Victorian Building Action Group

Victorian Building Action Group

2 days ago

THE SAVINGS MADE BY VOLUME BUILDERS ON SUPERVISION
(The top 20 home building firms this year built from 1166 and 4764 homes each).

It’s difficult to get actual statistics on supervision for a very important reason… huge profits of important builders are involved.

The builders are important to the governments because they belong to the biggest industry since the waning of the mining boom… and governments have made this occur because immigration is driving the economy… we welcome any Australian government to try to deny this.

With sufficient funds to pass the JOHN HOWARD MINIMUM ASSETS TEST… immigrants are welcomed with open arms through the front door… whilst POOR refugees are turned away or placed in detention.

And migrants with money invariably have skill sets which can be usefully employed by business.

Successive governments have agreed with this ‘grow the economy via population growth’ format for quite some time… because ‘turning back the boats’ is a vote winner and seems to resonate with the majority of Australians.

OBVIOUSLY MONEY RULES.

And so therefore does the Residential Building Industry which depends on this scenario for its buoyancy… and which the economy needs to prop up the GDP.

Every migrant family needs a home… and if they pass the minimum assets test then they can afford to buy a home or build one… keeping the economy sailing along at a rate of knots.

AND SO THE BUILDING INDUSTRY IS PLACED ON A PEDESTAL BY OUR GOVERNMENTS AND PROTECTED AGAINST ANYTHING OR ANYONE WHO THREATENS ITS WELL-BEING.

1. We have seen it with domestic building warranty insurance policies that are last resort… unlike any other consumer insurance. It’s grossly unfair insurance and rated by many who have studied it as a junk product… and yet we keep it to protect builders.

2. We have also seen this protection built into the standard building contracts via the Domestic Building Contracts Act 1995 which was written the way it was basically to protect business… which just happened to be builders.

Enterprise is protected in virtually every piece of legislation ever produced by governments, because our whole economy is based on enterprise to encourage new ventures and further the economy. The building industry epitomises this new venture by enterprise set-up as well as any other industry.

3. We have also seen quite recently the total dudding of apartment owners when there are obviously several people on each job whose job it was to specify or ensure that the flammable cladding complied with our codes, when they clearly did not. We expect to see a case where this violation of the apartment owners’ rights will be addressed in the high court.

People have a right to be safe (we say)… against fire, falling ceilings, failing roof trusses, airborne roof tiles, uninhabitable mould build-up, faulty wiring and inadequate glazing to name but a few.

And we at VBAG say that the apartment owners’ right to live in a safe building takes precedence over the legislated rights of builders, relevant building surveyors and negligent specifiers and fire engineers to get off Scot-free no matter how negligent they were… but there will have to be a ginormous fight for those apartment owners to win against governments hell-bent on protecting businesses to the great detriment of innocent consumers.

AND THEN THERE IS THE MATTER OF INADEQUATE SUPERVISION.

(We thought we would never get to this point… there being so many injustices in Australia’s building industry).

The ACCC states that for goods and services purchased from a business, where the value is less than $40 000, a consumer is covered (and has rights) for :-
• Repair, replacement or refund,
• Cancelling a service,
• Compensation for damages and loss.

The consumer guarantees on these products and services since January 2011 is that products must be of acceptable quality including “being safe, lasting and with no faults, look acceptable and do all of the things someone would normally expect them to do… and services must be provided with acceptable care and skill or technical knowledge… taking all necessary steps to avoid loss and damage.”

Unfortunately building consumers are a different species and are treated accordingly… with contempt… yes contempt!

SO, BACK TO SUPERVISION OR RATHER THE LACK THEREOF.

4. The reason we know that supervision is inadequate, is by virtue of the FACT that there are, (on average), over $27 000 worth of defects built into new homes built since 1994… when rules were relaxed in the Domestic Building Industry via the Building Code of Australia (performance based) and the privatization of relevant building surveyors and certifying building inspectors.

And supervisors have generally to this day been totally protected by virtue of the fact that they are employees.
But the builders have also been over-protected by our super-tough VCAT forum with its head-bashing mediations and compulsory conferences and a large list of precedents AND by unfair building contracts which:-

(A) Halve the total number of implied warranties that a builder has to comply with,

(B) Have a definition of specification that does not require labour content to be described at all… resulting in total lack of detailed workmanship clauses, and

(C) No definition of defect at all (the code for domestic building inspections AS 4349.1 being equally bereft as regards new buildings even with 6 (absolutely pathetic) types of defect mentioned in it)… and no doubt designed to deny another right of new home owners to have a product of reasonable quality (their new home) when handed over to them.

And now in Victoria, we have the DBDRV introduced in 2016 to make it even harder for owners of new homes, units and additions to their homes to get to VCAT to fight for their right to have their decrepit homes to be well rectified.

