Jimmy 00:00
Busy week in strata...
Sue 00:01
It's been incredible, hasn't it?
Jimmy 00:03
We've had new laws; I think they are supposed to come through on the 5th of December, but the Building Commissioner's powers have been increased, which is going to be pretty interesting. And, there's a survey out from Equifax, who do the iCIRT ratings, about how many people would be prepared to pay more, if they were more confident about the builders.
Sue 00:27
Oh, interesting.
Jimmy 00:29
And we're going to talk about another development in the Mascot Towers saga, and 'lock up and leave,' with some news about you, Sue Williams. Exciting stuff! We'd better get on with it, as we always say. I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.
Sue 00:49
And I'm Sue Williams and I write about property for Domain.
Jimmy 00:52
And this is the Flat Chat Wrap.
[MUSIC]
Sue 01:08
So what does the new survey from Equifax show? I mean, they're the ones who operate the iCIRT system, that was set up by the New South Wales Building Commissioner, David Chandler. The kind of star-rating for developers.
Jimmy 01:20
It's not just about building; it's about how reliable and responsible they are, and whether they've got the money to build the apartments to the quality that they claim they're going to, and whether they've got any history with...
Sue 01:34
Phoenixing...
Jimmy 01:35
And bankruptcies and things like that. Equifax are basically, a credit-rating company, but on a global scale. So they sort of dig deep into the history of these companies and now, they've actually done a survey. And what they've come up with is that 60% of apartment buyers, or potential buyers, would pay more, if the apartment developers and builders had a five-star rating.
Sue 02:04
Wow! That's huge confidence in the system, isn't it?
Jimmy 02:08
Up to 6% more, which I think would probably more than cover the costs of getting the iCIRT rating in the first place. So that must be encouraging for... Well, it'd be very encouraging for David Chandler, you would think.
Sue 02:22
Absolutely. Because it shows that the system is really working, and that developers really should be part of the system. And it also shows that buyers are educated enough that they realise that this system is really going to be good news for them, as well.
Jimmy 02:35
Only some, because another part of the survey was that there are only 25% of people in New South Wales, or maybe Australia, know that there is even such a thing as an iCIRT rating.
Sue 02:49
But I guess most serious potential buyers would know there is, wouldn't they, because they'd be looking at the news. They'd be checking out the developers.
Jimmy 02:57
You would hope so; like we did.
Sue 03:03
Enough said!
Jimmy 03:05
It says 45% of Australians intend to purchase, renovate, or build in the next five years and 32% of them say they have a negative perception of the building industry, which I find surprisingly low, actually.
Sue 03:21
I guess it's so hard, because so many builders have gone under in the last year, and construction costs have gone up so much. People would perhaps blame the builders for that as well, though the builders really are quite blameless in lots of ways, for that. It's just the shortage of supplies.
Jimmy 03:39
The survey, also found there is a concern among people that because of the push to build houses quickly, and because of the problems that there have been with supplies and labour and materials, etc, they're worried that builders will be cutting corners.
Sue 03:56
Well, builders probably, traditionally, maybe cut corners, but there's less incentive for them to cut corners now, because David Chandler (in New South Wales, anyway), is inspecting both apartments and houses.
Jimmy 04:11
And can do so, while they're being constructed. So this new power that he was given (or his department was given), they can go in during construction and say "that's a defect; that's a defect... Fix them before you complete the building." It actually saves the developers money...
Sue 04:30
Fixing it retrospectively is much more expensive.
Jimmy 04:33
Aboout 10 times as expensive, because you've got to pull things apart, then put the things back together again. So basically, it sounds like the populations split in three. There are 30-odd percent of people that have a negative view of the building industry and 30-odd percent have a positive view, and the ones in the middle either don't know or don't care, but one-in-ten Australians have a very positive view of the building industry. I want to meet these people.
Sue 05:03
Maybe they're builders themselves. Because the building industry does employ an awful lot of people; a startling number of people, actually. And when you're talking about people in the building industry, you're also talking about not only building houses and apartments, you're also talking about all those people building infrastructure and that's a huge employer at the moment.
