As the building quality fiasco continues to bite, insurers are starting to insert inconvenient exclusions into their policies, forcing private certifiers in NSW to warn that building in the state could grind to a halt. And in the UK, Lendlease is forking out part of a $9 million bill to replace Grenfell-like cladding on two buildings it did not design or build but owned for a while.
Combustible cladding and poor quality building made parts of Opal Tower at Homebush crumble and the Lacrosse apartments in Melbourne catch fire.
Partly the failures are bringing home the cost of a boom that swept up quantity and dumped quality in its wake.
But more important is a deeper problem – to governments failing to govern; happy to create all the laws anyone would want but refusing to police them and hold culprits to account. Laissez faire, under cover of fake laws and regs.
In the UK, suffering under the same delusion as here, that the market will sort it all out and demand and supply will yield a magic equilibrium, the inevitable has happened and angry citizens are taking the law into their own hands.
Australian behemoth Lendlease has been caught up in a kind of vigilante fury in Manchester and has ended up agreeing to pay part of a bill of around $9 million to help replace Grenfell-style cladding on two buildings it used to own – but did not design or build – after local government councillors threatened it with the loss of a lucrative government contract in the city, according to several media reports.
In NSW this week, Association of Accredited Certifiers chief executive Jill Brookfield says the construction industry will “grind to a halt” if the problem is not addressed.
“Insurers are now shying away from offering insurance cover for cladding to accredited certifiers and fire engineers,” she says.
“The industry is facing a crisis and this needs to be addressed as a matter of urgency – this is not just an issue which will impact accredited certifiers but one that will impact the entire industry.”
Two years of trying to get the attention of government has failed, she says.
The Building Ministers Forum failed to act and urgent action from government is needed. “The industry, builders and owners can’t wait for a national solution”.
Vice president of the AAC Robert Marinelli who has also been a member of the Building Professionals Board, which regulates certifiers, told The Fifth Estate that if certifiers can’t get insurance, then by law they can’t be registered. This applies equally to private certifiers – the majority of the industry – and those on local councils.
“In simple terms,” Marinelli said, “building surveyors that are accredited in different jurisdictions can’t have exclusions in PI [public indemnity]. They must be covered for all eventualities.
“If we can’t get clean insurance it means we can’t qualify to be registered.”
He said there are about 2000 building certifiers in NSW and possibly 7000 nationally.
What’s at fault, he says, is not the legislation – there are ample tight legal frameworks and regulations to testify to that – but the reluctance of government agencies to audit and police compliance.
“This is the problem: the basic issue is the government not doing what they are supposed to be doing.
“Our industry wants to be audited. It wants to make sure everyone is accountable for what they’re doing.
“We’ve got all the laws but no policing.”
“The government needs to spend money where it needs to spend money.” But the money goes instead to rebuilding stadia and other items instead.
“The cost of running the Building Professionals Board when I was there was described as a rounding error for the Department of Fair Trading [which has responsibility for the building industry].”
Key to the problem is that builders appoint sub-contractors who are unlicensed. If all subbies on a site paid a licensing fee there’d be money for auditing. Even $50 a year would yield $10 million, he says.
On the other hand, Marinelli is reluctant to blame the Department of Fair Trading. It’s got a “massive charter” – from real estate to car sales to financial advisers – “and then to be lumped with certifiers…”
And to bring some perspective, there are about 150-200 complaints a year from around 40,000 approvals, he notes.
Others might say this springs from a slight lack of faith that anything will come of complaints and that the industry is rife with stories of consumers routinely ignored and sidelined. Busy lives kick in and people give up, more keen to retain their sanity and pick up the costs of problems out of their own pocket instead.
Jill Brookfield says the Building Professionals Board needs to “articulate a plan for the likely eventuality that compliant insurance will shortly not be available for any construction professionals, including accredited certifiers.”
The AAC has a proposed the following plan to address the issues:
- All professionals involved in the design, installation and approvals process must be accredited and insured.
- All key personnel in the process who are not accredited must be licensed and be required to prove their competency at regular intervals.
- All documents related to the certification of a building should be in a standard form developed by industry and Government.
- All persons involved in the certification of any engineering design or technical aspect of construction must issue a certificate on a standard form.
- Comprehensive auditing of all accredited or licensed persons.
- All parties involved in the building product supply chain need to be accountable for the products they prescribe, specify, purchase and use.
- Amend the BASIX scheme to allow applicants to design buildings based on predetermined standards.
- Strengthen the administration of building regulation in NSW by bringing building regulations and control functions into one portfolio, reporting to one Minister.
Meanwhile, there are concerns that the lack of full insurance for properties will impact on the mortgages so that if a property loses its full cover at renewal time, the bank might have to provision for its less secure status. (Anyone hear the chime of sub-prime again?)
But there are other ways and means of obtaining a fix
Some people, sick of governments ignoring the problems and insurers and builders hiding under cover of expensive litigation, are taking their own remedies for shoddy building practices.
In the UK Lendlease has agreed to fork out a share of the cost of more than $9 million to replace Grenfell-style flammable cladding on two apartment blocks it formerly owned in Manchester, reports in The AFR, The Huffington Post and other publications said. (A spokeswoman from Lendlease told The Fifth Estate the figure was incorrectly reported but she did not offer a correct figure.)
This occurred after Liberal Democrats on the local council lobbied to shift financial responsibility to the owners and developers of the buildings, The AFR said.
Lendlease, which did not design or build the Vallea Court and Cypress Place apartment blocks, agreed to pay part of the cost anyway after leader of the minority Liberal Democrat party, John Leech applied pressure and said that, “if Lendlease didn’t cough up for the cladding refit on the towers, then its construction arm should be stripped of a £330 million contract it had won to upgrade Manchester’s historic town hall”.
Huffington Post said: “The Liberal Democrats on Manchester council demanded that Lendlease be blacklisted from council contracts until they agreed to pay the fee, according to a party spokesperson.”
Mr Leech was reported elsewhere as saying: “This is a huge, huge win for local people and I’m delighted that Lendlease and Pemberstone have finally taken responsibility and will pay for the new cladding. I really hope this sets a precedent across the country.”
It might look mighty unfair, but the people who bought into buildings and live in them also think it’s unfair that they pick up the bill for bad practices. We absolutely have not seen the details of the agreement Lendlease and other parties have entered into but regardless, it’s a curious turn in events.
Lendlease said in a statement:
Lendlease has always sought a resolution in favour of the residents, and has worked consistently towards securing that solution since being informed of the situation.
This was a complex situation involving several companies, which has taken longer than anyone would have liked and we regret how unsettling it has been. We have not been caught out, we have been working together with the other parties to agree a resolution for a while.
Lendlease previously owned the properties in Green Quarter and had sold some of the leaseholders their homes. However, Lendlease did not design or build either the Vallea Court or Cypress Place buildings within the Green Quarter development as has been erroneously reported.
Having not owned either properties for considerable time we had very little legal rights to intervene in resolving the cladding issue. Regardless, our aim was to help get a good outcome for the residents and we have been working with all parties involved to enable the remedial works on the cladding to begin without residents having to pay for it.
While it took longer than we had anticipated – these things are never as simple as they seem – an agreement has been reached and the cladding will be replaced without cost to them.”