It’s a packed Wrap this week with a lot happening in and around strata. Global credit rating and data analysis agency Equifax – the people who measure how many of David Chandler’s gold stars developers should get – have conducted a survey into how confident apartment buyers are in the properties they plan to purchase.
The answer is “not very” … unless they have a few of those highly sought-after gold stars to add some shine to their sales spin.
The Mascot Towers saga has taken another twist with owners refused permission to terminate the strata scheme with a view to walking away from their homes and mounting debts. What now for this benighted block and its emotionally and financially broken owners?
And talking of defective buildings, what does the supercharging of NSW Building Commissioner David Chandler’s powers in legislation that’s about to become law actually mean.
And finally we celebrate a travel writing award for Sue and join her on our Lock Up and Leave “Pick of the Trips”, by train across India – recalling a journey she took with her late Mum.
TRANSCRIPT IN FULL
Busy week in strata…
It’s been incredible, hasn’t it?
We’ve had new laws; I think they are supposed to come through on the 5th of December, but the Building Commissioner’s powers have been increased, which is going to be pretty interesting. And, there’s a survey out from Equifax, who do the iCIRT ratings, about how many people would be prepared to pay more, if they were more confident about the builders.
And we’re going to talk about another development in the Mascot Towers saga, and ‘lock up and leave,’ with some news about you, Sue Williams. Exciting stuff! We’d better get on with it, as we always say. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.
And I’m Sue Williams and I write about property for Domain.
And this is the Flat Chat Wrap.
So what does the new survey from Equifax show? I mean, they’re the ones who operate the iCIRT system, that was set up by the New South Wales Building Commissioner, David Chandler. The kind of star-rating for developers.
It’s not just about building; it’s about how reliable and responsible they are, and whether they’ve got the money to build the apartments to the quality that they claim they’re going to, and whether they’ve got any history with…
And bankruptcies and things like that. Equifax are basically, a credit-rating company, but on a global scale. So they sort of dig deep into the history of these companies and now, they’ve actually done a survey. And what they’ve come up with is that 60% of apartment buyers, or potential buyers, would pay more, if the apartment developers and builders had a five-star rating.
Wow! That’s huge confidence in the system, isn’t it?
Up to 6% more, which I think would probably more than cover the costs of getting the iCIRT rating in the first place. So that must be encouraging for… Well, it’d be very encouraging for David Chandler, you would think.
Absolutely. Because it shows that the system is really working, and that developers really should be part of the system. And it also shows that buyers are educated enough that they realise that this system is really going to be good news for them, as well.
Only some, because another part of the survey was that there are only 25% of people in New South Wales, or maybe Australia, know that there is even such a thing as an iCIRT rating.
But I guess most serious potential buyers would know there is, wouldn’t they, because they’d be looking at the news. They’d be checking out the developers.
You would hope so; like we did.
It says 45% of Australians intend to purchase, renovate, or build in the next five years and 32% of them say they have a negative perception of the building industry, which I find surprisingly low, actually.
I guess it’s so hard, because so many builders have gone under in the last year, and construction costs have gone up so much. People would perhaps blame the builders for that as well, though the builders really are quite blameless in lots of ways, for that. It’s just the shortage of supplies.
The survey, also found there is a concern among people that because of the push to build houses quickly, and because of the problems that there have been with supplies and labour and materials, etc, they’re worried that builders will be cutting corners.
Well, builders probably, traditionally, maybe cut corners, but there’s less incentive for them to cut corners now, because David Chandler (in New South Wales, anyway), is inspecting both apartments and houses.
And can do so, while they’re being constructed. So this new power that he was given (or his department was given), they can go in during construction and say “that’s a defect; that’s a defect… Fix them before you complete the building.” It actually saves the developers money…
Fixing it retrospectively is much more expensive.
Aboout 10 times as expensive, because you’ve got to pull things apart, then put the things back together again. So basically, it sounds like the populations split in three. There are 30-odd percent of people that have a negative view of the building industry and 30-odd percent have a positive view, and the ones in the middle either don’t know or don’t care, but one-in-ten Australians have a very positive view of the building industry. I want to meet these people.
Maybe they’re builders themselves. Because the building industry does employ an awful lot of people; a startling number of people, actually. And when you’re talking about people in the building industry, you’re also talking about not only building houses and apartments, you’re also talking about all those people building infrastructure and that’s a huge employer at the moment.
Three-out-of-four Australians who intend to buy, build or renovate in the next five years say they’re willing to pay more, to get assurances of working with trustworthy property developers or building professionals.