Jimmy 05:24
Three-out-of-four Australians who intend to buy, build or renovate in the next five years say they're willing to pay more, to get assurances of working with trustworthy property developers or building professionals.
Sue 05:39
Wise.
Jimmy 05:40
And while over two-fifths of Australians intend to invest in property, nearly half (47%) cite a lack of trust in the building or construction industry, and a lack of qualified contractors or builders in the market, as the biggest barriers. So people want to get in...
Sue 06:01
But they're nervous. I mean, we are trying to import more skilled construction workers at the moment. So hopefully, if we managed to succeed with that, that will help. You can understand why people would want to get into the home ownership. We were talking to a friend this morning, who's been renting for many, many years and his rent is going up and up and he just doesn't have the savings anymore, to be able to get into the industry and buy and he is kind of thinking of leaving Australia and going and living elsewhere....
Jimmy 06:33
In Scotland.
Sue 06:34
Because houses are so much cheaper there and he's missed the boat here.
Jimmy 06:39
He's obviously not watching all these crime series.
Sue 06:42
There are many in Scotland now, arent there? I think god, half the population has been murdered in our lounge room, over the last few months, watching these...
Jimmy 06:50
But it's quite funny, watching you watching it, when you're reading the subtitles, because one of them, the subtitles are in Scots, as well.
Sue 06:58
That's right. There were some words I didn't understand whatsoever.
Jimmy 07:01
"What does Denny Ken mean?"
Sue 07:04
I knew that one! There was another word that I couldn't understand and I asked you to explain; do you remember what that was?
Jimmy 07:10
Radge, I think, which means a bit mad, unreliable and crazy.
Sue 07:14
I've never heard of that before.
Jimmy 07:16
A radge gage is a crazy guy.
Sue 07:23
That's almost as hard to say as a rural Jura.
Jimmy 07:26
One of the things about renting though; there was a thing on the radio this morning, that there's been studies done that long-term renting actually shortens your life, they say, because of the increased stress. You know, like every 12-months or whatever, you're worried that the rents going to go up, or you're going to get evicted, or whatever. You remember when you did that book about DNA?
Sue 07:50
Yes.The telomeres.
Jimmy 07:50
So it shortens the telomeres, if you're renting for too long.
Sue 07:55
Wow! That is incredible!
Jimmy 07:57
But I suppose what it actually is talking about is the stress that comes from uncertainty. If you had long-term renting in places where you wanted to rent and the rent was controlled, then that would not be an issue.
Sue 08:11
Like in some of the build-to-rent places, which are being built now.
Jimmy 08:15
That was quite an interesting aside.
Sue 08:18
I mean, I guess that in other countries where renting is much more common; I wonder if they suffer from the same uncertainty and problems?
Jimmy 08:27
This survey was done in Britain.
Sue 08:28
It wasn't Australia; that's reassuring that it wasn't here.
Jimmy 08:31
I think it'd be even worse here. I mean, in Britain, at least, you've still got a decent amount of social housing. Not as much as it used to be, but it still does exist.
Sue 08:42
I can say that as someone who used to live in social housing. I grew up in social housing; I was born in social housing in Britain.
Jimmy 08:48
In the New Town.
Sue 08:49
That's right. And then Margaret Thatcher, the old Prime Minister, sold it all off to private investors.
Jimmy 08:56
Like your parents.
Sue 08:57
Yes. And they were very, very happy, because they were able to buy a house, which they had never imagined in their wildest dreams, they'd be able to, but they obviously bought it for very little money. 17,000 pounds, I think. So suddenly, they entered a whole new class and started voting Tory.
Jimmy 09:16
That's the power of property. When we come back, we're going to talk about...
[MUSIC]
Sue 09:21
Another downside of owning property and the other side of the iCIRT rating really; the continuing tragedy, that is Mascot Towers.
Jimmy 09:35
And we're back. What's the latest on Mascot, Sue? I thought I'd kind of forgotten...
