Jimmy Thomson June 14, 2012
Grappling with the concept of shared responsibility ... strata has presented itself as an issue for first home buyers in Australia. Photo: AFP
The NSW government has retooled its stimulus for first home buyers, offering them $15,000 towards new homes plus no stamp duty for buyers of new homes costing less than $650,000.
The new regime could be seen as a welcome bonus for the property-development industry, but some observers may also see it as a honey-trap for the unwary.
If you were a cynic, you might conclude that the home buyers' package is designed to attract the least-savvy members of the community to the most problematic and unregulated sector of property development.
It is reasonable to assume that first-time home owners - who mostly choose apartments - are likely to have little or no idea what they are getting themselves into when they buy into strata. But they will soon learn that Australia is still struggling with the concept of shared responsibility in high-rises and townhouses, so much so that the NSW government is reviewing strata laws.
That ''guesstimated'' $35,000 in grants and waived stamp duty for a $550,000 home may seem like a bargain - until you stack it up against the steady erosion of consumer rights for strata owners.
The big issue in new-apartment land is defects - and the home owners' reasonable desire to get what they paid for.
Developers' lobby groups would have you believe that defects would not be an issue were it not for crane-chasing lawyers geeing up apartment owners, who would otherwise be happy with their purchase.
The Fair Trading Minister, Anthony Roberts, said as much last month, when he announced that the "banquet is over" for strata lawyers in NSW. This sop to the developer lobby skates over one simple fact - defective buildings are a huge problem in this state.
In a recent University of NSW report on governance in the state's strata developments, researchers found more than half of respondents reported problems in their developments - and of those, 80 per cent said they had problems with defects.
Even before the O'Farrell government came to power, this was a big issue, with the statutory requirement for home-warranty insurance having been removed for buildings more than three storeys high.
Since that big blow to consumer protection, there has been an increasing number of obstacles placed in the way of strata owners.
It was made harder for owners to agree to take legal action, which cost more than a paltry sum, and then it was announced that claims had to be made within six months of a problem being discovered. And let's not forget that these issues are confronting many people who, for the first time in their lives, are coping with home ownership and the shared rights and responsibilities of strata living.
The new Fair Trading Minister added another hoop for them to jump through this year when he decreed that non-structural defects had to be claimed within two years and structural defects within six.
Meanwhile, some (but by no means all) developers spend millions of dollars in court trying to avoid having to rectify defects in their buildings, while others (but by no means all of them) explore every possible legal means of avoiding their owners discovering and claiming the defects in the first place.
Sydney needs to build more apartments in a big hurry. In 20 years' time, half the population of the city will need to be living in some sort of strata development, so the new payment scheme is a welcome boost for apartment builders.
But unless it also comes with new laws that provide easily understandable and viable protection for home owners, it's a minefield for the uninformed and unwary. So first-time home owners should grab their $15,000 gift and aim to get their stamp-duty relief. But perhaps they should have an extra question for their solicitors when they look at the contracts for their new home; how much time and money does this developer spend fighting its customers in court?
Otherwise, their money - and the government's, which is, of course, made up of your taxes and mine - is simply going to buy a very expensive pig in a poke. And if they've bought it from one of the less reputable and more litigious operators, no amount of grants and stamp-duty relief will compensate for the heartache and misery that could lie ahead of them.
Jimmy Thomson writes the Flat Chat apartment-living advice column in Domain every Saturday and edits flat-chat.com.au.
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