Tick-box bureaucrats adding to Sydney’s housing pain by delaying homeowners moving in

Developers say bureaucrats who are taking up to three months to tick a box are adding thousands of dollars to the prices of new apartments and slowing down the delivery of much-needed new homes.

Bureaucrats taking up to three months to tick a box are adding thousands of dollars to the prices of new apartments, with developers passing the cost of backroom delays onto homebuyers.

Developers have told The Daily Telegraph the slow acceptance of strata building bonds – which fund the repair of defects found within two years of a new block of units being occupied – is costing them up to $1 million a week in extra interest, as residents are prevented from moving in until the bond is accepted.

Those trying to hand over the money to Fair Trading for the bond say they’re being met with infuriating delays – including that in some cases they have been only able to lodge strata building bonds with Fair Trading on Wednesdays, for “safety reasons.”

The bond is currently two per cent of the project cost and held for two years.

Once it is accepted and a box has been ticked in the official ‘planning portal’, residents are able to move in and developers get paid the balance of the purchase price, which can be as much as 95 per cent.

Urban Development Institute of Australia chief executive Steve Mann criticised the current system. Supplied

Urban Development Institute of Australia NSW CEO Steve Mann said the current system was a “really poor, old-school, ‘when I’m ready’, cumbersome process’”.

“It’s wasting a lot of people’s time unnecessarily in a process that is relatively simple around ticking a box,” he said.

“The challenge is productivity – we’ve got to have everything working as efficiently and seamlessly as possible to beat the overall housing problem (with) more supply as quickly as possible.”

Building Commissioner David Chandler. NCA NewsWire/ Dylan Robinson

Urban Taskforce CEO Tom Forrest said the current model was another barrier to building new homes.

“It’s the sort of regulatory red tape that’s stifling housing supply in NSW,” he said.

Developers have told The Daily Telegraph that delays in bond acceptance have forced many unit buyers to spend thousands of dollars extra on temporary accommodation while they wait for the green light.

“It’s bureaucracy gone mad,” the developer said. “Thank God this team is now under the direction of the Building Commissioner (David Chandler) because it has not run well to date.”

Another developer, who also only agreed to speak on the condition of anonymity, said: “It’s been the department of unfair trading – a complete mess.”

That developer does very large projects and said he was running up interest bills of as much as $1m a week while waiting for a bond to be accepted.

“Those costs have to be passed on to consumers,” being the buyers of apartments in the next project, he said.

Mark Bainey, CEO of Capio Property Group in Lane Cove North at a housing development they have just completed. Picture: Jonathan Ng

Mark Bainey, the CEO of Sydney developers Capio Property, said logging the bond – which can also be done before commencement of development – was especially challenging for smaller tier developers.

“It’s another line of red tape which is slowing down the delivery of new housing in NSW. It’s no doubt a prevalent issue in the industry,” he said.

“It’s a cash flow challenge, but also a time delay.”

“You’re held up by a couple of pieces of paper and money you’ve already paid.”

Mr Chandler – who now helms the newly-created Building Commission which has swallowed up chunks of responsibility from the Fair Trading department – said he was already aware of the issue.

CEO of the NSW Urban Taskforce said the red tape was just another barrier to building new homes. Picture: David Swift

Mr Chandler told The Telegraph: “What we are going to be doing is examining … the bond journey that’s occurred historically and what would be the best journey in the future.”

In meetings with members of his new 400-strong team, most of whom have transferred from Fair Trading, Mr Chandler has already asked for “low-hanging fruit” that could be acted on quickly.

One of the problems raised was a large number of complaints from new apartment owners that developers have been taking too long to repair defects, exploiting the two-year bond time frame.

Mr Chandler said he told his new charges he was prepared to use the Residential Apartment Buildings (Compliance and Enforcement Powers) Act “in parallel” with the bond process if developers were “showing no urgency”. That would involve issuing official Building Work Rectification Orders with specified time frames for completion.

Mr Chandler said: “We are going to be all over everything.”

Mr Chandler was appointed in 2019 and is charged with dramatically improving new apartment quality in NSW.

The Building Commission started less than two weeks ago.

One of the many tasks it has inherited is administration of strata bonds, which are due to increase to three per cent during next year. An alternative option — project insurance — is also being ramped up, although at the moment there is only one cover provider.