Sue 09:41
Well, you could be forgiven for forgetting in some ways, because it's now been going on (this saga), for five years. And as you know, the building was cracking. There was lots of court cases against the developer and then against the developer of the next door building, who the owners blamed. In the end they reached a settlement; they mediated settlement. But really, all the owners and all the tenants in the building were evacuated. They haven't been allowed back in and at the same time, they're paying the huge legal costs that they've incurred. They've paid for some of the defects to be fixed, but the defects are still huge and they're not allowed to live in there. There's been a new court case; the owners decided to try and extinguish the strata title, so that they could then walk away from the building and start their lives afresh. And you can kind of understand that. But of course, most of them have mortgages. They also have big outstanding loans from Lannock, who is a strata...
Jimmy 10:47
One of the two strata loan companies in Australia.
Sue 10:50
That's right. And they borrowed the money for the legal costs and stuff.
Jimmy 10:53
We should point out that Lannock are long-term sponsors of this website.
Sue 10:57
Absolutely. The judge delivered the verdict on Friday and basically said no, they weren't entitled to extinguish strata title, because they have all these debts remaining; they have to honour their debts. I mean, you can understand why the judge would have said that, but it's very hard for the owners, because, you know, they've tried lots of things and they're still in this horrendous situation, of not being able to live there, but actually paying off their mortgages, paying huge interest on all the debts that they've now got. And there's absolutely no end in sight.
Jimmy 11:33
I was looking at some of the judgement; I was reading the judgement the other day, which goes on at great lengths, and in great detail. It seems that the costs that they thought they would incur to repair the building are actually not as bad as they thought it was going to be.
Sue 11:51
But the trouble is, if they're going to raise the money to actually repair the building, they're going to have to take out more loans and incur more debt. There's been a number of suicides at the building.
Jimmy 12:03
Oh, god!
Sue 12:04
There's been a huge number of mental health issues. There's been family breakups, marriage breakups, bankruptcies... These are people at the very end of their tether. And okay, maybe the building could be repaired for a bit less than originally thought, but how are they going to raise the money for that? And is it throwing good money after bad and most of them just don't have any money left.
Jimmy 12:28
What would you see as a solution?
Sue 12:30
I think the only possible solution really (and I'm just doing a story about this), is for the state government to step in; buy the building and the land.
Jimmy 12:39
Buy the building and the land; fix it up and sell it, and hopefully not make a loss.
Sue 12:44
They could sell it as public housing; they could sell it as recreation space. They could just do something to remediate the place and then these people would finally be free to move on with the rest of their lives. There's an incredibly valid argument; it's the State government's fault that this happened in the first place. It's no fault of the people who bought.
Jimmy 13:05
Is it the State government? Why is it the State government?
Sue 13:08
Because they certified these buildings. They didn't impose the proper building codes and building regulations. They allowed this situation to happen. I think, in 21st century Australia, you kind of assume, if you're going to buy an apartment, that it's going to be decent; it's going to be okay, it's going to be up to scratch. But these people put their faith that this this building was going to be okay...
Jimmy 13:33
As everyone does.
Sue 13:34
And they were just bloody unlucky. It could have been any of us. It could have been our life savings in an investment, or our life savings in a building to raise your family. These people have been absolutely ruined by this decision.
Jimmy 13:50
I think you're right. I mean, it's either going to take the State government or some multimillionaire (billionaire), to come in and say "I am going to buy this, clear the debts, clear everybody's debts..."
Sue 14:04
That's interesting... How about if Harry Triguboff wants to do something really nice for his legacy? I mean, he's obviously got a big legacy anyway, creating so many homes, but that would be a really nice gesture, wouldn't it?
Jimmy 14:15
I was thinking Gina Rinehart, or Twiggy Forrest.
Sue 14:19
Yes, well, I'm sure any of them.
Jimmy 14:22
Maybe they could get together. Maybe we could arrange a playdate for Harry and Gina and Twiggy.
Sue 14:27
Could you imagine the egos all in one room? I don't know, really!