Instead, this repressive ADDITIONAL forum head-bashes owners and builders into submission, with no orders but to expedite the disputes…WITHOUT EVEN A DEFINITION OF DEFECT… JUST THAT SOMETHING MUST HAVE FAILED DURING THE WARRANTY PERIOD.

The result is agreement by the builders only to those owner-alleged defects that can be band-aided cheaply… often the repeating of what had already failed in the first two years of the warranty (or the first 6 years for structural defects).

And this (compulsory first stop) forum was introduced to protect builders still further, because in 2013 / 2014 just in Victoria, there were $ Billions being spent by home owners fighting their builders in VCAT.

What was not said; and the real reason why the DBDRV forum was introduced by the Victorian government, was that the builders were also paying $1.9 Billion / $3 Billion per year.

And of course it was advertised as part of a tranche of building industry consumer protection reforms… when it was really extra repressive reforms aimed at protecting builders from exorbitant legal costs resulting from new home owners trying to have their defect-riddled homes properly repaired.

What the Victorian government should have done instead… was to insist that adequate supervision be carried out on every new home, unit and additions project to virtually remove the possibility of defects being built into each and every new home so that there would not be any disputes and as a result, owners’ trust in their builder would return.

This was not done because the government did not want to be seen (by business) to be increasing red tape, regulation and pressure on builders.

The FACT that (particularly volume) builders are not adequately supervising their new homes and soil reports is borne out by another FACT that thousands of new homes in the outer western suburbs have waffle-pod slabs which are inadequate and failing to remain planar within acceptable (more than reasonable) limits set out in the Code for Slabs and Footings AS 2870.1.

We at VBAG are certain that this is because volume builders are able to over-work and under-pay supervisors (who are not the most experienced people in their firms) to supervise something like 20 jobs at a time from completion of documentation to completion of home, when to ensure that there are no built-in defects they should multiply the time they spend on each job by a factor of four(4).

That is a super-saving of 3 full-time wages (and more expensive builder (unlimited) wages at that) spread over the 20 jobs.

So let’s say that Builders (Unlimited) would require 33% more salary than the average wage paid to non-Builder (Unlimited) supervisors. That represents a saving of 4 full-time Builders (Unlimited) wages for each 20 new homes.
Let’s say that a Builder (Unlimited) wage would be about $120 000 p.a. and a supervisor wage $80 000 p.a.

The extra cost for the 20 homes would be $160 000.

So for each new home the extra cost would be $8 000… quite a reasonable sum indeed for good quality new homes… especially when you realize that the total worth of defects per new home (average) is over $27 000.

But the point is that there wold be no more defects to dispute over, saving the volume builders a fortune in legal and (so-called) expert costs... we think actually considerably more than the extra cost in wages, not to mention the renewal of trust in builders... also worth a lot.

The larger builders are building anywhere from 100 to 4500 new homes per year.

IF IT WAS A RULE THAT SUPERVISORS WERE REQUIRED TO BE BUILDERS UNLIMITED, then the partners of a fairly typical (120 new homes per year) volume builder firm (say father and son or two brothers), would between them have to pay an extra $960 000 or extremely close to a million dollars… half a million dollars for each partner.

So you can see why such a (hidden) short-cut on supervision is the go with volume builders… because the drop in quality of their work is protected by legislation and the standard building contract and now the DBDRV.

Each partner gets an extra $480 000 each year… so it’s easy to fund the odd Christmas party for the HIA or the MBA… and in return the associations pressure the governments to keep up the immigration.

But their valued home owner clients are left with a total of over 3 times that amount… or $ 1 687 500 in rectification costs relating to the defects left in their new homes at completion time… that’s per typical volume builder… and there are hundreds of these firms.

So is it any wonder that legal costs were $3 Billion for both new home owners and builders in 2014 just in Victoria with something like $3 Billion worth of defects added to the growing enormous total left in houses since 1994?

VBAG keeping interested building consumers well informed. ... See MoreSee Less

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Victorian Building Action Group

1 week ago

OUR BANKS ONCE USED TO CARE ABOUT HOME OWNERS

From about 1950, we used to have 3 banks… the State Bank of Victoria, the Commonwealth bank and the Bank of New South Wales.

And all of the way up until about 1985 they looked after most home owners who borrowed money from them.

They had a Valuer check over the home they were lending on for established homes.

For new homes, they had inspectors who checked that each stage had been reached before they paid the builder.
They also had specifications with all of the detailed workmanship clauses necessary for good quality work.

They cared.

Now they don’t need to care, because they are such large concerns… and the average land value rises sufficiently almost every year; and safeguards their other risk factors… even if the one in a thousand new home builds was a disaster and the owners went bankrupt. (Nowadays it's more like 2% for lemons).

