we’ve got a happy little story, that’s got nothing to do with apartments really, except that you wrote it. It was written in an apartment.
That’s a tenuous link, isn’t it, really?
Yep. It’s about as strong as I can get. I’m Jimmy Thomson. I write the Flat Chat column for the Australian Financial Review.
And I’m Sue Williams. I write about property for Domain.
And this is the Flat Chat Wrap.
Sue, one positive story for apartment owners, regarding defects that you’ve dug out and another absolutely horrendous one.
Oh, yes. What do you want first, the good news or the bad news?
Give us the good news first.
Okay, well, residents in an apartment building in Strathfield in Sydney, won their fight against the developer about defects. There was lots of defects (alleged), in this building, including bad waterproofing and flammable cladding and they won in the Supreme Court. The Supreme Court ruled against the developers, after the developers pointed to everybody else and said “it’s their fault; it’s not our fault. It was the designers, it was the architects, it was the certifiers.” The Supreme Court of New South Wales disagreed and said it was their fault, so they’ve ordered them to pay all the costs of remediation and the legal costs that the strata owners incurred in their fight.
So, what’s the total cost to the developer?
They’re having to pay just over $1.2 million, to get all the defects fixed and they’re also paying the cost of $183,000 that the unit owners incurred, during their fight.
Are we going to name these developers? I think we should.
Right. Omaya and Al Maha. Okay, well, they’re a husband and wife team; Antoine and Georgette Bechara and they have a company called (they have various companies, you know, where they go through lots of different names)… The wife is a sole director and shareholder of Omaya Holding limited and Mr. Bechara’s company is Al Maha Ltd. That’s right.
That’s interesting. I’m sure they’ll be doing their best to lift their game in the future, when it comes to any developments that they do under those names.
Sure and the certifiers (Essential Certifiers), have now gone out of business, so they’re not trading anymore. They’ve had lots of complaints about them, as well.
So, they’ve essentially disappeared?
That’s right. But at least it shows that…
You can win.
Yes, absolutely. Hopefully, that will give hope to a lot of other people, fighting similar battles.
And then, you found another story that was in the Daily Telegraph. This was also in the Daily Telegraph, was it not?
Yeah, it was a new survey of 500 buildings, completed in the past six years in New South Wales. The New South Wales building watchdog, David Chandler, said it showed that 36% of those had a major defect of some kind, ranging from structural faults to defective waterproofing, cladding and fire safety systems.
That’s over a third; that’s a huge number. OCN (Owners Corporation Network), Executive Officer, Karen Stiles, spoke about it, as well. She said, she knows of one building, where the defects are going to cost $500,000 to fix per apartment and the apartments themselves are only worth $850,000. Can you imagine being in that kind of mess? Mr. Chandler was saying that a lot of the repairs at least, are going to cost $30,000 to $50,000 per apartment, in the apartment buildings that he surveyed. Karen said well, lots of people are going to have to go bankrupt. They’re going to be suffering huge stress over that. There’ll be suicides, marriage breakdowns; the whole lot. You kind of think, this toll of human misery that these developers exact on people…
And yet, not one of them (as far as I know), has been sent to jail for being a really bad developer.
That’s very true.
I think there’s a point in these things, where developers must know that they’re cutting too many corners. They’ve tried to do things too cheaply. They’re pulling money out of the project to put in their own accounts, rather than use it to build and then, they just walk away. At the end of it, they just walk away and start another company and do it to somebody else, all over again.
You wonder how they can do that, don’t you? I mean, just morally. Would you be able to sleep at night, knowing that you put… Some of these faults are really life threatening, as well. I mean, how could you sleep at night, knowing that you’re putting people and their families at risk in that way?
I think these people, really, genuinely; they’re almost verging on sociopath. They don’t think other people matter and I’m not talking about the first couple we mentioned. I’m talking about developers who go from one crap development to the next. They basically think if you’re stupid enough to buy an apartment from people like us, then you deserve everything that’s coming to you.
Or maybe, they they kind of think well, they’re doing a service to people, by providing a roof over their head and an affordable apartment and if there are any problems that come up later, well, they didn’t realize that was going to happen.