Jimmy 14:31
But these are people who can make a difference and you feel like if you can make a difference, you should make a difference, if it's not going to destroy your life to do that.
Sue 14:43
And as these people say... I mean, you could buy this building for a knockdown price. So you could maybe make a bit of a profit on it longterm.
Jimmy 14:55
Well, the figures that were in that judicial finding suggested that if they did the repairs at the costs that have just been estimated, the building would be worth enough that they certainly wouldn't make a loss. But as you say, these people have had it. They're tired of it; they just don't want to do it. And that's why you need some sort of angel to come and say "okay, right. You've had enough. If you can all agree that you're going to sell it at this price, I'll take it and I'll fix it."
Sue 15:30
And that could be John Minns, or it could be any of those other billionaires you've mentioned.
Jimmy 15:35
Exactly. John Minns is the Strata Commissioner. Chris Minns; there are too many Minns!
Sue 15:41
Chris Minns is the Premier.
Jimmy 15:44
He's already cutting back on infrastructure, so I don't think we can expect to see that anytime soon.
Sue 15:49
When we come back, David Chandler and his new powers... You'll be able to tell us a bit about that.
Jimmy 15:55
That's after this.
[MUSIC]
Jimmy
And we're back. David Chandler, as you said, has got these new powers. According to Chris Minns, his role has been supercharged, which means that he has the power now to investigate buildings in a way that nobody has ever had before and I don't think anyone else in Australia has. He can go into buildings; he can go into completed apartments. He has the right to go into any house or apartment in New South Wales, and say "I've come to have a look at the buildings."
Sue 16:35
The membrane.
Jimmy 16:36
"I've come to have a look at your bathroom."
Sue 16:39
Is there any home owner who wouldn't welcome him in?
Jimmy 16:42
I think not.
Sue 16:43
With tea and biscuits.
Jimmy 16:45
And a red carpet. Especially people in new apartments. Look, it's partly increasing his powers; I think its partly reminding people that he's there, that he's doing this stuff. Because every so often (as we just confessed about Mascot Towers), if it's not in the news every other day, you soon forget about it. So he's got these powers. I'm interested in the phoenixing, where they're going to track down people who have deliberately, as a business plan, gone into liquidation, so as to come out the other end, and then walk away from their debts; walk away from the defects, start up again under a different name. It sounds legally fraught, unless you can find the smoking gun, the piece of paper, where somebody has sent a note to somebody saying "hey, Charlie, why don't we build this building and then go into liquidation?"
Sue 17:46
But if people are doing it consistently, then you can probably point to a pattern and all credit to the New South Wales Government for trying this. They would have a lot of friends among developers, and probably those friends would be urging them not to do this kind of thing. I mean, I remember I was a friend with somebody who had been urged to stand for the New South Wales parliament and she was kind of quite innocent really; a bit of a newbie. And she phoned me up one day and said "this developer is planning to give me loads of money for my election campaign. What do you think I should do?" And I thought "oh, my god, this is how it happens."
Jimmy 18:26
And your advice was run very fast and very far.
Sue 18:28
Yes. Tell them to go away.
Jimmy 18:30
Did she ever get elected?
Sue 18:31
She would have done, if she'd taken the money. But then again...
Jimmy 18:36
Take the money and run for parliament. Look, we're going to get somebody in from the Building Commission, to explain exactly what these new powers mean. I've already reached out, as they say, and said 'will you come and talk to us?' And I think Angus is the name of the person who hopefully will be on the podcast next week. So that's something to look forward to, so we don't have to speculate anymore, about what a supercharged David Chandler looks like. I wonder if they'll give him a costume?
Sue 19:08
He needs a cape, doesn't he?
Jimmy 19:10
He does. When we come back, we are going to talk about...
Sue 19:15
Lock up and leave. Our choice this week of a great holiday, that you can leave your apartment for...
Jimmy 19:20
And some news about you.
[MUSIC]
Jimmy
Okay Sue, tell us... You had a bit of a pleasant surprise during the week.
