Over 3,400 defective apartment buildings to cost owners $6.2bn to fix

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MORE than 3,400 apartment buildings across Australia were found to contain defects and non-compliant combustible cladding, and will cost owners $6.2 billion to rectify, according to Equity Economics.

The research titled ‘Shaky Foundations: The National Crisis in Construction’ by Equity Economics, commissioned by the CFMEU, into remediating water leaks, fire safety breaches, structural failure and combustible cladding and associated costs, found 3,461 apartment buildings constructed within the last 10 years are affected.

CFMEU national secretary Dave Noonan said that the cost of Australia’s building and construction crisis was now clear, and unfortunately often homeowners would likely be the ones to foot the majority of the bill.

“Australia’s building and construction crisis will cost a staggering $6.2 billion to fix apartments they’ve already paid for.

“This includes the cost of remediating water leaks, fire safety breaches, structural failure and combustible cladding, and costs associated with increased insurance premiums, legal fees and alternative accommodation.”

Dependent on the type of defect, the cost of remediation can be up to $165,000 per dwelling. Cladding and water damage remediation can cost around $45,000 per dwelling.

Noonan said these remediation costs are enough to sink many families.

“Tens of thousands of families, many of whom have purchased their first home, are now stuck with the crippling cost and mental anguish of owning homes that they may not be able to live in, are unsafe and cannot afford to repair,”

Noonan blamed a number of factors for the state of today’s building industry.

“This is the result of the construction industry’s obsession with ‘deregulation’ at any cost, and poor oversight by government.

“It’s the result of years of not enforcing building standards and of allowing industry to ‘self-approve’ with little or no oversight. Often, it has fallen on the union to blow the whistle,”

Research from RMIT University shows there are at least 629 known buildings in Victoria alone, and it estimates the bill to rectify the problems could as high as $1.6 billion, which is higher than the Victorian government’s $600 million package.

Another research by Deakin and Griffith universities found 85% of apartment buildings have at least one defect. They analysed 212 building audit reports across New South Wales, Queensland and Victoria and found 3,227 line item defects.

Defects were found in 97% of New South Wales buildings, and 71% in Queensland and 74% in Victoria. An average of 14 line items per building were found, averaging 16 in NSW, 12 in Queensland and 11 in Victoria. Construction systems affected by defects per building was 5.93; NSW buildings had 6.5, Queensland 5.8 and Victoria 4.85.

Building fabric and cladding accounted for 40.19% of defects, followed by fire protection (13.26%), water proofing (11.46%), roof and rainwater disposal (8.58%), and structural (7.25%).

British engineer and Chair of the UK government’s Independent Review of Building Regulations and Fire Safety Dame Judith Hackitt recently said in editorial on Australian Property Journal that even if the government pays to rectify the problems, it does not that mean those who cut the corners in the first place get let off the hook rather than being held to account.

“We need to drive a massive culture change in the whole construction and built environment sectors that holds people accountable for designing, building, maintaining and managing buildings which are safe for people to live in throughout the full life cycle.

“A new regulatory system needs to drive the right behaviours, make responsibilities crystal clear, create significant penalties for those who flout the law and incentives for those who do the right thing.

“The market needs to find a way to recognise the importance of quality which means changing procurement practices away from simply awarding the contract to the guy who bids the lowest cost.” Dame Hackitt said.

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