Builders leave apartment buyers stranded

Apartment buyers are demanding a change in insurance protection from broken builders who leave it high and dry.

The Australian Apartment Advocacy survey of 1,100 apartment buyers across the country found that one in three had seen their original builder out of business in the past 12 months.

This left many stranded without any warranty or building insurance to repair defects.

Under current legislation and regulations in most Australian states, if an apartment owner goes bankrupt, they will only get help if their complex is three stories or less.

The latest Australian Bureau of Statistics data shows that 50 per cent of apartment owners live in buildings of four floors or higher.

Samantha Reese, head of the Australian Apartment Advocacy division, said the report, released on Sunday, showed buyers were understandably angry.

State governments across the country have called for action.

“Stamp duty proceeds from apartment sales are a source of multi-billion dollar government income in Australia, yet buyers have to fight bankrupt builders on their own and are left stranded,” she said.

Reese said she can’t understand the reluctance to make a difference in the industry, especially since research has clearly shown that 80 per cent of buyers would pay an extra 2 per cent above the asking price if it meant they were covered in the event of their originator going bankrupt.

“If we continue to push people to live in apartments – as 20 per cent of people in NSW are already doing – the government needs to get the backs of apartment buyers as much as it does in cottages or homes and land,” Reese told the AAP. Sunday.

“I understand it’s a big beast to deal with, but buyers have shown that there is an appetite for it.”

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

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

Bust builders leave apartment buyers high and dry:

* 34% had problems with water resistance

* 30% structural cracking

* Water penetration 67% from the outside

* 20% fire retardant defective

Source: Australian Apartment Advocacy.

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