27 September 2022
‘Don’t buy lemons any more’: Top property developers win gold star ratings
People who buy a defect-ridden apartment in future will only have themselves to blame, NSW Building Commissioner David Chandler has declared while revealing the first developers to be awarded gold stars under his new rating system.
And would-be developers with little more than a $2 company, a ute and a mobile phone will no longer be able to gamble with millions of dollars of buyers’ money.
“I’m urging consumers to really take this seriously,” Chandler said. “You now have a power card and if you don’t choose to use that, then I can’t help you.
“If you’re buying a new car, you check on the quality via a rating and you investigate it so you don’t buy a lemon. Now it’s the same with apartments. You have a rating system, so you don’t buy lemons any more.”
Chandler was speaking at a ceremony to mark the official recognition of one of Sydney’s long-term development companies, the TOGA group, being awarded the top – so far – 4.5-star rating. They join select others, boutique developer HELM, mass producer Harry Triguboff’s Meriton and DASCO Australia, on the top rating rung.
So far, 160 developers have signed up to receive the voluntary rating in the iCIRT system (independent Construction Industry Rating Tool) and 60 have been through the process to receive a rating between one and five stars.
Ratings company Equifax examines a company’s project data, building performance, insurance claims, licence checks, awards, trading partners, credit records, financial data and their own and related partners’ criminal history. The intention is to assess them on capability, conduct, character, capacity, capital and counterparties.
Chandler introduced the initiative to rate good companies with three or more stars and give less reliable players lower ratings, or deny them a rating altogether, after building issues like Mascot Towers, Opal Tower and combustible cladding decimated confidence in buying apartments.
Up to 80 per cent of all apartment sales in NSW by the end of 2023 will be by well-rated developers, he predicts.
“Consumers will have a really, really clear choice from hereon in not to deal with unrated players,” Chandler said.
“Frankly, for rated developers, I think the next three to five years are going to be the golden years of residential apartment building sales.
“This is the time to actually let the fresh winds that are blowing in the sails of this industry start to carry the good boats forward, and leave the ones that are risky still back in the docks.”
TOGA Group managing director Allan Vidor was delighted to earn the top rating. “We’ve been in this business for 59 years and we take great care in what we do,” he said. “We have very rigorous processes and we’re very pleased with this result.
“If there are any issues, we go back and fix them and we have a reputation after so many years as a developer who can be trusted. People are spending a lot of money on apartments and making big decisions and there’s more and more acknowledgement now that the rating system is there to make sure things can’t go horribly wrong.”
“We went with TOGA as they have a good reputation but now that 4.5-star rating gives us even more confidence,” said lawyer Lillie, 32. “It makes it easier to secure finance as a purchaser and also helps if ever we want to resell it.”
Fellow gold star-winner Mark Monk, CEO of HELM, said he’s a strong supporter of the iCIRT system as a way of bringing confidence back into the apartments sector. “We were the first company to sign up to the ratings and while we aren’t a big business, we very much care about our work,” he said.
“We started 13 years ago and have invested heavily in our people, systems, product and reputation but for a long time there hasn’t been a system to distinguish the good players from the bottom 20 per cent of the industry who’ve damaged its standing.”
Meriton director of sales James Sialepis said buyers must be very aware and conduct due diligence.
“Meriton’s long 60-year history, 100 per cent completion track record, combined with the highest iCIRT rating for any developer to date, ensures our customers can enjoy unparalleled confidence and assurance when choosing Meriton,” he said.
Chandler agreed to stay on in his role in August after rescinding his July resignation over concerns he had about the fair trading portfolio under then minister Eleni Petinos, who was later sacked, albeit for allegedly unrelated issues.
“I was looking for clarity about the landscape where I could do my job,” he said. “And I think [incoming minister] Victor Dominello has very clearly reinforced that and I’ve had some amazing support too from the opposition and crossbenchers.
“It was unexpected, but it was quite moving, it was fantastic.”
His office has developed a Continuing Occupation Protocol which means that if a building has problems, hopefully it can be made safe in situ without evacuating all residents.
The legislation also allows him to look at buildings up to 10 years old to examine them for defects.
Next year, a Building Trustworthy Index will be established to rate buildings on their trustworthiness, compliance to standards and embodied carbon.
But the iCIRT rating tool, Chandler says, is now having a huge impact on the industry, as buyers take their deposits back from unrated developers, insurers agree to insure apartment buildings again and consider offering 10-year warranties, some financiers refuse to lend to unrated developers, and staff refuse to work for them.
“What this rating system is doing too is closing the door on people who think they can come into the development industry with a $2 company, a mobile phone and a ute,” Chandler said.
CORRECTION
A previous version of this story omitted the fourth developer to receive a 4.5 star rating. DASCO Australia also received 4.5 stars.
Original article written by Sue Williams for SMH - click here to view article.