And they asked home owners to prove they could raise money over a 6 month period... and they also asked for a deposit to safeguard their investment. This meant that new home owners were very likely to be able to withstand the added financial pressure if interest rates rose markedly in the future for a time.

We’re fairly certain that they didn’t give interest-only loans with virtually no deposit required as is very often the case today... well until quite recently anyway.

We have also had very low interest rates for a sustained period of time… and there are on average two bread winners nowadays compared with just one breadwinner per household in the 1960’s.

All of this has led to the ratio of household debt to household income being much higher than ever before.

Recent purchasers of homes are potentially headed for disaster… and only very recently did the government talk about putting the brakes on interest-only loans and talk about the imminent return of mandatory deposits and restrictions on repayments as a percentage of household income… and not without good reason, albeit so late in the piece.

Australia can expect tens of thousands of bankruptcies if interest rates jump suddenly by just 2 or 3%.

The banks and the government used to seem to care about home owners.

Once upon a time… until about 1985 banks were in charge of specifications with detailed workmanship clauses. Now there are no workmanship clauses at all in the HIA and MBA Standard Project Specifications.

VBAG is amazed that these 'half-specifications are permitted to be published at all in their current format.

The signatories to these specifications should hang their collective heads in shame… and that includes the Royal Australian Institute of Architects... SHAME.

All governments of Australia together as COAG, colluded in 1995 to produce the Domestic Buildings Contract Act 1995, which basically re-defined ‘Specification’ to mean just a list of materials amongst an array of unfairness to consumers.

Immediately there no longer any requirement to mention the labour content of construction of new homes… how tradesmen are supposed to assemble those materials in a manner which lasts a reasonable length of time.

33 years later today, many tradesmen do not know how to perform long-lasting work it seems... or are not paid sufficient to carry out such time-consuming work.

AUSTRALIANS HAVE BEEN TOTALLY CONNED & TOTALLY DUDDED.

Today we see very littler evidence sure that governments and banks care at all about building consumers and home owners… it’s all about profit and GDP.

VBAG keeping interested building consumers well informed. ... See MoreSee Less

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Victorian Building Action Group

2 weeks ago

CAUTION FOR OWNERS OF PULL-DOWN & RE-BUILDS – DRY SOIL

We have had a record (millennium) drought which ended just 8 years ago.. and the authorities are basically ignoring its longer-term effects, just at they ignored its initial effects. This message also applies to units replacing an existing house.

Yeah… but that was 8 years ago… so all that stuff on heave & settlement is no longer an issue… right?

WRONG!

The millennium drought lasted 13.5 years… and super-dried the soils in virtually all of Victoria and southern NSW and more (see B.O.M. map shown in earlier article).

And this super-drying-out of the soil affected areas below the zone of little moisture variation… and this drying out process was long enough to affect under at least the edges of buildings as well.

Generally the more reactive the clay, the more affected the soil… but this depends on several other factors including a very important one, the depth of the reactive soil profile. Then there is drainage, trees and more.

The point is though, usually when a house is removed after (say) 40 years of existence, the soil under the house (particularly for brick veneer and slid brick houses is as a general rule… pretty damn dry… and the re-build is usually founded partly on this soil AND the soil outside the original house envelope.

Our point is that proper reinstatement (re-moistening) of this bone-dry soil is extremely important if you wish to avoid mega-problems in the future…

AND THIS RE-MOISTENING OF THE SOIL TAKES TIME.

So you will possibly need to rent for a longer period than you planned for… and the easiest thing to do is to allow the builder to start earlier than he should.

In fact we advise to be very wary of any builder (and also soil testing firm) who allows starting the re-build in less than at least 3 months (6 months minimum might be safer because of the effects of the millennium drought) after the smoothing out of the soil process which follows removal of the old house footings.

BECAUSE our rainfall since the millennium drought has been anything but normal (or anywhere near average) for more than 2 of the 8 years since.

THE DROUGHT ENDED... BUT NOT ITS EFFECTS.

2010 ended up being an average rainfall total, but 3 months were under 50% and 3 other months only 65%... that's half the year well under average.

Since 2000 our annual rainfall (as a percentage of average rainfall) has been 123% / 92%, 82%, 63%, 61%, 90% and 79%... we think not sufficient to return all the moisture dried out during the millennium drought.

This year looks headed for just 57% of the average rainfall... perhaps a little less.

SO THE SOIL MAY STILL BE BONE DRY DEEP DOWN.

SO do not get complacent… and do not let the soil engineer or the builder make you rush your project without proof that moisture has returned deep down to your soil… particularly in reactive or highly reactive clay areas…

Otherwise you might ruin your dream homes by permitting differential soil movements to occur.

VBAG keeping interested building consumers well informed. ... See MoreSee Less

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