The ACT Government was on the right track by putting property developers in its sights with a potential licensing scheme but it needed to go further if it was serious about fixing the building quality issue in the ACT, according to the ACT Owners Corporation Network.
President Gary Petherbridge, commenting after Tuesday night’s Four Corners report Cracking Up that highlighted Canberra’s decade-old Elara apartments debacle, said the issues started with developers, who needed to be called to account, but licensing alone would not be enough.
He said the Government needed to start excluding developers who they knew to be questionable from land purchases.
“If they were serious they could turn around and say, ‘we don’t want to sell these properties to people who are proven to have some suspicious behaviour’,” he said.
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“So that way you could start to put the pressure on. Unfortunately, that means the Government might not get as good a price for these places as they want, because they’ll be limiting the market to those who are credible and won’t have any actions going against them.”
Mr Petherbridge said self-regulation in the industry had clearly failed and while acknowledging the efforts of Building Quality Minister Gordon Ramsay and Access Canberra to clean up the mess, he believed tougher laws and a return to former regime practices were needed.
He said even Access Canberra had admitted that successful prosecutions were hard to achieve because the regulations weren’t strong enough. “It’s time for the consumer to have a chance, not the rich developer,” he said.
Mr Petherbridge believes architects and engineers armed with detailed plans needed to be involved all the way through a project, not just used by real estate companies as marketing tools, and certifiers or building surveyors should be at arm’s length from builders and developers.
“If you’re building a million-dollar house you wouldn’t do it without an architect, without an engineer, you wouldn’t just depend on the certifier the builder appoints to look after it,” Mr Petherbridge said.
“You’d make sure you were getting what you wanted. Why wouldn’t you do the same for something that costs $100 million?”
The Codes of Practice for builders and certifiers trumpeted by the Minister were merely guidelines and part of a failed self-regulatory approach, he said.
He would not advise anyone to buy a unit of the plan in the current environment. “If you want to buy something buy the ones that exist, don’t buy off the plan,” he said.
Mr Petherbidge believed the situation meant trouble for the re-shaping of Northbourne Avenue where many new apartments were set to stay unoccupied.
“We may have pulled down the old Northbourne square boxes because they looked a bit slummy, well I think we’ve got a new slum coming on with a whole heap of empty high-rise things that aren’t quite occupied,” he said.
Mr Petherbridge said the Equity Economics’ $260 million estimate of the cost of repairing defects in the ACT since 2010 may be just the tip of the iceberg.
He said that with one complex the original repairs estimate was $500,000, with the builder offering half that, but the final cost was $20 million.
Mr Ramsay has flagged more legislation later in the year to complement initiatives such as builders exams and licensing, the Codes of Practice and increased site inspections.
The possibility of developer licences comes after the recent ACT Labor conference backed the move, which the Property Council dismissed as ineffective and impractical.
Mr Ramsay has also called for the Commonwealth to take action to prevent ‘phoenixing’ in the industry so offending companies and their directors can be pursued.
Four Corners alleged that Elara builder Ivan Bulum, was able to avoid responsibility for the 120-unit complex’s many defects and continue in business, these days as a developer.
Elara owners face a multi-million dollar repair bill if they lose an appeal bid for insurance from an ACT Government fund, and the value of their property has fallen by tens of thousands of dollars.
The Commonwealth, States and Territories have agreed on a national approach to implement the recommendations of the Shergold Weir report into building quality, and the current Legislative Assembly inquiry will also be recommending measures.
For Mr Petherbridge, the Government needs to start taking responsibility for the situation and move against the developers they know to be lacking. “They might have to hit a couple of big ones,” he said.
Master Builders ACT CEO, Michael Hopkins said the Four Corners episode highlighted the need for the ACT Government to make implementing the 24 recommendations of the Shergold Weir report its top priority.
He said the lack of enforcement, consistency and clarity of the regulatory framework means that quality in the building sector had been compromised.
“The MBA welcomed the agreement by States and Territories to work with the Federal Government in a nationally coordinated way to implement building reforms, and the MBA stands ready to work with the ACT government on the implementation of these reforms,” he said
“The Building Confidence report addresses important reforms including the need for licensing of building and design practioners throughout the building supply chain, mandating a system of continuing professional development training, and reforming building certification.”