affordable familysizedapartments any time soon.
The Victorian Government is proposing new legislation purporting to improve consumer protection when buying new dwellings, especially apartments.
🧑🏻⚖️The proposed legislation includes: • Increased powers for a (renamed) Building & Plumbing Commission to force rectification prior to issue of occupancy permit/settlement – rather than now where settlement occurs and issues are rectified post-hoc • The power to order rectification works for up 10 years after occupancy permit issue • Developer bonding for buildings 4+ storeys, set at 2% of construction cost, with return after 2 years – currently no such bond exists, nor is there DBI • Expanded domestic building insurance which covers serious defects upfront – instead of only if the builder goes bust.
⛔This may sound positive but such changes will definitely impact the cost of building new housing, i.e.: • "First resort" DBI will mean singificant increases in insurance premiums which will drive up the cost of any dwelling 3-storeys or lower. VIC will head the way of NSW where insurance costs are obscene • Apartment developers will assume the bond as a development cost as they will most likely never get it back. Watch the rise of owners corporation champions who use the system to suck every dollar out of it just prior to the 2 year expiry • Many builders will not want the ongoing liability risk of 10 years of maintenance, so will just not build residential any more. Less supply of capable builders.
• Builders will also struggle to continue increasing their insurance capacity to handle growth due to capital requirements.
Such schemes also don't differentiate between good and bad developers & builders. Everyone just pays extra, irrespective of past performance.
I know David Chandler OAM is a fan of these changes, but NSW hasn't exactly been great in delivering new #apartment supply for the last few years.
So these changes might make consumers marginally more "confident" about buying new, increasingly fewer will be able to afford to buy something in the first place.
It's worth remembering that much of this comes from a Building Confidence report dated 2018. Australia is now in a very different place in terms of regulation, construction costs and feasibility.
We're not in a consumer confidence crisis for new apartments; we're in a #feasibility crisis due to increasing costs.
In the meantime, the trend continues – fewer and fewer (albeit slightly better) homes, at ever growing prices.