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The new insurance created to protect apartment buyers

Most buyers on the hunt for a brand new apartment have a wish list, with top priorities often including space to work from home, a pleasant outlook and proximity to public transport.

Now there’s another priority worth adding to your list: a developer with Latent Defects Insurance (LDI).

While developers are already required to post a bond of 2 per cent of the building contract price to remedy structural defects in the first two years from completion, LDI offers even greater peace of mind.

Urban Property Group is the first developer in NSW to take on LDI and chief operating officer Mark Elias says this insurance is a game-changer for both the construction industry and apartment buyers.

“Your home is always going to be one of the most important things in your life, and it’s a shame that there is a lack of consumer confidence in the sector,” says Elias.

“Rebuilding confidence in the sector is critical, and trust between developers and buyers is a cornerstone of this.”

Resilience Insurance is the first Australian company to offer LDI and chief executive Corey Nugent has welcomed its launch.

“It’s well-established around the world in about 40 countries,” he explains.

“LDI provides a 10-year insurance policy post-completion on those structural elements that are important or causing those issues that had previously reduced confidence in that sector.”

Nugent says if something goes wrong with walls and floors: if concrete cracks, slabs drop or transfer beams fail, a developer with LDI in place can quickly make amends without resorting to court battles. The insurance also covers accommodation for residents who must move out while issues are rectified.

Better still, with LDI in place, these defects are less likely to occur in the first instance because a core function of the insurance is to review the building design and monitor construction to ensure work is being completed to design and building code standards.

Elias says LDI removes much of the unscrupulous behaviour within the industry by having an insurer as a fallback should developers fail to address defects.

“The need for lawyers and other players within the industry to address defects is heavily reduced, meaning less cost for both apartment owners and builders,” he says.

“In essence, it will improve our relationship with buyers post-settlement.”

Urban has purchased LDI for The Parq, a 67-unit development in the heart of Bexley that’s nearing completion, with owners expected to move in from September this year.

Drawing inspiration from the suburb’s traditional brick architecture, The Parq will feature arched brick-framed windows, metal-dressed top floors and a communal rooftop garden with a barbecue area where residents can entertain and enjoy views over Port Botany, Sydney CBD and the Blue Mountains.

Residents will also have easy access to a variety of on-site amenities, including ground-floor retail, a childcare centre and a fully equipped gym. Buyers to date have been a mix of young couples, young families, “right-sizers” and investors.

“We have found the LDI gives investors confidence with the protection of their investment and ultimately their returns, whilst first-home buyers and right-sizers have loved the fact that the place they call home has an additional safety net,” says Elias.

Nugent points out that LDI is actually a cheaper alternative to the Strata Building Bond and Inspections Scheme and therefore shouldn’t add to an apartment’s retail price.

He encourages prospective buyers to push LDI to the top of their wish list if they’re considering purchasing within a medium or high-rise development.

“The first question that consumers should be asking their developer when they’re purchasing property is ‘Are you providing me two years or 10 years’ worth of protection post-completion?’ ”

Read the full article by domain.com.au here.

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