Dodgy developers’ days are numbered, warns building commissioner

Up to 20 per cent of the state’s property developers are “risky”, Building Commissioner David Chandler has warned, vowing to spend this year chasing them out of the industry.

As the fallout continues from eight rectification orders being issued in just one week by the powerful Building Commission NSW, Chandler warned prospective home builders and buyers to be wary of the developers with which they do business.

NSW Building Commissioner David Chandler estimates up to 20 per cent of developers in NSW are “risky”.Credit: Kate Geraghty

“When I started this exercise in 2019, I said that 15 to 20 per cent of developers were risky. That’s proving to be the case as we work our way out of this,” Chandler told the Herald.

The pattern of “risky” developers is well-established, he said.

“Some of them, it’s their business model ... They start a $1 company, they build the project, get the sales in [and then disappear].

“We want to get them before they disappear.”

When asked to specify how many developers in NSW were risky, he admitted getting an accurate number was difficult.

“Divide 20,000 [the number of developments made each year] by 80 [a possible average number of developments per builder] and that might tell you how many developers there are,” he said – that would result in 250 developers in Sydney, or 50 “risky” developers.

Catching these types of developers – which are often accused of collapsing the business without any money and reappearing as a new entity – is becoming progressively easier as more defects in buildings across the state are being reported to Chandler’s office.

Owners corporations of large apartments have avoided reporting issues to the commission or Fair Trading NSW, said Chandler, because of fears for their apartments’ reputation.

But by the time they have reached a dead end in the courts, “they’ve run up hundreds of thousands of dollars in legal fees, they’ve had no defects repaired, and because of the passage of time the developer has wound up their company”.

“The message has got to be: ‘Tell us about them earlier.’”

Owners corporations that discover serious defects in their buildings can report the issue to Building Commission NSW, but Chandler said only 30 per cent of owners with issues make contact.

If a developer is still in the process of selling the final apartments several years after it opened, the commission has a better chance of getting the developer to rectify problems.

“If we can get there early, we’ve got a much better prospect of getting an outcome than if it is in three or five years.”

In December, the state government removed Chandler’s department from within NSW Fair Trading and established it as a standalone agency, Building Commission NSW.

With the newly open doors comes an increase in personnel, from 40 staff enforcing standards to more than 400 in his team alone.

While at pains to say the developer Greenland Australia – which built a Macquarie Park complex issued with a rectification order this week – was not a risky company, Chandler said the problems at the site were common.

“The majority of buildings that have defects in them, we don’t see until we get to a situation like this one [in Macquarie Park],” he said.

“This building had never been reported to Fair Trading or the Building Commission [before last year].”

The commission found out about it because Chandler received a tip-off on LinkedIn.

The commission’s rectification order stated that the defect was “in a building product or building element that causes or is likely to cause the basement slab to fail, namely, to fracture and collapse, leading to the destruction of the building or any part, or the threat of collapse of the building or any part”.

‘No danger’

Late on Wednesday, Building Commission NSW provided a statement – six hours after the Herald first inquired – saying there was “no danger” to the residents at 23 Halifax Street in Macquarie Park.

The defects, the statement said, related to “the long-term durability of the basement levels of the building only, not to any units within the complex”.

“The Building Commission will continue to work with the developer to ensure compliance with the order and is working to rebuild trust and capability in the construction sector,” it said.

At 10.30pm on Wednesday, Greenland said it was “aware of several news stories” regarding its site, but said it was not responsible for constructing the blocks, and named GN Residential Construction as the project’s builder.

At a press conference on Thursday, Chandler told the Macquarie Park residents they were safe in their building.

“There is no imminent risk, and there is no likelihood that risk will arrive in your building,” he said.

NSW Building Commissioner David Chandler in Parramatta.Credit: Kate Geraghty

When asked why his agency published building orders that said the defects could result in the “destruction of the building or any part, or the threat of collapse of the building or any part”, Chandler said there was a difference between the words “could” and “may”.

“The order says ‘could’, and my decision-making and my office’s decision-making is about … ‘there may’. Not ‘could’, ‘may’.

“May is simply what may means … It’s certainly not saying that the building is in imminent risk.”

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