Sue 19:36
I've had a bit of a terrible week, but on Saturday, I went to the Australian Society of Travel Writers Awards, the annual awards, and I won an award, for the best travel news and trade story of 2023. That was a big surprise and it was really lovely.
Jimmy 19:55
Well, maybe to you, but not to us. We're not surprised. This is your second Travel Writers award?
Sue 20:02
I won the same award a few years ago, which was a thrill as well. Unfortunately then, I had to accept the award in a ceremony over Zoom and it was a disaster...
Jimmy 20:14
Because of me, mainly.
Sue 20:17
They gave me a digital red curtain and they announced the three finalists and the idea was that the winner would appear through this digital red curtain on the screen. I duly appeared, which was a thrill, but I had red curtain all over my face. I looked like I had a terrible disease. Or you'd just being the victim in a slasher movie. It was awful. So this was much more pleasant, because it was a real-life ceremony and I won. I dedicated the award to my mum, who died a couple of weeks ago.
Jimmy 20:52
We are going to move onto 'lock up and leave,' and where we're going to send people this week, which also has a connection with your mum... The trip that we've chosen on the Mild Rover website is a trip to India by train. A trip through India by train. Now, you've done a bit of that.
Sue 21:13
I've travelled through India. I took a big trip with Abercrombie and Kent with my mum, just before COVID. We travelled a bit by train, we travelled a bit by planes, we travelled by boats, we travelled by rickshaw; we did a bit of everything, really.
Jimmy 21:29
This is mostly train, this one. I think it's a luxury escapes trip. We know that they say that like Britain, India was built on the railway lines. What's it like travelling by train? I mean, I've done it years ago, but it was a pretty basic...
Sue 21:47
I think it depends what class you're travelling in.
Jimmy 21:49
Yes, we were in ordinary; we weren't in the cheapest class, but we weren't in first class. So what is it like travelling with a fancy outfit like Abercrombie and Kent?
Sue 22:02
With a fancy outfit, its fabulous. I mean, you're travelling first class. It's really comfortable. It's kind of like a train in Japan; its not far off. It's very comfortable. It's very clean and efficient and it's just great, watching India pass by on the outside, through the windows and at every station, you've got people trying to sell you chai and sweets and pastries. You can really see a slice of India and really experience it, even while you're in the non-India a bit of the train ride. And then if you're in the cheapest part of the train, it's equally interesting, but not quite as comfortable, because you tend to be on wooden seats. It tends to be incredibly crowded and people climbing in the windows and climbing all over the place, because it's a very overcrowded country and train transport can be very, very cheap. But this, obviously, you're on a luxury escapes trip, you're going to be doing it in comfort and India in comfort... I mean, India anyway, is just an astonishingly colourful and endlessly fascinating place, but in comfort, it's kind of even better.
Jimmy 23:16
They do luxury quite well.
Sue 23:18
Oh, they do. I mean, the palaces that you can stay in, the amazing colonial old hotels, the fabulous sites. I mean, even places like Varanasi on the Ganges, where you go out on a boat and you watch the funeral pyres. I mean, it can be quite challenging. And it was interesting, because I was really nervous that my mum would find it all a bit much, but she was fascinated. You know, she thought it was quite amazing, because you'll never see those sites anywhere else in the world. now. India is just an amazing place.
Jimmy 23:52
And India by luxury train; sign us up. Well, thanks, Sue. Thanks for all of that. Congratulations again on your award. We will be running Sue's award-winning story in Mild Rover and you will also find the link to the trip about train travel in India there. You're off to Lithgow tomorrow; I'm stuck in here, editing this podcast. We need to get it done. Alright. Thanks for listening.
Sue 24:24
Thank you very much. See you next time.
Jimmy 24:29
Thanks for listening to the Flat Chat Wrap podcast. You'll find links to the stories and other references on our website, flat chat.com.au. And if you haven't already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify or your favourite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you'll get this podcast every week, without even trying. Thanks again. Talk to you again next week.