Do you really think they’re that naive? If they’re doing it for the second or third time, are they really that naive?
I kind of think they feel that they’re unlucky, if the building shows huge faults. They don’t supervise their tradies and their workers.
Because they don’t know; most of them (many of them), have no experience in the building industry.
That’s true as well. They consider themselves entrepreneurs.
I mean, we could go and borrow money tomorrow and call ourselves developers and find a plot of land and find a builder and find an architect and stick it up and never actually set foot in the place. Then, when it started to fall down, say “oh, it wasn’t us and by the way, we’re shutting the business down, so there’s no money for anybody.” We won’t be doing that, folks!
I know what you’re saying; how can people sleep at night, but think about drug dealers… Drug importers; the people selling dodgy drugs to kids at music festivals. I’ve said this many times in the past; when we were growing up, there was still a kind of sense of right and wrong. It kind of evolved during the 80s, the ‘greed is good’ period. It was there’s right and wrong and there’s what can I get away with? It’s become, there’s right and wrong and what can I get away with and if I don’t get away with it, how badly am I going to be punished? Right and wrong is a very adjustable concept.
I wonder if some of these people think there’s always safety nets there for people, so when people get caught up in whatever terrible things that they’re trading, these people will be rescued in some way by hospitals, if they’re trading in crappy drugs… Government rescue plans, if they’re building terrible, defective buildings. Unfortunately, those safety nets often aren’t there at all.
Well, when we first got into this, through the apartment that we bought off-the-plan, a lot of our thinking was, there’s no way the government would allow this sort of thing to go on. It’s such obviously fraudulent behavior, that it cannot be happening. Except, it was and it took us a while to realize that the checks and balances and safety nets for people buying apartments, just did not exist.
You just assume they’re there. In our case, many years later, I talked to people who’d worked for the developer that we were dealing with. They said the developer basically felt that the apartments had been sold off too cheaply, so therefore, they felt that we’d got a bargain. If we’ve got a few defects along with the bargain, that was alright and all well and good, that we’d have to pay for them. That would even up the playing field in some way, which was interesting to see; how they thought or maybe, how they justified it to themselves later.
Probably. But then, I’ve just heard today, a new take on this, where a developer has written to all the people who deposited money for an off-the-plan development and said ‘the cost of materials have gone up; the costs of workers has gone up. I can no longer build this apartment at the prices that you have paid. This contract is therefore null and void.’
Wow, can they do that?
Well, this came from a lawyer and apparently, they can, because somewhere in the contract it must say that if these conditions are met, then the contract can be rescinded.
Wow. Developers can make a huge amount of money from developments and if they cost them badly, they can make not very much money from developments. That’s part of the risk of business, isn’t it?
I think this is another variation of the sunset claw-back.
They’ve gone ‘wow! Apartment prices…(this is northern New South Wales; Southern Queensland). Apartment prices here are going gangbusters and we could have sold these apartments for a lot more, so let’s just invoke these clauses.’
And then everybody’s sitting there; they’ve got the deposit back and it’s not gonna go as far as it would have when they put it down, a year or two ago.
Gosh, where there’s developers, there are always loopholes to be discovered, aren’t there?
Absolutely true. We’ll be talking about a new loophole that’s been discovered in renovations during lockdowns, after this.
And, we’re back. We’ve been talking a lot about renovations during lockdown and my column in the Fin Review at the weekend, was likening it to the Brady Bunch. We were talking about how you could only have two tradies per an apartment, but you could have as many apartments being worked on in a building, as were available. It turns out, it’s even worse… One of our readers has written to me today and said that the limit of two workers only applies in occupied apartments. In an unoccupied apartment, the limit is one worker per four square meters.
Wow! So, if an apartment is, say 50 square meters…
That’s 12 workers. If it’s 100 square meters, it’s 25.
Working in there, all the same time.
Working in there, all the time and there’s no limits.
So, she’s suffering from the noise from the building?
The dust and the number of trades people coming through the common property, all at once and in the lifts and stuff.
