Law Change could spark Sales Slump

Anthony Lawes of the Sydney Morning Herald reports that buyers of new appartments could face higher levies and a drop in propery values as a result of NSW changes to the period in which developers have to provide cover for shoddy work.

Previously builders had a statutory warranty period of seven years. The new law changes this, for non-structural defects, to just two years. For structural problems the warranty period reduces to six years. Non-structural defects include painting, acoustics, wiring, lighting, fire hazards etc.

Worst of all, the clock for the warranty starts when the building is finished, not when the new owners move in!

Under the changes, the cost of repairs would shift onto the new owners, as most non-structural defects take several years to surface.

The NSW government justifies the change as a way to re-energise the home building sector, but the chairman of the Owners Corporation Network fears it will have the opposite effect. "The message from this change is, don't buy new and don't buy off the plan because whatever you buy won't have adequate warranty."

Part of the problem apparently is that no home warranty insurance is available for owners in blocks higher than three storeys, so there is no way for the buyer to defray those costs.

This puts an interesting slant on the Hornsby Shire's Housing Strategy, with three or more layers of residential units being built above two levels of mixed commercial and retail. The 'higher than three storeys' rule means that only the lowest level of those new residential units would be covered. Suddenly the penthouse suites don't sound so attractive!