This is something we feel very strongly about, and if you own an apartment in Australia, you should, too.
Why? Because if you buy in buildings over 4 storeys, you are not protected due to the ‘Warranty’ Insurance exemption.
Effectively, this means you are buying something in the magnitude of $700,000 or more but you get zero ‘warranty’. You have more protection by purchasing a $20,000 small car or even a kettle from Kmart.
If the builder goes bust, you, as an owner and body corporate, are left with the repair bill which in apartment buildings (think waterproofing, cladding, structural) easily run into the millions.
Key Takeaways:
- Apartments over four storeys are excluded from builders’ “Warranty” Insurance, a rule in place since 2002. You could spend $700,000 yet have less protection than on a cheap appliance.
- If a builder collapses, owners and body corporates must cover repair costs that can reach millions. Problems like waterproofing, cladding and structural defects are common.
- The 2002 exemption still leaves high-rise owners without vital warranty protection. Joining the push for reform can help secure fair rights for all apartment buyers.
https://www.change.org/apartmentownersprotection
The Australian Apartment Advocacy (AAA) is fighting for apartment owners to ensure that insurance protection is provided to those who live on buildings over 4 storeys. To learn more about AAA, log onto aaadvocacy.net.au.
It’s an exemption that has been in place since 2002 and doesn’t really make much sense:
- We have had body corporate clients that were made up of 5-8 residences/apartments – each apartment occupying an entire floor, which easily takes the building over 4 storeys.
- Conversely, there are 2 to 4-storey bodies corporate in the outer suburbs that extend across a large area that might have 20 to 200 apartments/townhouses/residences.
The Victorian and NSW governments agreed to changes to builders ‘Warranty’ Insurance for residential developments in a 10-point plan announced in March 2002. One point in that plan removes the mandatory requirement for builders of multi-storey residential buildings to provide ‘Warranty’ Insurance.
That change now forms Div 3 Part 18 of the Building Regulations 2006 (the Regulations).
An exemption from the provision of ‘Warranty’ Insurance applies if a builder carries out domestic building work under a major domestic building contract for the construction of a multi-storey residential building. The exemption applies to a major domestic building contract entered into on or after 10 April 2002.”
