Opening the cracks in construction

When construction is not up to scratch, homeowners often face massive repair or litigation costs. As regulators strive to lift standards, considerable efforts are being made to protect consumers

A survey of Australian apartment owners and residents has painted a damning picture of housing standards, with 63 per cent reporting building defects.

That’s a two per cent increase from the last survey in 2023 and nine per cent more than in 2021.

The most common issues reported in the 2025 Australian Apartment Advocacy (AAA) survey were poor waterproofing, cracks, noise, plumbing and tiling.

AAA director Samantha Reece says developers and builders tend to blame each other for cost-cutting and shoddy work.

“The consumer is piggy in the middle,” she tells AC, with owners often facing massive repair or litigation costs.

“We’ve had people in their 80s facing defect bills of $400,000, and they’re pensioners! That is criminal.”

Twenty-four per cent of those surveyed had not had any defects fixed. Fifty-one per cent reported some had been, but not all.

Reece wonders if flaws are damaging the appeal of apartment life, with many respondents saying they’d rather live in a house.

But they’ll likely find as many defects in a single residence, as in flats.

A report last year by the Australian Housing and Urban Research Institute (AHURI) found 70 per cent of households had building problems.

That extrapolates to nearly eight million dwellings, old and new.

AHURI managing director Dr Michael Fotheringham says there’s no reason to believe the situation has improved.

“I don’t think there’s been real change,” Fotheringham says.

“Our report included existing stock and most of them won’t have been modified unless someone is undertaking major renovation.”

Fotheringham concedes the push to meet government housing targets might tempt some builders to cut corners.

“We have to be careful not to reduce standards,” he says.” “We don’t want to make it easier to build rubbish houses.”

Both Reece and Fotheringham hail recent efforts to enforce building codes, especially in NSW and Victoria.

After the Mascot and Opal Tower evacuations of 2019-2020, NSW established a Building Commission that now has more than 450 staff and the power to impose hefty fines.

As well as inspectors, there are lawyers, investigators, policy experts and intelligence analysts. They’ve been busy: this past year conducting more than 700 inspections and issuing almost 300 building work orders. During the 2024/25 financial year, BCNSW also issued 1,512 penalty notices, almost triple the number of the previous year.

NSW Building Commissioner James Sherrard says the state is leading the way for compliance.

“Builders know that if their output is not up to scratch, they will face consequences,” he tells AC.

“These could include large fines, suspended or cancelled licences or permanent bans. Positively, we’re finding that building work around the state is improving, as a result of inspections, education and co-operation from industry.”

Victoria has its Building Reform Program underway, including a new mandatory insurance scheme.

The AAA’s Reece agrees insurance is a key area, with massive excesses payable in some strata body claims.

“That’s not true insurance,” she says. “I have owners saying they get better protection on a $10 kettle from Kmart than they do on their $5 million apartment.”

§ DEFECTS: A CONVEYANCER’S DUTY

Conveyancers aren’t building inspectors, but they do have a duty of care to clients regarding any flaws they might uncover.

“We would always recommend that a Pest and Building Report and/or Strata Report be obtained by the purchaser,” says AICNSW President and Cremorne Conveyancing principal Jennie Tonner.

“We would review it and provide legal advice on it and then ask specific due-diligence questions on defect issues.”

Tonner stresses that reports need to be obtained by the property buyer themselves. “They cannot legally rely on it unless they purchase it,” she says.

For strata, conveyancers should look for any past, present or likely future defects, and whether the buyer might be liable for special levies.

If structural renovations have been carried out, conveyancers should check for council compliance, final occupancy certificates, and warranties.

They’d also review off-the-plan and new build contracts for warranties against major and minor defects, plus the strata insurance policy.

It’s a lot of reading and responsibility but, adds Tonner, “That’s how I work.”

However, she is concerned at the pressure imposed when clients and agents are rushing to exchange.

“It is impossible to do the above properly and diligently when we have such ridiculous time restraints,” she says.

But without those vital checks, “the client would have to satisfy themselves, which they could not do as they would not know what to look for.”

A situation where caveat emptor or “buyer beware” demands professional oversight.