How Big is the Australian Strata Defect Problem?
DEFECTIVE: Issue 2021.001
Let’s start my new series of articles about strata building defect issues [DEFECTIVE] by trying to understand the size and scope of the problem in Australia. After all, my [and your] experiences are ultimately just anecdotes and not good enough.
But, there’s actually no comprehensive and reliable data on the extent of strata building defects that we can rely on as I explain below.
Relevant Australian research
Recent [in the last 15 years] Australian research is limited to the following 5 studies which specifically included or covered strata building defects.
In 2009 Dr. Hazel Easthope, Prof. Bill Randolph, and Sarah Judd from the City Futures Research Centre at UNSW produced the report ‘Managing Major Repairs in Residential Strata Developments in New South Wales’ which looked at major repair issues in strata buildings and found the following things in relation to building defects.
1. That 66% of their survey respondents had building defects in their strata buildings.
2. The most common defects in strata buildings were water ingress, internal water leaks, defective services, balustrade faults, electrical faults, cracking to internal or external structures, and tiling problems.
In 2012 Dr. Hazel Easthope, Prof. Bill Randolph, and Sarah Judd from the City Futures Research Centre at UNSW also produced the report ‘Governing the Compact City: The role and effectiveness of strata management’ which looked at broader strata building management and found the following things in relation to building defects.
3. That of their survey respondents:
only 17% had never had any defects present in their strata building,
11% did not know, and
the remaining 72% indicated one or more defects existed in their strata building.
4. The most common defects in strata buildings were internal water leaks, cracking to internal or external structures, and water penetration from the exterior of the building
In 2019 Dr. Nicole Johnston of Deakin University and Sacha Reid of Griffith University produced the report ‘An examination of Building Defects in Residential Multi-owned Properties’ which specifically looked at strata building defect issues.
Because it’s the only strata building specific analysis so far, I overview it in more detail below.
But, as important as their study and report is, its scope was limited. As Dr. Nicole Johnston and Sacha Reid say at the end of their report ‘There are considerable opportunities for further research in this area’. Let’s try to make sure this happens soon.
In 2019, the UNSW City Futures Research Centre also started a new research project titled ‘Cracks in the Compact City: Defects in Strata’ which has yet to report but has already made 2 submissions: (a) to a NSW Parliamentary Inquiry; and; (b) to the NSW Fair Trading on building standards plus they have created a Defects how-to guide.
In 2020, Equity Economics prepared the report ‘The Cost of Building Defects; Economic Modelling of the Cost of Building Defects in Apartments Across Australia’ for the CFMEU which, after taking into account the new combustible cladding problems, made the following startling findings.
5. The estimated cost to address structural and safety defects in strata buildings built after 2009 is approximately $6.2 billion but this excludes legal costs, building audits, and insurance premium increases.
6. If the Equity Economics estimates are extrapolated backward, that’s an additional cost of $3.0 billion for buildings strata buildings built in the ten years between 2000 and 2009.
And, there’s also the 2020 UNSW City Futures Centre ‘Australasian Strata Insights’ that collates the number and size of strata buildings in Australia to put these results into context.
So, we can only extrapolate from these reports and the number of strata buildings in Australia to make guesstimates about the extent of the strata building defects problem.
But, it’s pretty clear it’s a very big problem.
Overviewing the report: ‘An examination of Building Defects in Residential Multi-owned Properties’
Dr. Nicole Johnston of Deakin University and Sacha Reid of Griffith University's 2019 report ‘An examination of Building Defects in Residential Multi-owned Properties’ was a pilot study on the topic to evaluate the required resources to properly examine this phenomenon with the aim of developing a more extensive full-scale study.
Their research was undertaken in 3 parts.
A. An analysis of 212 strata building defect audit reports that covered 3,227 (line item) defects provided by building consultants and defect auditing businesses in 3 states [New South Wales, Victoria, and Queensland].
B. 10 structured stakeholder and end-user interviews.
C. Reviewing the relevant laws, regulations, and codes.
Of the 212 strata buildings that were analysed, the report found that:
1. 85% of the strata buildings analysed had at least one defect in multiple locations.
2. The incidence of strata buildings with defects varied between states as follows: New South Wales (97%); Queensland (71%); and; Victoria (74%).
3. On average there were 14 defects identified per building/
4. The incidence of defects per strata buildings also varied between states as follows: New South Wales (16); Queensland (12); and; Victoria (11).
5. Although 3,227 defects were identified across 212 strata buildings the total number of defects identified by the auditing companies was much higher as many multiple occurring defects were grouped into a single defect line item in some reports.
6. Of the 13 different construction systems in strata buildings, on average 5.93 were affected by defects [that’s almost half].
7. The incidence of affected construction systems also varied between states as follows: New South Wales (6.5); Queensland (5.8); and; Victoria (4.85)
8. The 3,227 defects in the 212 strata buildings affected the following structures:
building fabric and cladding - 40.19% (1297)
fire protection - 13.26% (428)
waterproofing - 11.46% (370)
roof and rainwater disposal - 8.58% (277)
structural - 7.25% (234)
other systems [hydraulics, safety, electrical, lighting and data, mechanical and ventilation, access and egress, non-essential elements, in motion equipment and utility supply] - 5% (163)
9. The 3,227 defects in the 212 strata buildings affected those buildings and strata residents, in the following ways:
water ingress and moisture - 29% (936)
multiple/mixed impacts - 22% (710),
safety - 20% (645),
building damage - 15% (484),
other (generic category - 10% (322)
rust - 4% (129).
10. Strata building defects are proliferating around Australia and they cause great distress and potential harm [both physical and psychological] to the most involved building stakeholders [owners, residents, committees, and managers].
Conclusions
It’s clear that no one knows how extensive the problem of original construction defects in strata building really is.
But, there’s no doubt it’s a very extensive and serious problem.
The sample surveys and analyses in recent University research identify that significant proportions of strata buildings have multiple defects [66% to 88%] and the defects affect significant parts of those buildings. That could mean that as many as 120,000 strata buildings and 1,000,000 apartments are affected just in those that were built this century.
And, the only measured attempt to quantify the cost of remedying strata building defects puts it at close to $10.0 billion for just those buildings that were built this century.
But, even if those numbers a wrong by a factor of 100%, that still means that tens of thousands of strata buildings, hundreds of thousands of apartments and owners, and, billions of dollars are involved.
So, this problem needs addressing for existing and new strata buildings with serious, innovative, research-based, data-driven, and, large-scale action.
April 19, 2021
Francesco …