I just got this note today, so I’m going to chase it up with New South Wales Health, who said they don’t ever want to talk to me about renovations again. I’m going to throw it at Victor Dominello, the former Fair Trading Minister and Stuart Ayres, another former Fair Trading Minister, who are both in the Crisis Cabinet. They haven’t responded to anything. You know, they’re basically just saying “we don’t care.”
Well, why don’t you also talk to Kevin Anderson’s office?
Well, he’s not even in the Crisis Cabinet. Nobody listens to Kevin. His training wheels have fallen off you know, with the story about Kevin last week. It was all about how his department didn’t take seriously, the possibility of the Premier’s ex-boyfriend needing a license to do all these real estate deals. They kind of just push it to the side.
Yeah and forgot about it.
So yeah, he’s having a tricky time as it is, but really, when you think about it…And of course now, when there’s a highest occupancy rate in apartments (rented apartments), than we’ve heard for years. There’s a lot of empty apartments around. A lot of people will be going “this would be a perfect time to do a renovation.” They might even think, “oh, should I impose on my neighbors in this way, by doing a renovation?” They’ll go “hey, the government isn’t just saying it’s okay, they’re actively encouraging it. So, let’s go; let’s do it!” It will be interesting to see what kind of responses we get on that. I think we’ve done a lot about renovation, so I might just leave that, at that. We’ll take another little break and when we come back, we’re going to talk about pets, because we never talk about pets. That’s after this.
And, we are back. Sue, you were chasing up (to some extent), the story about Scott McGregor out in, is it Camperdown?
That’s right. He’s at the City Quarter in Camperdown, in Sydney. Many of the apartments there (many of the blocks), allow people to have pets. His apartment building allows people to have pets, but not dogs. You can have cats and parrots and squirrels (no, you can’t have squirrels), but you can’t have dogs. He has been saying ‘well, now the laws have changed, we can now have dogs, so that’s fantastic.’
So this is a law that came in last week that said you cannot have a bylaw that prevents people from having companion animals, unreasonably.
Yep, absolutely. So we all thought that’s fine; he can keep his little dog, but apparently, the Community Association (the overarching Community Association, which looks after all the blocks), are saying “well, no. We still don’t want to allow dogs into that block of apartments and because we control all the entrances and exits to the building, we’re going to say that you can’t… We’re going to pass new bylaws to say you can’t have your pets on any of those exits or entrances, or any of the pathways around the building.” Effectively, pet owners are saying that they’ll have to kind of carry their animal out for a walk. They won’t be allowed to let the animal walk, even on leash and they’re saying unfortunately, it seems that the strata laws have changed, but the Community Association laws are not changing in the same way,
Just for those of you who are not familiar with Community Title; Strata Title is where all the apartments in a building come under the same set of rules. Community Title is when there’s a whole bunch of strata buildings that share resources. You could have four or five buildings in the same area; same immediate vicinity. They might share an underground garage, for instance. They probably share sewage and water and…
And access roads and things like that. So, they come under community title and the basis of Community Title, is that it brings all the buildings together and the bylaws and community title are superior to the bylaws in any one of the buildings. Your building might say ‘well, we want to have pets,’ but if the community says ‘no, you can’t have them,’ then you can’t have them. Now, the Community Title laws have not been updated for years, but they have been updated this year and they’re due to come into force at the end of this year.
And what do they say about pets; anything?
They’re the same as the old strata laws.
Oh wow, so they’re kind of out of step with the strata laws?
Maybe, someone needs to look at that now?
I feel that pet owners could challenge the Community Title laws on the basis of being harsh, unreasonable, unconscionable and discriminatory, because they could say “well, our strata buildings aren’t allowed to have that law, yet you’ve got it. That can’t stand anymore; you’ve got to change your bylaw.” Certainly would be worth a punt, wouldn’t it?
It certainly would. It seems ridiculous, doesn’t it?
Yeah. I don’t know what they’re planning to do there. It sounds like there’s a lot of pet owners who are going to be very annoyed, having to carry their Great Dane’s over the path.
I mean, it’s just nonsensical, isn’t it?
