How do you make sure your brand new property is well-built?

Defective buildings in the apartment sector will have effects beyond the high rise.

Has a glossy brochure and slick showroom landed you in a property that’s only fit for tearing down? A nightmare scenario for any owner and the agent who sold it to you. Here’s what I found out while losing sleep about it.

Big developers have shut up shop and builders are taking the hit on stalled projects. Off-the-plan purchasers are stuck with property worth 10 per cent less at settlement and insurance costs are rising. Negative news about shoddy construction could destroy confidence in the property industry, making it harder to build, buy and re-sell profitably in the future. The type of defective construction we see in the headlines comes down to a whole range of shady building practices and regulation failures over time.

Space race

Greater density development was a response to population growth. Construction speed, lack of care and hands-on oversight lead to corner-cutting with cheaper materials that slipped through unchecked. Tightened budgets and deadlines trumped quality and safety. Just like a bad marriage – made in haste, repent at leisure.

Future investigations and buyer fears will dampen demand in high rises, but the ramifications of defective buildings in that market will be felt across the industry. There’s no doubt the extra scrutiny will impact any complex or multi-dwelling development. What can you do to reduce your exposure?

You’re worth it

In my experience, the builders operating on the Peninsula are more likely to be on Grand Designs than The Block. Boutique builds are not expected to be as problematic. Overall the luxury home sector is a safer bet, and according to The build quality in smaller scale, luxury style developments is going to be higher, and that’s a selling point reflected in the price.

Small, yet perfectly formed

  • Don’t buy anything taller than three storeys.
  • Builders of residential properties (three storeys or less) must have Domestic Building Insurance (DBI).
  • High-rise buildings (above three storeys) don’t have the same warranties or buyer protections – developers and builders are exempt from DBI mandatory insurance.

Compared to the high stakes high rise market in the city, the Peninsula is limited to low rise, medium-density building by residential zoning laws. About 75 per cent of residential housing can’t go above two storeys (or 9m high). There are 24,000 properties zoned in areas that can go up to three-storeys but no higher. In this context, planning restrictions are good news.

Talk about it

DBI home building compensation cover is compulsory, lasts for up to 10 years and gets transferred to the next owners. But it only applies if your licensed builder dies, goes bankrupt or disappears before completion. In all other cases, it is up to your builder to return, fix or complete works. I don’t recommend having anyone killed for the insurance so go through VCAT if the builder refuses to make any repairs.

In a smaller market where 77 per cent of us live and work on the Peninsula, stories spread fast. If your builder hasn’t picked up the phone and you know he’s not dead or broke, you’re going to tell someone else about it. It’s not worth being bad at your business when you’re likely to run into clients at the supermarket. It helps us all if you provide positive reviews for excellent work too.

Do be diligent

Get informed before you build or buy off the plan – there’s a long wait for the “final reveal”. If you’re building yourself or purchasing a brand new home, do your due diligence. Work with an agent who knows the local builder/developer network or ask for builder referrals from neighbours. We also recommend getting a surveyor to do a comprehensive building report. It will cost you a few hundred dollars, but it’s money well spent.

Written for Bowman & Company Real Estate.

How do you make sure your brand new property is well-built?