Category Archives: Industry

Private water supply to Broadway units could whet developer appetite

WHEN the first of 5000 people begin moving into the vast Central Park apartment complex on Broadway next year, they will be the first city residents to have water in their taps that is not supplied by Sydney Water.

A private water company, Water Factory, will deliver water to the 1800 apartments and to the businesses that will eventually employ 10,000 people on the former Carlton and United brewery site.

Under a deal signed by the developer, Frasers Property, Water Factory will also collect the sewage, run-off and other waste water produced in the development and recycle it for use in all toilets, washing machines, gardens and air-conditioning towers.

An underground treatment works is being built in the basement. The Water Factory founder, Terry Leckie, says it will be the biggest in a high-rise residential project.

It was impossible for a private company to provide drinking water and treat sewage in private developments until the NSW government passed the Water Industry Competition Act in 2006, the first law in the country designed to encourage private companies to bid for the rights to supply and treat water.

Since then, there has been a trickle of interest from companies. A few environmentally sensitive commercial developments in the central business district have installed recycling systems and use grey water in toilets, including Westfield in Pitt Street Mall, No.1 Bligh Street and workplace6 in Pyrmont, where Google is based.

The plans for Central Park go a lot further and may prompt interest from developers to use private companies to provide water and sewerage in new projects, especially those in more isolated areas if, as Mr Leckie claims, they can do it cheaper.

While each apartment will be built with separate pipes for recycled water, the main difference residents will notice is with their bills. Most NSW apartments have one water meter for the whole block and residents pay an equal share regardless of the number of showers they have. In Central Park, each unit will have its own meter, giving residents the same incentive as house owners to save water.

A separate charge for sewage treatment will be calculated depending on how much drinking water each unit uses.

The Water Factory will buy the drinking water for the complex

Thank you SMH for this article

Individual Water Metering for plans approved after 30th June 2012

Sydney Water will make individual water metering for multiple dwelling buildings a requirement for the issue of a compliance certificate under s73 of the Sydney Water Act for all applications received after 30 June 2012.

Metering specifications will require:

  • Individual supply point to each unit.
  • Provision of a space for the meter installation.
  • Installation of the meter in a cupboard in a common area with a drain.
  • Provision of space for a data logger/transmitter and 240V power.

Sydney Water intends to nominate at least two accredited suppliers for the new metering.

Sydney Water may take a flexible approach to plans which have been lodged with council prior to 1 July 2012 but which do not come before it prior to that date.

Thank you J.S Mueller & Co Lawyer for this article

Housing Review a major step forward

The NSW Government’s review of potential housing opportunities reported in the media today shows the government’s commitment to boosting housing supply and increasing affordability in a common-sense and transparent way, UDIA NSW believes. In what is one of the biggest steps forward for NSW housing supply for years, the Government has given a commitment to pursuing housing opportunities where the landholdings are, rather than designated growth areas that suffer major land fragmentation issues.

Late last year Planning and Infrastructure Minister Brad Hazzard made a public call to developers with large landholdings, close to infrastructure, to approach the State Government with their projects, in recognition that residential development in NSW had stagnated for many years. This month, the Government published online the results of that process: a list of 43 sites which are potential candidates for rezoning for urban development under the Review of Potential Housing Opportunities on Landowner Nominated Sites.

In the Sydney region, the sites are in the local government areas of Auburn, Blacktown, Camden, Campbelltown, City of Sydney, Hornsby, Liverpool, Penrith, Pittwater, Sutherland, The Hills, and Wollondilly. Regionally, the sites are in the local government areas of Cessnock, Clarence Valley, Hawkesbury, Port Stephens, Wingecarribee, and Wyong. Submissions closed on November 29 and the review process is predicted to be finalised in the first quarter of this year.

The projects are being assessed on three criteria, according to the Department of Planning and Infrastructure’s website:

  1. Housing delivery: The site is suitable for urban development and has viable prospects to produce houses in the short term.
  2. Infrastructure: Infrastructure and services for new communities will be delivered in a timely and efficient manner and at no additional cost to Government.
  3. Strategic setting: The proposal supports the broadly planned pattern of growth and urban policies.

The process is governed by a Chief Executives’ Review Committee, which is chaired by the Director-General of the Department of Premier & Cabinet. Recommendations will then be made to State Government. Consultation will take place with the relevant Councils to seek their feedback on the proposals. Today, in the Sydney Morning Herald, Minister for Planning and Infrastructure Brad Hazzard said many of the nominated sites were outside the growth centres and that the growth centres strategy had failed. “The lines on the maps for the growth centres are supposed to encourage development in those areas, but it has not worked and the corollary has been it deterred development outside these lines,” Mr Hazzard told the newspaper.

