Building defects on the rise in Illawarra: lawyer

Kells solicitor Paul Magagnino says economic pressures are forcing builders to cut corners. Picture: ADAM McLEAN

Kells solicitor Paul Magagnino says economic pressures are forcing builders to cut corners. Picture: ADAM McLEAN

Under-quoting in the highly competitive construction industry had led to a rise in building defects in the Illawarra, a commercial lawyer says.

Paul Magagnino, managing partner at Kells the Lawyers, said the number of legal cases against the region's builders had increased in the past 12 months.

He said builders who "buy" jobs by under-quoting often recoup profit margins by cutting corners during construction.

"We've had an increase in clients in the past 12 months coming to us for advice in relation to defective building works and we currently have several matters before the tribunal," Mr Magagnino said.

"Cutting corners is one of the reasons for the defects as builders try to squeeze as much profit out of a deal as possible."

Shoddy workmanship made up 65 per cent of complaints in NSW in the the past financial year, with 32 per cent of people unhappy with the quality of the finish on their home. Other common issues included leaks, cracks and water damage. More than half of the complaints were made against builders.

Mr Magagnino said the cost of construction had risen significantly in the past few years, forcing builders to find ways to reduce the cost of jobs.

"Many smaller and medium builders were forced for economic reasons to take shortcuts just to survive," he said.

There had also been the collapse of several larger construction companies in recent years, such as the liquidation of Southern Cross Constructions and Kell & Rigby.

"I think locally most builders have a good name and continue in my view to do good work, it's just that economic pressures are forcing them to cut corners and come unstuck due to defects," he said.

Under the legislation, home owners had a seven-year warranty but Mr Magagnino said builders may not be able to meet the demands of repairing defects. Rectification work could be expensive, with builders often spending twice as much to fix a faulty job.

Mr Magagnino said the reforms were overdue.

"There are a lot of victims of serious defects that can't get justice," he said. "It can cost a lot of time and money. The reforms need to make the builder more accountable."

A contract on a house or apartment, once signed, is a legally binding document.

Mr Magagnino advised home owners to be vigilant and have the contract checked by a lawyer or independent expert before putting pen to paper.

"People need to get it right at the front end," he said. "For not a whole lot of money in the beginning they can be protected and can save themselves a lot of worry if things go wrong."

For example a contract might have a mechanism that if the builder does not rectify any defects they will be penalised.

NSW Home Building complaints 2013-14

BY CAUSE

  • Workmanship 65.1%
  • Contractual/Not Finished 13.0%
  • Materials 10.9%
  • Design Fault 6.7%
  • Changed Environmental Conditions 4.0%
  • Legislative/Standard Change 0.2%

BY DEFECT

  • Unsatisfactory Finish 32.89%
  • Non Structural Defect 13.73%
  • External Water Penetration Faulty Fixture/Appliance 10.12%
  • Installation 9.23%
  • Non Completion 7.91%
  • Contractual Dispute Only 7.65%
  • Other Non-Structural Defect Defective Moisture Barrier 7.34%
  • Causing External Water 3.61%
  • Floors 2.91%
  • Leaking Shower 2.59%
  • All Other Defects 11.89%

BY INDUSTRY

  • Builder 59.44%
  • Electrical 6.94%
  • Concreting 3.92%
  • Plumbing Bathroom/Kitchen/Laundry 3.01%
  • Renovations 2.84%
  • Pool/Spa/Sauna 2.45%
  • Fencing 2.16%
  • Roof Plumbing 2.05%
  • All Other Industries 17.18%

Source: NSW Fair Trading

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