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Shenton Quarter nightmare - buyers in limbo

Updated: Dec 6, 2023

Apartment buyers caught in a commercial dispute over alleged structural issues say the saga has highlighted gaps in consumer protection.

Key points:

  • The 2018 Building Confidence report aimed to improve regulations and compliance in the building and construction industry

  • The report's co-author has lamented Western Australia's slow progress

  • The WA government is considering mandatory audits and insurance options to protect buyers

Single mum Bethany Evans put down a $100,000 deposit on a three-bedroom apartment at the beleaguered Shenton Quarter development in Perth, in October 2021.

Problems at the project first emerged in March this year, when the CFMEU released vision of cracks in the concrete, which it claimed was evidence of structural issues.

Ms Evans told 7.30 it felt like a "red flag", however the developer assured her that remedial works were normal.

She also had a lawyer review her contract and found that there was no way out of it.

Work on the site continued and Ms Evans was hopeful she would be living in the million-dollar apartment early in the new year.

Those hopes were dashed when workers walked off the site three weeks ago.

The builder, construction giant BGC, said the decision to close the site was due to a commercial dispute with the developer Iris PW, regarding engineering and design.

Iris PW said BGC's decision was disappointing.

"The project is 95 per cent complete, has been comprehensively monitored and all aspects – including design, engineering and core structural integrity – assessed throughout the build process, and is on track for certification on completion."

Regardless of who might be at fault in the commercial dispute, the saga has thrown consumer protection and industry regulation into the spotlight.

Ms Evans said she was left in the precarious situation of needing to find her fourth rental property since putting down the apartment deposit.

"I have bought a promise – not a property, a promise," she said.

"I don't feel confident about going through with the purchase. I will need to see some really strong validation that there are no structural concerns."

In WA, owners of apartments in buildings taller than three storeys do not have access to the state's home indemnity insurance scheme.

Ms Evans said this left apartment buyers in a vulnerable situation in the event that defects emerged after they had moved in.

"If the builder should go under, there is no protection on a building like this," Ms Evans said.

"I am not sure I can afford that."

WA Commerce Minister Sue Ellery told 7.30 apartment buyers had a number of protections available to them, such as "general remedies under the Australian Consumer Law".

"Recent changes to the WA strata laws have also made it easier for owner's corporations to directly sue builders for negligent and defective building works."

Lawyer Bronwyn Weir co-authored the 2018 Building Confidence report, which aimed to improve regulations and compliance in the building and construction industry and was endorsed by all state governments and broadly welcomed by industry.

"What this current dispute proves is that WA is not immune from these issues, that there are major issues occurring on building sites," she told 7.30.

"In WA they have, I would say, the lightest touch regulatory regime.

"It is completely left to the market in terms of how much independent oversight there is to the building approval process and the construction process.

"The scheme really operates on a basis of trusting builders and developers to deliver quality product."

Among the report's recommendations was independent on-site inspections during construction.

In an email to Shenton Quarter buyers sent on November 17, Iris PW reassured them that all apartment projects in WA must be certified as complying with all building standards on completion.

"This requires the building to be fully assessed and signed off by an independent building certifier," the email stated.

"Without this, titles cannot be issued and contracts cannot be finalised.

"Similarly to an accounting audit, these certifiers are paid for by the developer but act independently."

Ms Ellery said the state government was considering mandatory inspections as part of its ongoing review of WA's building laws.

WA Commerce Minister Sue Ellery says the potential for mandatory inspections could be part of new regulations.


"Government has been working closely with industry to ensure protections are available for families building their homes, without creating unnecessary challenges that could delay delivery of residential builds," she told 7.30.

Ms Weir said mandatory inspections would not impact those in the industry doing the right thing.

"I find it frustrating when I hear that we can't increase regulation or increase oversight to ensure better outcomes for consumers because that might slow things down," she said.

"We're simply asking for the bare minimum, and that is compliance.

"The alternative is a legacy of buildings in this new rush to increase housing supply that are going to leave a large percentage of owners with awful headaches for many years to come."

Property Council of Australia WA executive director Sandra Brewer said "overwhelmingly" West Australians should have confidence in the state's apartment buildings "due to our stringent regulations and robust protections".

"Our industry is supportive of improved compliance obligations; however, they do need to be balanced," she said.

"Australia desperately needs more homes for our growing population.

"But the industry is facing significant pressures from a scarcity of labour and an increase in the price of materials.

"An unnecessarily complex regulatory approach will jeopardise housing supply if it places costly administrative burdens or unreasonable time constraints on apartment builders."

Another Shenton Quarter apartment buyer, Janice Dudley, signed her contract in 2019. She's living with a friend while the commercial dispute drags on.

"I think it's an example of the regulation trailing," Ms Dudley told 7.30.

"There is the government providing incentives for people to buy apartments, in the interest of medium to high density.

"And yet, those people don't have the same protections."

In October, NSW also became the first Australian jurisdiction to introduce a new insurance product that offers 10 years' protection for buyers of residential apartments.

Ms Ellery told 7.30 the WA government had held talks with the insurance provider in NSW.

"The WA state government has had discussions with the private insurer and is closely monitoring the development of this insurance," Ms Ellery said.

Along with apartments being seen as a solution to the state's housing supply needs, the WA government has been trying to curb Perth's excessive urban sprawl, which has seen it dubbed the 'world's longest city'.

Apartment Advocacy Australia's Samantha Reece said this highlighted the need for consumer confidence.

"The state government has set an infill target of 47 per cent and built the city's infrastructure around this plan," she said.

"If we don't offer protection then buyers won't purchase off-the-plan apartments."

CFMEU state secretary Mick Buchan said developers needed to be held more accountable.

CFMEU WA state secretary Mick Buchan says the remediation work needed at the Shenton Quarter development is "unacceptable".


He said the union would be lobbying for new licensing requirements for developers.

"They need to apply industry standards and start building to a high-quality standard, not to a price," he told 7.30.


To watch the 7.30 Report click here.





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