UDIA NSW believes this process shows the government is deeply committed to fostering housing growth and that it is also being transparent about the process and consultative with councils, which is essential. UDIA NSW Chief Executive Stephen Albin said says he believes the process is a realistic approach to fostering development where the landholdings are, rather than simply rezoning land in areas of fragmented ownership. “Our own research, which we have put to Government, clearly shows that the large sites where the landowners have been ready, willing but not yet able to develop are largely outside the growth centres,” he said. “It is clear, for the state to meet its future population and economic growth targets, that the process needs to take into account achievable development rather than operating off a wish-list that may not be viable or achievable.” “We support development that is led by the realities of the industry, whether it is inside or outside a growth centre – so long as it is commercially viable, sustainable, and supported by the appropriate infrastructure.” “As an industry group, we feel it is important to stress that this process is one that will benefit the state as a whole, in terms of housing affordability and economic growth.”

Thank you to UDIA NSW for this Article

Tenants’ groups push for renters to have a greater say on building management

TENANTS should be allowed to attend owners’ corporation meetings to give renters a much greater say in how their strata buildings are managed and maintained, tenants’ groups and strata experts have said.

There should also be changes to the legislation to stop the misuse of bylaws, such as banning pets from buildings, as part of the state government’s review of the strata laws, a leading strata law expert, Cathy Sherry, said.

As part of its review, the government last month launched an online forum to give people and businesses the chance to discuss and debate potential amendments to the strata legislation.

One of the big issues raised was inviting tenants to meetings held by the owners’ corporation.

Chris Martin, the senior policy officer with the Tenants’ Union of NSW, said strata bylaws were often the biggest problem faced by tenants, especially those banning pets in buildings or delays in repairs to common areas.

“About half the people living in strata [buildings] are tenants so generally we would be supportive of tenants being given more of a say,” he said.

He said one of the most problematic bylaws tenants came up against was the prohibition of pets. “Really it should be about the ability of a responsible adult to make a responsible decision,” Mr Martin said.

The last review of the Strata Schemes Management Act was carried out in 2004 and a review of the Community Land Management Act was last conducted in 2006, but the government said only “cosmetic reforms” were achieved.

Ms Sherry, a senior lecturer in law at the University of NSW, said there was good reason for tenants to be more active in the running of their building, especially if they have lived in it for many years.

“Tenants are often much more connected to the building than an absent investor-owner,” she said.

“Owners obviously need to have a say because they are the ones that own the buildings but there should also be a way to give renters a say, so perhaps that could be renters collectively getting one vote or a tenants’ forum.”

More than 2 million people now live in over 70,000 strata schemes in NSW and within 20 years, half the state’s population are expected to be living in strata and community schemes.

Alexandra Smith

Thank you for TEYS Lawyers for this article

Housing demand set to increase on the back of higher population growth

22,771,649. That’s the estimated total of Australia’s population.  According to the Australian Bureau of Statistics there is one birth every 1 minute and 46 seconds and an Australian dies every 3 minutes and 40 seconds.  Every 2 minutes and 44 seconds there is another international migrant crossing the Australian border.  Overall the Australian population increases by one person every 1 minute and 31 seconds.

Population and more importantly, the change in population, is intrinsically linked with housing demand.  To put it simply, more people means more homes.

Unfortunately, for such an important indicator, we only see quarterly updates of Australia’s population estimates at a macro level (ie national and state).  More geographically granular updates are released only annually.  Additionally, there is a long time lag for updating population data.   The official estimates at a state and national level are currently up to date as at March 2011 with the June quarter estimates due to be released on December 19th.

Total population growth has eased since peaking back in the March quarter of 2008 (+0.63% over the quarter – note that there is some seasonality in population growth and Q1 typically shows a higher rate of growth than other periods).  Part of the slow down can be attributed to the migration cuts brought in by the Federal Labor Government (the migration intake quota was virtually halved).  Additionally we have seen a swift rise in the number of permanent and long term departures from Australia which has only recently started to reverse.

In fact, based on the more timely migration data released by the ABS (migration data is released monthly, about a month and a half in arrears – so quite a timely data set in comparison with the demographic statistics report which is quarterly and released about six months in arrears) we are now seeing an ongoing trend of higher net migration rates; fewer residents leaving and more new or returning residents arriving.  The migration data is also quite seasonal, with spikes being recorded during February and July each year.

