Written by David Lovato – CPC Lending Solutions

November 2024

The New South Wales Building Commission is now under new leadership with the appointment of James Sherrard as building commissioner, succeeding David Chandler, who retired in August.

Sherrard’s appointment comes after the Commission’s establishment in December 2023, which elevated the role from NSW Fair Trading to an independent authority focused on enforcing building standards.

The NSW Building Commission’s mandate is to lift construction quality across the state, reducing defects in new builds through robust oversight. Its creation followed high-profile incidents, such as the Opal and Mascot Towers, which exposed structural issues and inconsistent enforcement of building standards in NSW’s apartment sector.

Its key functions include: 

• Managing disputes and complaints about building, renovation, trade or specialist trade work on residential and non-residential buildings
• Inspections and compliance for building quality in residential construction
• Licensing of tradespeople, design practitioners and certifiers
• Policy development and reform of building laws in the state

Recent reforms to strengthen the building industry

Since its establishment, the NSW Building Commission has introduced several reforms aimed at raising standards and accountability in the construction industry. These reforms empower the Commission to take more decisive action in areas like inspection, licensing and product safety, all to safeguard consumers and improve construction quality across NSW.

Expanded inspection powers

One of the Commission’s significant changes is the authority to inspect properties under construction and mandate rectifications. Inspectors now have the power to enter any construction site, from apartment buildings to free-standing homes, to identify potential or existing defects.

The Commission can issue several orders, including:

• Prohibition orders, blocking the issuance of occupation certificates or strata plan registrations
• Stop work orders, halting a developer’s work if issues are identified
• Building rectification orders, requiring defect remediation before work can continue

Anti-phoenixing measures

The Commission is also equipped with stronger anti-phoenixing powers, aimed at preventing developers from escaping financial obligations by dissolving and re-establishing companies. Under these new regulations, the Commission can reject, cancel or suspend licences for individuals involved in failed companies within the last 10 years.

Enhanced suspension powers

The Commission now has the authority to suspend certifiers, design practitioners and other key professionals if their ongoing work poses a serious risk, allowing for prompt intervention to safeguard public safety.

Strengthening building product safety

Starting in 2025, the Commission will introduce new requirements across the building product supply chain, impacting manufacturers, suppliers, importers and tradespeople. 

These duties include ensuring compliance and sharing essential product information within the supply chain. The Commission also has the authority to issue warnings, enforce recalls and ban non-compliant products as necessary.

Cladding remediation 

Finally, the Commission oversees Project Remediate, an initiative to replace flammable cladding on eligible apartment buildings, aiming to enhance safety through certified, fire-resistant materials.

CPC Lending Solutions is a property development and residential finance specialist. Whether you’re a developer needing funding for land, construction, or residual stock, or a buyer looking for the perfect mortgage, we’re here to help. Contact us at [email protected] or fill in this form.

 

Written by David Lovato – CPC Development Lending Solutions

September 2024

Your finance broker is only as good as the lenders they have access to. That’s why aggregators exist, to act as a bridge between your broker and a broad range of lenders. This, in turn, provides you with access to a diverse panel of lenders and their offerings.

What is an aggregator?

An aggregator is an important partner for brokers, as they connect them with a single access point to multiple lenders. Instead of dealing with each lender individually, brokers use an aggregator to explore a variety of loan products, compare rates and stay updated on lender policies.

This saves time in your loan application process and improves your broker’s ability to offer tailored loan solutions that suit your financial circumstances, needs and goals.

Why does a good aggregator make a difference?

When you’re looking for a loan, having a broker backed by a strong aggregator can make all the difference. Here’s why choosing the right one matters for your financial success. 

1. Increases options

With a broader pool of lenders, like the more than 60 offered by the Loan Market Group (LMG), one of Australia’s leading aggregators, you’re not limited to the products and rates offered by one or two lenders. 

As a result, your broker can find the most competitive rates and tailored loan structures that align with your financial requirements.

For example, as the image below shows, LMG offers access to residential and commercial loans from all these lenders. 

Plus, the variety includes both large and small lenders, as well as banks and non-bank lenders. This gives borrowers a much wider range of lenders with varying loan requirements, assessment times and loan types, making it more likely you’ll find the loan to suit your needs.  

An aggregator like LMG also includes options for finance for other needs, like car loans, business loans, or equipment finance. This means you can attend to all your loan services under one roof.

2. Streamlines the process

Submitting applications to several lenders would be very time-consuming and tedious. With the help of an aggregator, you and your broker can efficiently compare offerings from various lenders within a single system, saving you time and streamlining the entire application process.

3. Prioritises security

Cybersecurity is a big concern, particularly in the finance sector. A good aggregator like LMG will be committed to protecting your sensitive information with industry-leading security measures. For instance, at LMG their award-winning InfoSec strategy is built on three pillars:

• Protecting data: Keeping both brokers’ and clients’ data secure
• Raising awareness: Fostering a community that understands cybersecurity risks
• Building trust: Instilling confidence in LMG’s platforms and security measures

As a borrower, the people with whom you share your sensitive information are a big consideration. So it is helpful to know that aggregators like LMG keep cybersecurity at the centre of their service. 

4. Updates regularly

When an aggregator focuses on great technology, their brokers and clients get to stay regularly updated on interest rate changes, new products and lender policies. 

LMG’s platform provides brokers with a continuous stream of real-time information. This means your broker stays informed and up-to-date, allowing you to make quick and accurate decisions, knowing all the options. 

5. Stays transparent and independent

One of the key benefits of working with a leading aggregator like LMG is its independence. Neither LMG nor CPC Lending Solutions are owned or controlled by any of the lenders on the LMG platform. This means we are not pressured to promote specific loan products and the recommendations we make are solely based on your best interests.

