Opal Tower rule: Pre-sale checks for ‘high risk’ units

 

Developers and builders who have been "red flagged" will not be able to sell high-rise apartments without a new mandatory inspection.

It is a move the state government desperately hopes will avoid a repeat of the Opal Tower and Mascot Towers defective building debacles.

The new measure, which the state government has described as the first of its kind in Australia, will examine developers, builders and certifiers in the residential high-rise market - including those involved in "phoenixing" - to identify "risky players".

Mascot Towers was evacuated mid-year after structural concerns. Picture: Damian Shaw
Mascot Towers was evacuated mid-year after structural concerns. Picture: Damian Shaw

Phoenixing is when a new company is created using the assets and directors of a company that has been liquidated to avoid tax or legal issues.

Those identified as "risky players" or phoenixers will face the new inspections before they can sell units.

The inspections are part of an interim measure to prevent homebuyers from being stuck with a poor quality apartment.

It comes as the NSW government moves to reform the industry in the wake of evacuations of the Opal Tower at Olympic Park and Mascot Towers in Sydney's inner south due to structural defects.

The owners in Opal have since launched a class action against the state-owned Sydney Olympic Park Authority seeking millions of dollars in compensation.

A damaged floor stab on level 10 of Opal Tower.
A damaged floor stab on level 10 of Opal Tower.

Mr Anderson said the inspection scheme would prevent defective apartment buildings from hitting the property market as the industry was being reformed.

He said there were often "telltale signs" that a construction project could be at risk, found by scrutinising those involved in the project.

"We want to stop risky players from dragging this industry down by identifying unsafe projects and ensuring they either meet the required standards or are excluded from receiving an occupation certificate," Mr Anderson said.

Structural concerns with Mascot Towers. Picture: Damian Shaw
Structural concerns with Mascot Towers. Picture: Damian Shaw

Under NSW laws, developers are required to obtain an occupation certificate before being able to accept final payments for units purchased off the plan. Without one, the units cannot be sold.

The NSW government has proposed a raft of reforms to clean up the troubled residential apartment sector, including making it easier for homeowners who buy defective apartments to pursue damages and the creation of a new registration system for the industry, where developers will be forced to comply with "declared" building designs.

However, the government pulled the Bill last month after the Greens and Labor ­demanded the government ­establish an independent building commission to ­support the work of NSW Building Commissioner David Chandler.

NSW Building Commissioner David Chandler. Picture: AAP
NSW Building Commissioner David Chandler. Picture: AAP

Appointed by the state government in August, Mr Chandler has been meeting with industry stakeholders as part of his brief to provide his own recommendations on overhauling the sector.

It is understood Mr Chandler and Mr Anderson will unveil their proposed measures in as little as two weeks.

A government source said Mr Chandler's proposals would be in addition to the proposed legislation.

The stalled bill is expected to be relisted next year.

Visible cracks in the parking lot at Mascot Towers. Picture: Monique Harmer
Visible cracks in the parking lot at Mascot Towers. Picture: Monique Harmer
Some of the cracks inside the Opal Tower building in Homebush.
Some of the cracks inside the Opal Tower building in Homebush.