Newer build with known defects (NSW)

Hi all,

I have seen a property that is almost within my price range and I love it. Link: 202/9 Young Street, Neutral Bay, NSW 2089 - Apartment for Sale - realestate.com.au

When I viewed it on Saturday, I spoke to some people in the building who said they are having problems at the moment with leaks. The property developer has apparently been taken to Court to pay/fix, as the building is still within the 6 year warranty period.

I realise I could use this as a negotiation tactic to bring this property in line with my budget (pre-approval $840k); however nervous about buying a building with defects. The fact they have had to go to court implies to me the developer is dodgy, and could likely declare bankruptcy and/or disappear. The owner I spoke to also said the person who initially bought this property threatened to sue and so the developer bought it off her at a loss, and is now selling again at a greater loss... these all seem like red flags to me, but this would be my first purchase ever so I'm not sure if I am over-reacting and whether it is worth just using this to negotiate or stay far away (thinking Opal Towers/Mascot Towers etc). I'm also wondering what other damage might be found out of the warranty period if this has shown up already?

Does anyone have any thoughts? Too risky?

I haven't yet got the strata report as it is $250 and if I feel it's a flat no from what I know already I'd rather save the $ - but will buy it if that's what others think is a good idea.

Sorry, I am super new to this so if these are all stupid questions I will delete. Thank you

 

The original sales were February 2015, it's 7 years so outside of the statutory warranties.

The most recent sales were Feb 2020 $1,070,000 (pre-covid) & Sept 2021 $960,000 (peak boom).

Current owners have held for less than a year and selling for less than the purchase price+ stamp duty.

This would be one of the few units which have gone backwards during the boom.

Is this unit one of the that was subject to the defects claim?

 

What is the apparent cost to fix the defects? Consider you will be liable and ask if its worth the price or less? You will buy that obligation. I would engage a strata inspector to SPECIFICALLY report on the issue likely at a higher cost

Builders warranty periods arent as you think.

 

Wow thank you. This is a very very helpful breakdown. I think they are probably trying to cut their losses as it seems like an expensive ongoing issue, and the REA told me on the phone earlier there are also problems with the buildings cladding. It seems like an expensive nightmare and I think I am going to steer clear!

 

Stay away from that cladding. Very costly fix and until it is fixed it can make a building unsaleable. I think its dishonest that Govt is refusing to name the buildings.
The register should be public knowledge. Until owners, builders and strata are forced to fix the problem it will be delayed.

Cladding registration

Agree ....walk on.

 

Thanks Paul. I didn't realise there was a portal for them to register the buildings but this should 100% be publicly accessible! As soon as I heard cladding issue it rang alarm bells. Now going to focus my search on brick buildings 20+ years old - every newer build I have seen has had issues...

 

“Those all seem like red flags to me?”

they ARE red flags. Screaming sirens more like it.

Why on earth would you consider involving yourself in what is clearly a problem? Do you want to be the one with a lawsuit on your hands?

buying a place should be easy and fun and you should be happy with the one you buy - and assured it’s not a dud!

 

Sorry I’m sure it does sound stupid. I’m just very new to the whole thing so wanted a second opinion.

 

Recent builds are hit and miss. The bigger they are the less compliant they seem to be. Some are OK....I dont see Mirvac and Meriton getting the same issues. ? Is that the case ?

The higher the rise the bigger the problem it seems. Perhaps focus on lower rise smaller devs. An established place with decent strata reporting and decent build quality will help

 

No, never stupid to ask a question.

Far more stupid to be afraid to ask and buy a risky property. You will have learned a lot from the answers given above, and knowledge is power!

Ask away!