And while over two-fifths of Australians intend to invest in property, nearly half (47%) cite a lack of trust in the building or construction industry, and a lack of qualified contractors or builders in the market, as the biggest barriers. So people want to get in…
But they’re nervous. I mean, we are trying to import more skilled construction workers at the moment. So hopefully, if we managed to succeed with that, that will help. You can understand why people would want to get into the home ownership. We were talking to a friend this morning, who’s been renting for many, many years and his rent is going up and up and he just doesn’t have the savings anymore, to be able to get into the industry and buy and he is kind of thinking of leaving Australia and going and living elsewhere….
Because houses are so much cheaper there and he’s missed the boat here.
He’s obviously not watching all these crime series.
There are many in Scotland now, arent there? I think god, half the population has been murdered in our lounge room, over the last few months, watching these…
But it’s quite funny, watching you watching it, when you’re reading the subtitles, because one of them, the subtitles are in Scots, as well.
That’s right. There were some words I didn’t understand whatsoever.
“What does Denny Ken mean?”
I knew that one! There was another word that I couldn’t understand and I asked you to explain; do you remember what that was?
Radge, I think, which means a bit mad, unreliable and crazy.
I’ve never heard of that before.
A radge gage is a crazy guy.
That’s almost as hard to say as a rural Jura.
One of the things about renting though; there was a thing on the radio this morning, that there’s been studies done that long-term renting actually shortens your life, they say, because of the increased stress. You know, like every 12-months or whatever, you’re worried that the rents going to go up, or you’re going to get evicted, or whatever. You remember when you did that book about DNA?
So it shortens the telomeres, if you’re renting for too long.
Wow! That is incredible!
But I suppose what it actually is talking about is the stress that comes from uncertainty. If you had long-term renting in places where you wanted to rent and the rent was controlled, then that would not be an issue.
Like in some of the build-to-rent places, which are being built now.
That was quite an interesting aside.
I mean, I guess that in other countries where renting is much more common; I wonder if they suffer from the same uncertainty and problems?
This survey was done in Britain.
It wasn’t Australia; that’s reassuring that it wasn’t here.
I think it’d be even worse here. I mean, in Britain, at least, you’ve still got a decent amount of social housing. Not as much as it used to be, but it still does exist.
I can say that as someone who used to live in social housing. I grew up in social housing; I was born in social housing in Britain.
In the New Town.
That’s right. And then Margaret Thatcher, the old Prime Minister, sold it all off to private investors.
Like your parents.
Yes. And they were very, very happy, because they were able to buy a house, which they had never imagined in their wildest dreams, they’d be able to, but they obviously bought it for very little money. 17,000 pounds, I think. So suddenly, they entered a whole new class and started voting Tory.
That’s the power of property. When we come back, we’re going to talk about…
Another downside of owning property and the other side of the iCIRT rating really; the continuing tragedy, that is Mascot Towers.
And we’re back. What’s the latest on Mascot, Sue? I thought I’d kind of forgotten…
Well, you could be forgiven for forgetting in some ways, because it’s now been going on (this saga), for five years. And as you know, the building was cracking. There was lots of court cases against the developer and then against the developer of the next door building, who the owners blamed. In the end they reached a settlement; they mediated settlement. But really, all the owners and all the tenants in the building were evacuated. They haven’t been allowed back in and at the same time, they’re paying the huge legal costs that they’ve incurred. They’ve paid for some of the defects to be fixed, but the defects are still huge and they’re not allowed to live in there. There’s been a new court case; the owners decided to try and extinguish the strata title, so that they could then walk away from the building and start their lives afresh. And you can kind of understand that. But of course, most of them have mortgages. They also have big outstanding loans from Lannock, who is a strata…
One of the two strata loan companies in Australia.
That’s right. And they borrowed the money for the legal costs and stuff.
We should point out that Lannock are long-term sponsors of this website.
Absolutely. The judge delivered the verdict on Friday and basically said no, they weren’t entitled to extinguish strata title, because they have all these debts remaining; they have to honour their debts. I mean, you can understand why the judge would have said that, but it’s very hard for the owners, because, you know, they’ve tried lots of things and they’re still in this horrendous situation, of not being able to live there, but actually paying off their mortgages, paying huge interest on all the debts that they’ve now got. And there’s absolutely no end in sight.
I was looking at some of the judgement; I was reading the judgement the other day, which goes on at great lengths, and in great detail. It seems that the costs that they thought they would incur to repair the building are actually not as bad as they thought it was going to be.
