In a bid to rebuild buyer confidence across the apartment sector, a Western Sydney apartment project becomes one of Sydney’s first entry level buildings to offer 10-year defects insurance.
The 10-year insurance policy offers buyers cover post-completion on all structural elements of the building. This is compared to developments in previous years that offered buyers shorter insurance policies, usually around two years.
The project Ophera, a boutique residential development in north-west Sydney’s Tallawong, will comprise 81 residential apartments that are priced from $475,000 for a one-bedroom apartment - almost 45% cheaper than the city-wide unit median.
According to SHC Insurance Brokers, which is writing the insurance policy, Ophora is one the city’s “most affordable developments” to come with the new policy called latents defects insurance (LDI).
Just under 60 developments across the nation now boast LDI, which was brought to Australian shores in November last year.
It is a government-approved alternative to the mandatory strata bond – worth 2% of a building’s construction cost.
The policy is tipped to play a role in rebuilding buyer confidence in the wake of major development defects across Sydney, including Mascot Towers and Opal Tower.
LDI was incorporated by the NSW government and NSW Building Commissioner David Chandler OAM into the 2019 building reforms to extend consumer protection.
The reforms were intended to strengthen the administration of building regulation and certification and enhance the accountability of certifiers while also maintaining a best practice building regulation and certification system.
The key point about the Ophera, which is developed by KDMC, is that it has been designed with affordability in mind.
KDMC development manager Ronnie Rahme (pictured above left) said offering LDI at Ophora meant they could provide peace of mind to first home buyers and investors, offering 10-year insurance and coverage over $50 million.
“Rebuilding confidence among apartment buyers has become crucial for many Sydney developers since the Opal Tower crisis back in 2019, when occupants noticed major defects in the building not long after it was completed,” Rahme said. “It’s why, in a nutshell, we were quick to acquire LDI before we began construction on Ophora.”
Rahme said the policy meant a “far higher surety” of compliance with standards, codes, and safety for the buyers of the new homes.
“Given the gravity of the nation’s housing crisis, coupled with a slew of construction horror stories that rocked the apartment sector over the past few years, we understand there’s a greater need than ever to provide safe, quality and affordable housing to all,” Rahme said.
“LDI removes a lot of the unethical and untrustworthy behaviour we’ve witnessed from builders across Sydney. It helps us send the message that entry-level prices don’t equate to a sacrifice on safety or quality.”
KDMC is also in the process of incorporating the KPMG Building Trustworthy Indicator, which collates data on the regulated design and construction process.
Rahme said this was done in a bid to build trust of the building ecosystem by “providing transparency to our buyers”.
While LDI is a relatively new regulatory reform, it’s fair to wonder why more projects don’t offer this insurance to buyers.
SHC Insurance Brokers founder Stefan Hicks (pictured above right) said while a handful of Sydney developments were quick to embrace it, KDMC’s Ophora would be “among the first” entry-level residential apartment complexes to offer LDI, and the first in the Blacktown City Council area.
Hicks said gaining LDI was no mean feat.
“It’s offered selectively to developers and builders with a quality building history, and it requires both parties to employ an independent inspection service throughout construction,” Hicks said.
“While this insurance is well-established around the world in about 40 countries, in Australia we’re typically seeing high-end buildings covet LDI. The fact that Ophora has joined this exclusive list of quality-assured builds is a coup for entry-level home buyers.”
