Builders leaving apartment buyers stranded

·2-min read

Apartment buyers are demanding a shake-up in insurance protection from broke builders who leave them high and dry.

A survey by industry body Australian Apartment Advocacy of 1100 apartment buyers from around the country shows one in three had seen their original builder go broke in the past 12 months.

This left many stranded with no builder warranty or insurance to fix defects.

Under current legislation and regulations in most Australian states, if an apartment owners' builder goes bankrupt they only get assistance if their complex is three storeys or below.

Latest Australian Bureau of Statistics data shows 50 per cent of apartment owners live in buildings four storeys or higher.

Australian Apartment Advocacy head Samantha Reece said the report, released on Sunday, showed buyers were understandably furious.

She called on state governments around the country to act.

"Stamp duty revenue from apartment sales is a multi-billion-dollar government revenue stream in Australia, yet buyers have to battle bankrupt builders on their own and are left stranded," she said.

Ms Reece said she could not understand the reluctance to shake up the industry, especially since research clearly showed 80 per cent of buyers would pay an extra two per cent above the asking price if it meant they were covered if their builder went bust.

"If we continue to push people to live in apartments - like 20 per cent of people in NSW already do - the government needs to have the backs of apartment buyers as much as they do for townhouses or house and land," Ms Reece told AAP on Sunday.

"I understand it's a big beast to tackle, but the buyers have demonstrated that there is an appetite for it."

She said claims by developers that the additional insurance cost would deter buyers was proven wrong by their research.

Buyers believe $20,000 is a small price to pay for peace of mind and protection on a $2 million apartment, she said.


* 34 per cent experienced water proofing issues

* 30 per cent structural cracking

* 67 per cent water penetration from outside

* 20 per cent defective fire proofing

Source: Australian Apartment Advocacy.

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