On a rolling annual basis, the September results for net migration were the highest since August 2010.  This is likely the result of the improved migration intake, with the Federal Budget announcing a 10.5% uplift in the skilled migrant intake and a 7.4% increase in the number of migrant families.   The trend of fewer long term and permanent resident departures is also helping to drive the net migration figures upwards.

Almost without doubt, as the ABS progressively release the new demographic data for the June and September quarters of this year we will see an improvement in population growth figures.  Theoretically the uplift in population growth should translate to greater housing demand; so we should start seeing that reflected in some improved dwelling approval and commencement figures.  That will be a welcome development by the residential building sector where the latest construction data from the ABS showed the value of residential construction was down 3.9% over the year.

Thank you Tim Lawless from RP Data for this article

Keeping our children safe

The NSW Government has launched an education campaign to protect the state’s children from avoidable death and injury. Each year around 8000 children are admitted to hospital because of falls, 50 of which are from windows and balconies. Senior NSW Government Ministers are working collaboratively on the new campaign, which will see 40,000 brochures and posters distributed across the state. Planning and Infrastructure Minister Brad Hazzard says too many young lives are lost in circumstances that can be avoided.

“It’s clear something needs to be done and that is why the NSW Government is making childhood safety a number one priority.”

Health Minister Jillian Skinner says a working party lead by The Children’s Hospital at Westmead has recommended the launch of an education campaign to reduce the incidence of childhood falls.

“The campaign is backed by the recommendations of a report on childhood health and safety.”

Fair Trading Minister Anthony Roberts said posters will be sent directly to all licensed property and strata managers in NSW so they can provide this important information to landlords, rental tenants, strata owners corporations and strata residents.

“The campaign material includes simple tips to avoid injury and save lives:

  • Ensure windows are locked and cannot be opened by a child
  • Install metal window guards with bars less than 10cm apart
  • Keep furniture away from windows and balustrades
  • Remember flyscreens do not provide protection
  • Always supervise children on balconies and in other people’s homes.”

Minister for Citizenship and Communities, Victor Dominello is encouraging all families and local service providers to get behind the campaign by ensuring safety in their homes and public places.

“The safety of our children is too important not to be taken seriously. I encourage all communities to get behind this initiative and take the time to alert others about the dangers of windows and balconies,” Mr Dominello said.

Thank you to Fair Trading for this article

Peace of mind before you sign – buying off the plan

Follow these tips to safeguard against problems with new or off-the-plan purchases.

Out with the old and in with the new. It’s the spring-time clarion call of the NSW government – to encourage apartment buyers, via specially tailored new-year concessions, to choose new or off-the-plan property in order to stimulate the construction industry and get the economy moving.

“The fact that housing construction is at record lows is not only a problem for the economy, it also means higher home prices for individuals and families across the state,” says the Treasurer, Mike Baird. “We want to make sure our incentives actually encourage activity, not push up home prices.”

As a result, Premier Barry O’Farrell’s budget ruled that from January 1 eligibility for stamp duty concessions will be limited to those buying newly constructed and off-the-plan apartments.

“We believe this is necessary to make buying a new home or apartment relatively more attractive than buying an existing dwelling,” Baird says.

But sometimes buying new or off the plan can be riskier than buying an older, established apartment, so here are Domain’s top-10 spring tips on how to ensure your new buy is blooming wonderful.

1. Check up on the developer and builder

Make sure the developer has a good record in building well-designed apartments, as well as in rectifying any problems afterwards.”Purchasers, particularly of off-the-plan sales, need to undertake due diligence on the vendor,” says strata lawyer Stephen Goddard, the chairman of apartment owners group the Owners Corporation Network. “They can look at other projects done in the past, how they’ve fared over time and what their track record is in fixing any defects.”

2. Make sure the price is right

It’s too easy to be dazzled by a shiny new apartment, a display unit or glossy brochure and forget the simple common sense of checking it’s reasonably priced.”You’ve got to pare it back to the price per square metre,” says the principal of buyer’s agents Sydney Property Finders, Dennis Kalofonos. “You compare that to the price per square metre of similar-standard apartments in the same area which have already been built or established.”In addition, these days you can’t expect an immediate profit if you sell. “Off the plan, generally developers build a premium into their product because it’s two to three years down the track that it’s being finished and bought,” Kalofonos says. “And usually buyers aren’t aware they’re paying 10 to 15 per cent extra just because it’s new.”

3. The devil’s in the details

As well as the square metreage, check all the other proposed measurements, such as ceiling heights, storage spaces and the size of car spaces, as well as the quality of the fittings to be put in.Also, take a photo of everything in the display apartment in case problems arise later. Developers can stint on size and quality – and you don’t want to move in and discover the ceilings are oppressively low, the car space is too narrow to open doors when your neighbour’s car is also parked and nothing is quite what has been promised.

