Developer rating system

A new dawn for new apartments

A new developer rating system is transforming the market for off-the-plan apartments in good news for buyers.

A recent webinar hosted by our partners Owners Corporation Network highlighted how far reform of the residential apartment construction sector has come since the Opal Tower and Mascot Towers defects disasters in 2018 and 2019.

Amid daily headlines about defective apartments, sales dried up as consumer confidence collapsed. New projects stalled and an already under-supplied market for new housing spiralled us into the affordability crisis we see today.

Developers doing the right thing by their customers became fed up being tarred with the same brush as the minority responsible for most of the problems. They have embraced the NSW Government’s reform agenda to tighten regulation and impose stiff penalties on sub-standard work.

The task ahead is to restore confidence and demonstrate that buyers can trust today’s new apartments.

iCIRT rating system

Enter the new iCIRT rating system, which went live a year ago and has been growing the list of developers and builders who meet its stringent rating criteria. As webinar participants learnt, the system is approaching a tipping point where anyone buying a new apartment off the plan should ask the developer if they are not on the register, then why not?

iCIRT, run by independent global rating agency Equifax, dives deeply into each company’s finances, history and personnel and connections to provide a rating of between one and five gold stars.

“OCN has been proud to be a part of the development of this important star rating tool,” OCN executive director Karen Stiles said.

“We look forward to the day apartment purchasers rely on an iCIRT rating the way they use fridge and washing machine star ratings.  There a low rating means higher energy or water costs.  A low – or no – iCIRT rating risks years of financial and emotional pain dealing with serious defects.”

Ms Stiles urged buyers to check ratings and “go high or go home to do more homework on the biggest purchase of your life!”

Companies rated three or more stars are placed on the iCIRT register and can advertise that the system deems them reliable and trustworthy. Companies rated below that level will not be on the register. Equifax explained that a previous broader construction sector rating exercise found 90 per cent of companies that subsequently failed were rated one or two stars.

Developers believe this system will end a business model that has given the whole industry a bad name – outbidding others on new sites, cutting corners on construction, delivering a sub-standard building and then dissolving the company.

Companies who have embraced the new rating system say they are already being rewarded with improved pre-sales. Substantial discounts on the new Decennial Liability Insurance 10-year warranty,  outlined in our previous client update, are also now on offer to these companies.

These market pressures, they believe, will force any developer still thinking about the old way of doing business to lift their game or get out of the industry.