The extent of problems in the ACT’s construction industry has been laid bare, with accounts of shoddy construction work, building delays and owners being left out of pocket by broke builders detailed in submissions to a new government inquiry.
One legal firm said it had advised 80 property owner corporations in relation to building defects since 2010.
Kerin Benson Lawyers said that ACT government inaction effectively meant that apartment owners in buildings above three storeys had “no recourse against their builders whatsoever” to fix defects.
The ACT parliamentary inquiry has received 39 submissions to its investigation into building quality in the territory.
The submissions highlight wide-ranging concerns about a lack of regulation and oversight in the ACT’s building industry.
Detailed in the submissions are numerous accounts of leaking roofs in new properties, extensive construction delays and shock repair bills imposed on owners.
In one submission, Civium Strata division manager Pascal Deschanel listed an extensive number of faults with an unnamed 45-unit apartment block, whose builder and developer were both deregistered following its construction.
Among the defects were “extensive leaking to building and basement areas, rusting to steel supporting beams” as well as “major cracking to [the] basement retaining wall”.
The property owners had “very little opportunity for recourse” because the builder and developer were deregistered, according to Mr Deschanel’s submission.
A number of submissions also raised concern about the prevalence of “phoenixing” in the ACT construction industry.
The practice, which is illegal in Australia, involves a new company being set up to continue the business of another that has been deliberately liquidated to avoid paying its debts, including tax.
In their submission, Natalie Bice and Brendan Pratt explained how their builder went into liquidation shortly after they moved into their property, leaving them to fix more than 60 defects resulting from a shoddy build.
In the meantime, the builder had transferred all of its assets to a new business, meaning the couple could not chase it for compensation.
In another anonymous submission, a property owner said he had tried repeatedly to contact his builder before discovering it no longer existed as a legal entity.
The owner said he had been “scarred by the experience” of buying the “brand-new” apartment in 2013, and has “often hated living in the ACT as a result”.
“Since the serious issue of waterproofing and roof leaks has worsened, we have been living an emotional and financial nightmare,” the submissions read.
“I would urge the committee to consider the impact on my life, the financial stress, and the prolonged emotional affliction of this negligence and lack of accountability.”
Liberal politician Jeremy Hanson is chairing the parliamentary committee investigating the building industry. Photo: Rohan Thomson
The ACT parliamentary committee announced in April that it would investigate the territory’s construction industry amid growing concern about the quality of building work in new developments.
Submissions to the inquiry were scheduled to close on Sunday, but have now been extended until November.
A discussion paper prepared by the committee’s chair, Liberal Jeremy Hanson, said as much as $114 million could have been spent fixing building defects in the ACT in 2016/17, based on modelling from the University of NSW.
The paper also noted that Access Canberra received 525 complaints relating to planning and construction laws in 2016/17.
In its submission to the inquiry, Kerin Benson Lawyers said that number was an “underestimate”, given complaints made by owner corporations were on behalf of hundreds of owners.
The law firm also called out a statement in the discussion paper which said “every contract for the sale of a residential building and every contract to carry out residential building work” contains a warranty, unless the work is valued at less than $12,000.
“It is only true of contracts which were entered into on or after August 2017,” the submission read.
“This effectively means that currently in the ACT, no residential buildings above three storeys have statutory warranty protection.
“This means that many larger residential owner corporations have no recourse against their builders whatsoever.”
The legal firm argued property owners should be given “more tools to address building defects”, saying it would make developers and builders far more likely to change their behaviour.
The Owners Corporation Network said in its response that property developers needed to “move away from greed and towards a more balanced approach to the needs of the community”.
An ACT Government spokeswoman said it took the issue of building quality “seriously” and was already introducing reforms targeting dodgy practice.
“Recently, this has included introducing tests for those seeking a building licence, and retesting both those who have substantiated complaints made against them,” the spokeswoman said.
But Master Builders Association of the ACT Michael Hopkins said the ACT Government continued to renew to licences of builders with a “poor building history”.
Mr Hopkins supported a crackdown on “phoenixing”, a beefed-up complaints handling unit and the introduction of trade contractor licensing.
“On a modern building site, most of the construction work is carried out by trade contractors, who, with very few exceptions, don’t have minimum training requirement and don’t require a trade licence to set up business in the ACT,” he said.