4. Calculate your levies

Make sure the quarterly levies quoted are likely to be the true cost of maintaining the building and its facilities, particularly if the complex has expenses such as lifts, a heated pool, sauna and concierge service.It’s not unknown for developers to underestimate levies in order to make a purchase more attractive, or for levies to rise sharply after the first year or two, when warranties run out.”You need to make sure you know what you are paying for, what you’re getting for that money and whether that’s going to be enough money for what you need to cover,” says Darren Klein of property valuers Value 8. “Builders don’t, as a rule, underestimate levies but it certainly occurs.”

5. View the view – and the potential for losing it

If a building has a fabulous view – factored into the price of the apartment – look carefully at any land in front that could possibly be used for another building that could block you out.”In Sydney at the moment, there are at least four developments where people’s views are under threat by other buildings being erected later by the same developer,” says Flatchat columnist Jimmy Thomson. “They’ve applied for variations on original development applications that now mean they’re building higher or in a place previously earmarked for a park.”So while you can be sold a view, you can never actually own it and that same view can be sold again and again. The only other industry where the same product can be sold again and again is the oldest profession in the world.”

6. Ask to see any contracts in place

Apartment buyers need to be aware of any long-term developer-imposed contracts, says Michael Teys of TEYS Lawyers.”These will hardly ever be in the interests of the owners and the developer will have benefited either by cash or in some other way from putting them in place,” he says.”There’s no justification for locking owners into 10-year or 20-year contracts with, say, a caretaker or gardener. Owners should decide for themselves who they want their contracts to be with – and for how long.”

7. Browse the bylaws

A building’s bylaws either stop residents doing things or oblige them to do other things, says the president of Strata Community Australia, NSW, David Ferguson. It’s imperative purchasers read them before they buy. “They might ban pets, or apportion costs to a particular apartment, for instance, to pay for the exclusive use of a common cupboard,” Ferguson says. “Your lawyer should run you through them first but you should be aware of them and make sure they suit you before you make the decision to buy.”

8. Run through the security

Good security is usually a high priority for apartment buyers. “Make sure there are good access control systems either in place or planned for the building,” says the director of Francis Management Building Services, Eric Francis.

“You need a secure front entrance to a building – with electronic swipe keys audited regularly – and access only to the floor on which you live, and common property areas like gyms and pools.”

9. Listen to the noise

Apartments can prove havens from the din of lawn-mowers and barking dogs around suburban houses but if they have poor sound insulation and noisy neighbours, they can be hell on Earth.

“Double check that the apartments are going to comply with the acoustic requirements of the Building Code of Australia,” says the principal consultant of Pollution Control Consultancy and Design, Alex Jochelson. “And that’s an absolute minimum – most engineers are of the opinion those standards aren’t stringent enough.”

10. Ask whether it’s future-proofed

That means not only that it’s cabled for pay TV and broadband but that it’s been thoughtfully designed to be environmentally smart in the years to come. “The biggest cost in the future is going to be the rise in utility costs,” says Christine Byrne of Green Strata.

“So it’s very important to make sure new apartments have good insulation, great glazing, cross-ventilation, eco-friendly alternatives to halogen lighting and maybe solar boosting to take away the need for so much energy.”

Where are the savings?

  • Until December 31, first-home buyers will continue to pay no stamp duty on any property, old or new, up to $500,000 and receive a discount for properties valued up to $600,000.
  • From January 1, stamp duty will be waived only for first-home buyers purchasing newly built and off-the-plan property for less than $500,000, with partial exemptions on new properties priced from $500,000-$600,000.
  • The $7000 first-home buyer grant will be available to all eligible newcomers.
  • From now until July 1 next year, empty-nesters aged 55 and over won’t have to pay stamp duty on new homes. This replaces the previous exemption for only those aged over 65.

Thank you to TEYS lawyers for this article

Developments for preliminaries in building defects claims

Owners Strata Plan 70579 v Midwest Constructions Pty Limited & Ors [2011] NSWSC 429

Obtaining adequate compensation for owners corporations in building defect matters is a specialised task.
In The Owners Strata Plan 70579 v Midwest Constructions Pty Limited & Ors the Supreme Court considered an owners corporation’s request to vary a referee’s report to make further allowance for superintendence fees, storage costs, protection of goods costs, a contingency allowance, an increased contract period and scaffolding.
Apart for the claim for the superintendence fees issues, where the owners corporation’s evidence was uncontested, the owners corporation’s arguments were rejected by the Court.  Those remaining issues are explored below:
Storage of courtyard topsoil fee:  The court found that the referee was correct to not allow this fee because there was no evidence that it could not be stored on site safely.  Perhaps, if the scheme had a structural engineer’s report to support the argument that the slab could not withstand the soil loading the referee or Court would of found that this fee would be recovered.