The anti-pet lobby is quite obsessive, when they get going and for no good reason. I was on James Valentine last week and a woman called up and she said they’d had a problem with a couple who had a little dog. The problem wasn’t so much the dog, it was the couple. They were alcoholics and they didn’t look after the dog properly. They had a lot of hassles dealing with that, but they dealt with it. They asked, ‘how can we stop this happening again?’ Somebody had the bright idea of saying ‘well, we ban all pets from the building’ and they went ‘yeah, that’s great. That means we’ll never have this problem again.’ She was quite upset that the new laws were coming in, that were going to rescind that and say you cannot have that bylaw.
Which is ridiculous, because it was the alcoholic couple who were causing the problems, rather than their pet.
Yes. But you know, when people get a simple solution that doesn’t affect them… You don’t want to have a dog; you don’t want to have a cat and you don’t want to have any hassles with people who do have dogs or cats. Then you think ‘well, the simple solution is get rid of the dogs and cats.’ That’s not an option anymore. It will be interesting to see how this Community Title thing plays out. I wonder if there’s going to be an amendment made, to bring it into line with strata law?
You’d think that would make huge sense.
It would but you know, talking about common sense and talking about Fair Trading… You don’t often get those two phrases in the same sentence.
I did a really cute story this week… I’m sorry; it’s nothing to do with apartments, really, but it was just such a lovely story. I really enjoyed writing it. It was a waste removal guy and his girlfriend; they were out doing their round and they were emptying some dumpsters outside a restaurant. There was lots of styrofoam boxes, so they just went through them; just to check that they were empty. In one of them, there was a tiny little crayfish, all shriveled up and black, but he’s looked as if he was still alive, so they felt really sorry for it. They took it to their van and they looked on their mobile phone, to see how you should treat your crayfish and they discovered crayfish are fresh water and you can’t put them in tap water, because there’s too many chemicals. They went and bought four big bottles of mineral water; poured it into the styrofoam box and immediately, the little crayfish started jerking around and moving and his little claws started clapping again. He started showing all these signs of life, so they took him home that night and he started looking better and better. The guy didn’t sleep all night, because this thing was making so much noise. The next day, they phoned up the Sea Life Aquarium at Sydney Harbour; the animal rescue center there and said “look, we’ve got this crayfish. We don’t know what to do with it.” They said “bring it in,” so they brought it in. The Aquarium put it into quarantine for two weeks, but we all have to go into quarantine if you’re anywhere now.
Because it was from Western Australia.
That’s right. They thought it was probably from Western Australia. At the end of his two weeks quarantine, he was fine; healthy, no diseases. They named him ‘Pinchy.’ Do you remember Pinchy, the lobster from the Simpsons?
From the Simpsons.
Unfortunately, Homer boiled him to death in warm water by mistake. That was a terrible, terrible end for that one, but this crayfish is now in a big tank in the Aquarium. It’s got all these new friends, because it’s in this tank with yabbies (which are another type of crayfish) and lots of different fish and turtles. Apparently, it’s settled in really, really well. Isn’t that gorgeous?
Good on this couple for saving a crayfish. I mean, the woman’s mum said to her “why didn’t you bring it back here; it would taste beautiful in butter.” She said “no! He deserves to be saved,” because he’d survived for four days, they reckon, on his own. He’d just been overlooked by the restaurant staff, who’d been unpacking the boxes. They thought ‘well, if he survived… He fought to survive for four days. He deserves a second chance at life.’ The woman was saying “I think this is just such a great story for these times, because we’re all a bit fed up with COVID and restrictions and you know, if Pinchy can survive and fight on, we all can.” I thought that was lovely.
And so once the Aquarium opens again…
Pinchy could be a star attraction!
I think they’ll be using him in the World Cup; how he predict the results, like that octopus did before.
That’s a very good idea!
Pinchy’s predictions for today’s big match. I look forward to that. That’s good. That is a lovely story and yes, you’re right; it has nothing to do with apartments, but what the hell. We live in apartments; we’re entitled to smile along with everybody else. Sue, thank you for bringing that to us and for your contribution again this week.
Thank you all for listening. We will talk to you again soon. Bye.
Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, flat-chat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favorite pod catcher. Just search for Flat Chat Wrap with a W, click on subscribe and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.