Building Better: How NSW is Tackling the Apartment Defects Crisis

If you live in a NSW strata apartment built in the last ten years, there's about a 50-50 chance your building has at least one serious defect. That's not scaremongering; it's what the research tells us. Waterproofing failures, faulty fire safety systems, cracked facades, and structural issues are now common in newer strata buildings. We can’t just call them bad luck anymore. This is a systemic problem, and it demands a systemic response.

The numbers are sobering. Landmark studies by the NSW government and follow-up surveys with strata managers show that between 40% and over 50% of strata buildings completed since the mid-2010s have had at least one serious defect. The usual suspects appear again and again: waterproofing, fire safety systems, building envelopes, and structural elements.

Academic work led by UNSW's City Futures Research Centre has documented not just the prevalence of defects, but their human cost. Years of dispute and delay. Large special levies landing on owners who thought they'd bought their piece of the Australian dream. Difficulty selling or refinancing. Living with cracked walls, constant water leaks or, in the worst cases, evacuation orders takes a heavy emotional toll. It can turn your home into a construction site or just a memory.

The research also points to why this keeps happening. Responsibility is fragmented across a long development chain. Aggressive procurement and value-engineering during the construction boom meant corners got cut. Supervision and certification had gaps you could drive a truck through. And by the time owners find the problems, the developer has usually moved on to the next project, leaving the owners corporation to enforce their rights alone.

NSW has responded with one of the most far-reaching construction reform programs in the country, based on one clear idea: get it right the first time.

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 gives the Building Commissioner real teeth. Inspectors can walk onto sites, issue orders to fix issues or stop work, and even halt an occupation certificate if they find a serious defect. The message is clear: you don't get to hand over the keys until the building is actually safe and compliant.

The Design and Building Practitioners Act 2020 sets statutory duties of care and registration rules for designers and builders working on apartment projects. These aren't just professional obligations anymore; they are legal duties backed by consequences.

Then there's the Strata Building Bond and Inspections Scheme. This scheme requires developers to lodge a 3% bond. This bond can be used to fix defects after independent inspections. Think of it as a deposit held against the builder's workmanship. If they do good work, they get it back. If not, owners have a fund to draw on for repairs.

The iCIRT star-rating system now rates builders and developers on their track record. This makes it easier for buyers to separate the good operators from the cowboys. And decennial liability insurance is now available. It provides longer-term defect insurance that shifts the risk back onto those who create defects. This means owners who had no say in how the building was constructed won’t bear the burden.

Here's the thing: the better operators in the industry haven't fought these reforms. Many have embraced them. They help differentiate serious builders from fly-by-night operators who've damaged the sector's reputation.

Major developers and tier-one builders are increasingly using independent design review. They focus on more robust engineering oversight and higher internal standards. This applies to critical items like waterproofing details, fire-stopping, and facade systems. They know regulators are on site more often now. They also know serious defects can threaten both their reputation and their balance sheet.

Peak professional bodies for engineers, certifiers and lawyers have stepped up with training, practice notes and defect-management protocols. These tools help strata managers and committees navigate claims and work constructively with the Building Commission, rather than ending up in protracted disputes that benefit no one except the lawyers.

Specialist remedial contractors and defect financiers have also grown in importance. This reflects an uncomfortable truth: even with better rules, we still face years of fixing defective buildings from the past. Owners corporations will still bear a large share of the financial and governance responsibility for making things right.

NSW is not unique in facing building defect problems; these issues exist here and elsewhere in the world. But NSW has become something of a policy lab. They’ve launched a sweeping reform agenda to lift standards, find defects earlier, and make those who cause the problems pay to fix them.

The reforms are ambitious and far-reaching, but they represent a necessary reset. For too long, the construction industry operated on the assumption that someone else would pick up the pieces when things went wrong. That someone else was always the owners.

The new model says: if you design it, build it, certify it, or develop it, you own the consequences. And if you do good work, these reforms will help you prosper by weeding out those who don't.

For owners in affected buildings, the journey remains difficult. But at least now there's a framework, a regulator with power, and an industry that's starting to understand that cutting corners today means paying tomorrow.