  1.  Protection of goods issue:   The owners corporation sought costs for moving and storing goods whilst works in the unit were undertaken.  The expert evidence from the defendants was that covers could be placed on the goods and that whilst some may need more protection than others an allowance should be made for that.  The referee made the allowance suggested by the owners corporation, but it wanted to subsequently change its position to seek a higher amount and was unable to do so.   Expert evidence to determine why and how goods should be protected and how to best protect those goods in light of the anticipated scope and duration should be carefully considered.
  2. Contingency:  A contingency allowance only of 5% instead of the 15% sought was allowed by the referee.
  3. Contract period:  The scheme sought an increased contract period which partially determines the cost of various items including scaffolding hire.   The owners corporation’s evidence on the required contract period was considered to be not transparent or testable.  The builder’s evidence was based on a construction programme with a critical path analysis prepared by an experienced builder and was preferred by the referee and the court.
  4. Mobile or standing scaffolding:   The referee and court found that the cheaper option of mobile scaffolding was to be preferred.  If the owners corporation had put on expert evidence that mobile scaffolding was not appropriate and that fixed scaffolding was, that outcome may have been different

This area of law is regularly evolving and the briefing  of experts and consideration of expert evidence is becoming more and more specialised.

Thank you to Bannermans Lawyers for this Article

(HOW) Insurance accesses order of appeal

INTRODUCTION

The NSW Court of Appeal in Vero Insurance Limited v. Owners of Strata Plan No. 69352 & Ors [2011] NSWCA
138 on 30 June 2011 has clarified the amount of the excess payable by an owners corporation when a claim is
made on the Home Owners Warranty (HOW) Insurance in relation to common property building defects.
THE FACTS
The Owners – Strata Plan No. 69352 (The Owners) is a residential development consisting of 201 residential
units. Vero Insurance Limited (Vero) issued identical certificates in respect of insurance for all units. The Owners
made a claim on the HOW Insurance in relation to defective work on the common property in the amount of
$85,137.50. Vero rejected the claim. The Owners appealed the decision of Vero in the Consumer, Trader and
Tenancy Tribunal (Tribunal).
The Tribunal determined that the excess payable by The Owners was limited to the first $500 of the whole claim
of $85,137.50. Vero appealed the decision in the District Court of NSW. The District Court dismissed the appeal.
Vero then appealed to the Court of Appeal.
Vero contended that the Home Building Act, 1989 required it to provide insurance cover in relation to each
dwelling. Each lot in the strata scheme is a dwelling, which was insured separately. Vero submitted that the
common property in a strata scheme is not a “dwelling” for the purpose of the HOW Insurance, and that each lot
proprietor’s dwelling includes his or her beneficial interest in the common property as a tenant in common (that
is, some part of the common property was attached to each dwelling in the strata scheme). It was further
submitted that an owner corporation is not an insured under, or a beneficiary, of the HOW Insurance.

THE DECISION

The Court of Appeal held that The Owners was entitled to make a claim in its own right under the HOW
Insurance in respect of defective work on the common property.
The Court reached this conclusion by analysing the interplay between sections 18D and 99(1) of the Home
Building Act, 1989 and the relevant provisions of the Strata Schemes Management Act, 1996 and the Strata
Schemes (Freehold Development) Act, 1973. The Court concluded that the HOW Insurance had to insure The
Owners as the successor in title to the common property, against the specified risks. It noted that The Owners
could make the claim by virtue of section 227(2) of the Strata Schemes Management Act, 1996, or more simply
in its capacity as the registered proprietor of the common property and successor in title. As result, the Court
held that the Tribunal was correct. Only one excess of $500 was payable. The Court did not consider, however,
whether the cover provided by the HOW Insurance was limited to $200,000 only (being the minimum liability of
an insurer under the HOW policy in relation to each dwelling).

WHAT DOES THIS MEAN

The decision has two important ramifications for all owners corporations:
· In respect of a claim made on the HOW Insurance, only one excess of $500 is payable; and
· An insurer may be unable to rely upon the developer exclusion clause in the HOW Insurance policy to
limit or reduce its liability to an owners corporation in relation to defects in the common property. This
arises where a developer retains ownership of lots in the scheme at the time a claim is made, and the
insurer asserts that its liability is reduced because of this.

Thank you Grace Lawyers for Information Supplied