But the trouble is, if they’re going to raise the money to actually repair the building, they’re going to have to take out more loans and incur more debt. There’s been a number of suicides at the building.
There’s been a huge number of mental health issues. There’s been family breakups, marriage breakups, bankruptcies… These are people at the very end of their tether. And okay, maybe the building could be repaired for a bit less than originally thought, but how are they going to raise the money for that? And is it throwing good money after bad and most of them just don’t have any money left.
What would you see as a solution?
I think the only possible solution really (and I’m just doing a story about this), is for the state government to step in; buy the building and the land.
Buy the building and the land; fix it up and sell it, and hopefully not make a loss.
They could sell it as public housing; they could sell it as recreation space. They could just do something to remediate the place and then these people would finally be free to move on with the rest of their lives. There’s an incredibly valid argument; it’s the State government’s fault that this happened in the first place. It’s no fault of the people who bought.
Is it the State government? Why is it the State government?
Because they certified these buildings. They didn’t impose the proper building codes and building regulations. They allowed this situation to happen. I think, in 21st century Australia, you kind of assume, if you’re going to buy an apartment, that it’s going to be decent; it’s going to be okay, it’s going to be up to scratch. But these people put their faith that this this building was going to be okay…
As everyone does.
And they were just bloody unlucky. It could have been any of us. It could have been our life savings in an investment, or our life savings in a building to raise your family. These people have been absolutely ruined by this decision.
I think you’re right. I mean, it’s either going to take the State government or some multimillionaire (billionaire), to come in and say “I am going to buy this, clear the debts, clear everybody’s debts…”
That’s interesting… How about if Harry Triguboff wants to do something really nice for his legacy? I mean, he’s obviously got a big legacy anyway, creating so many homes, but that would be a really nice gesture, wouldn’t it?
I was thinking Gina Rinehart, or Twiggy Forrest.
Yes, well, I’m sure any of them.
Maybe they could get together. Maybe we could arrange a playdate for Harry and Gina and Twiggy.
Could you imagine the egos all in one room? I don’t know, really!
But these are people who can make a difference and you feel like if you can make a difference, you should make a difference, if it’s not going to destroy your life to do that.
And as these people say… I mean, you could buy this building for a knockdown price. So you could maybe make a bit of a profit on it longterm.
Well, the figures that were in that judicial finding suggested that if they did the repairs at the costs that have just been estimated, the building would be worth enough that they certainly wouldn’t make a loss. But as you say, these people have had it. They’re tired of it; they just don’t want to do it. And that’s why you need some sort of angel to come and say “okay, right. You’ve had enough. If you can all agree that you’re going to sell it at this price, I’ll take it and I’ll fix it.”
And that could be John Minns, or it could be any of those other billionaires you’ve mentioned.
Exactly. John Minns is the Strata Commissioner. Chris Minns; there are too many Minns!
Chris Minns is the Premier.
He’s already cutting back on infrastructure, so I don’t think we can expect to see that anytime soon.
When we come back, David Chandler and his new powers… You’ll be able to tell us a bit about that.
That’s after this.
And we’re back. David Chandler, as you said, has got these new powers. According to Chris Minns, his role has been supercharged, which means that he has the power now to investigate buildings in a way that nobody has ever had before and I don’t think anyone else in Australia has. He can go into buildings; he can go into completed apartments. He has the right to go into any house or apartment in New South Wales, and say “I’ve come to have a look at the buildings.”
“I’ve come to have a look at your bathroom.”
Is there any home owner who wouldn’t welcome him in?
I think not.
With tea and biscuits.
And a red carpet. Especially people in new apartments. Look, it’s partly increasing his powers; I think its partly reminding people that he’s there, that he’s doing this stuff. Because every so often (as we just confessed about Mascot Towers), if it’s not in the news every other day, you soon forget about it. So he’s got these powers. I’m interested in the phoenixing, where they’re going to track down people who have deliberately, as a business plan, gone into liquidation, so as to come out the other end, and then walk away from their debts; walk away from the defects, start up again under a different name. It sounds legally fraught, unless you can find the smoking gun, the piece of paper, where somebody has sent a note to somebody saying “hey, Charlie, why don’t we build this building and then go into liquidation?”
But if people are doing it consistently, then you can probably point to a pattern and all credit to the New South Wales Government for trying this. They would have a lot of friends among developers, and probably those friends would be urging them not to do this kind of thing. I mean, I remember I was a friend with somebody who had been urged to stand for the New South Wales parliament and she was kind of quite innocent really; a bit of a newbie. And she phoned me up one day and said “this developer is planning to give me loads of money for my election campaign. What do you think I should do?” And I thought “oh, my god, this is how it happens.”
And your advice was run very fast and very far.
Yes. Tell them to go away.
Did she ever get elected?
She would have done, if she’d taken the money. But then again…
Take the money and run for parliament. Look, we’re going to get somebody in from the Building Commission, to explain exactly what these new powers mean. I’ve already reached out, as they say, and said ‘will you come and talk to us?’ And I think Angus is the name of the person who hopefully will be on the podcast next week. So that’s something to look forward to, so we don’t have to speculate anymore, about what a supercharged David Chandler looks like. I wonder if they’ll give him a costume?
He needs a cape, doesn’t he?
He does. When we come back, we are going to talk about…
Lock up and leave. Our choice this week of a great holiday, that you can leave your apartment for…
And some news about you.
Okay Sue, tell us… You had a bit of a pleasant surprise during the week.
I’ve had a bit of a terrible week, but on Saturday, I went to the Australian Society of Travel Writers Awards, the annual awards, and I won an award, for the best travel news and trade story of 2023. That was a big surprise and it was really lovely.
Well, maybe to you, but not to us. We’re not surprised. This is your second Travel Writers award?
I won the same award a few years ago, which was a thrill as well. Unfortunately then, I had to accept the award in a ceremony over Zoom and it was a disaster…
Because of me, mainly.
They gave me a digital red curtain and they announced the three finalists and the idea was that the winner would appear through this digital red curtain on the screen. I duly appeared, which was a thrill, but I had red curtain all over my face. I looked like I had a terrible disease. Or you’d just being the victim in a slasher movie. It was awful. So this was much more pleasant, because it was a real-life ceremony and I won. I dedicated the award to my mum, who died a couple of weeks ago.
We are going to move onto ‘lock up and leave,’ and where we’re going to send people this week, which also has a connection with your mum… The trip that we’ve chosen on the Mild Rover website is a trip to India by train. A trip through India by train. Now, you’ve done a bit of that.
I’ve travelled through India. I took a big trip with Abercrombie and Kent with my mum, just before COVID. We travelled a bit by train, we travelled a bit by planes, we travelled by boats, we travelled by rickshaw; we did a bit of everything, really.
This is mostly train, this one. I think it’s a luxury escapes trip. We know that they say that like Britain, India was built on the railway lines. What’s it like travelling by train? I mean, I’ve done it years ago, but it was a pretty basic…
I think it depends what class you’re travelling in.
Yes, we were in ordinary; we weren’t in the cheapest class, but we weren’t in first class. So what is it like travelling with a fancy outfit like Abercrombie and Kent?
With a fancy outfit, its fabulous. I mean, you’re travelling first class. It’s really comfortable. It’s kind of like a train in Japan; its not far off. It’s very comfortable. It’s very clean and efficient and it’s just great, watching India pass by on the outside, through the windows and at every station, you’ve got people trying to sell you chai and sweets and pastries. You can really see a slice of India and really experience it, even while you’re in the non-India a bit of the train ride. And then if you’re in the cheapest part of the train, it’s equally interesting, but not quite as comfortable, because you tend to be on wooden seats. It tends to be incredibly crowded and people climbing in the windows and climbing all over the place, because it’s a very overcrowded country and train transport can be very, very cheap. But this, obviously, you’re on a luxury escapes trip, you’re going to be doing it in comfort and India in comfort… I mean, India anyway, is just an astonishingly colourful and endlessly fascinating place, but in comfort, it’s kind of even better.
They do luxury quite well.
Oh, they do. I mean, the palaces that you can stay in, the amazing colonial old hotels, the fabulous sites. I mean, even places like Varanasi on the Ganges, where you go out on a boat and you watch the funeral pyres. I mean, it can be quite challenging. And it was interesting, because I was really nervous that my mum would find it all a bit much, but she was fascinated. You know, she thought it was quite amazing, because you’ll never see those sites anywhere else in the world. now. India is just an amazing place.
And India by luxury train; sign us up. Well, thanks, Sue. Thanks for all of that. Congratulations again on your award. We will be running Sue’s award-winning story in Mild Rover and you will also find the link to the trip about train travel in India there. You’re off to Lithgow tomorrow; I’m stuck in here, editing this podcast. We need to get it done. Alright. Thanks for listening.
Thank you very much. See you next time.
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 or your favourite 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.