In contrast, going directly to a lender limits your options solely to that lender’s products, which may not be a good fit for your needs. With an aggregator, you are more assured of unbiased advice and a broader view of your options. 

 

Download the free 2024 CPC residential lending guide today. This guide will help you make an informed decision by outlining some of the key factors to consider when choosing your next home loan.

CPC Lending Solutions is a property development and residential finance specialist. Whether you’re a developer needing funding for land, construction, or residual stock, or a buyer looking for the perfect mortgage, we’re here to help. Contact us at [email protected] or fill in this form.

 

Written by David Lovato – CPC Development Lending Solutions

July 2024

The NSW government’s recent planning reforms, introduced in June 2024, are designed to provide greater housing choices for families needing additional space and for multi-generational households. 

These changes are expected to help retain young people in NSW who might otherwise leave due to housing shortages.

The reforms significantly expand the permissibility of dual occupancies and semi-detached dwellings, providing new opportunities for small developers to undertake profitable projects across the state.

Understanding the reforms

The reforms will: 

• Expand permissibility: The new reforms permit development applications for dual occupancies (two homes on a single lot) and semi-detached dwellings in a broader range of R2 residential zones. This change affects 124 local government areas across NSW, providing a substantial increase in available development sites​. 
• Streamline approvals: The reforms aim to streamline the development approval process by enabling more projects to qualify for complying development consent (CDC). This faster approval route bypasses the lengthy council approval process, reducing the time and costs associated with starting a new development.

Certain regions, such as the Hawkesbury, Blue Mountains, and Wollondilly, are excluded due to bushfire and flood risks. Bathurst is also excluded as it lacks suitable R2-zoned land.

Additionally, heritage-listed sites are protected, although developments in heritage conservation areas may proceed if they enhance the area’s heritage value.

Keep in mind that while the state government is driving these reforms, local councils remain the primary assessors of development applications. They are responsible for evaluating these applications based on local planning controls and community needs. 

Key steps for success

To maximise the benefits of these reforms, small developers should adopt a strategic approach. Here are some key steps:

1. Target DA-approved or quick approval sites:

Focus on sites that are either already DA-approved or can quickly gain approval through the CDC. The new reforms have unlocked many such potential sites, making it easier and faster to initiate projects.

2. Extend settlement terms

Purchase sites on extended settlement terms to allow them to be more shovel-ready before settlement. Alternatively, settle within standard timeframes and rent out the existing premises for 3-6 months, generating interim income while preparing for construction.

3. Use an effective builder-developer model:

Adopt a builder-developer model where the builder handles construction and the partner manages finance and planning. This clear division of roles ensures efficient project management and execution.

Then, conduct building works at cost, transferring builder profits to developer profits. This approach helps manage high management and labour costs, ensuring project profitability.

4. Take a single-lender approach 

Secure a bridging loan that transitions into a construction loan. This simplifies the funding process and saves time and money, providing financial stability throughout the project lifecycle.

How CPC can assist

At CPC Development Lending Solutions, we specialise in providing bespoke lending solutions tailored to the unique needs of small developers.

Here’s how we can help:

• Feasibility studies: Before you purchase a site, we conduct comprehensive feasibility studies to ensure the project’s financial viability. This helps mitigate risks and ensures that the development numbers stack up before securing finance.
• Bespoke financing solutions: We offer tailored financing options, including bridging loans and construction loans. Our solutions are designed to meet the specific needs of each project, providing flexible terms and competitive rates.
• Expert guidance: Our team provides expert advice and support throughout the development process. From site acquisition to project completion, we ensure you have the financial backing needed to succeed.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.

 

Written by David Lovato – CPC Development Lending Solutions

May 2024

Australia’s soaring home prices and rental rates are increasingly placing housing out of reach for many. 

This crisis is being exacerbated by a growing population and a shortfall in housing supply, which the National Housing Supply and Affordability Council has recently forecast to continue widening in the coming years. 

One potential solution some experts including researchers at the University of South Australia (UNISA) and the University of Melbourne are increasingly championing is modular and prefabricated homes. They argue that this innovative construction approach could potentially transform the housing market by addressing the urgent demand for affordable, high-quality homes. 

Understanding Australia’s housing crisis

The root of Australia’s housing crisis lies in the simple economic principle of supply and demand. Despite the urgent need for more housing, construction rates have not kept pace with demand. 

For instance, building approval numbers in March were close to decade-lows, according to the Australian Bureau of Statistics.    

This shortfall has been attributed to various factors including high construction costs, regulatory barriers, and a shortage of skilled labour. 

Why modular homes could be the answer

Modular homes are constructed in a factory setting and then transported to the building site where they are assembled. This method offers several benefits that could help alleviate the housing crisis:

• Speed of construction: Modular homes can be constructed much faster than traditional homes. Components are built simultaneously off-site while the foundation is prepared on-site, significantly reducing overall project timelines.
• Cost-effectiveness: With controlled factory settings, modular construction reduces waste and can be more cost-effective. Bulk materials can be purchased at discounted rates, and the assembly-line process reduces labour costs.
• Quality and sustainability: Factory settings allow for more controlled construction conditions, which can enhance the quality and durability of homes. Additionally, modular homes often incorporate energy-efficient designs and materials, supporting more sustainable living.
• Flexibility and scalability: Modular buildings can be easily designed to meet diverse needs, from single-family homes to multi-storey apartment complexes, making them a versatile solution across various market segments.

Weather-independent construction

One of the lesser-discussed advantages of modular homes is their resistance to weather-related delays. 

Weather has been identified as one of the top causes of delays and subsequent cost increases in the building industry, affecting 45% of projects worldwide, according to UNISA. 

Modular construction largely circumvents this issue, as the majority of the building process occurs indoors. UNISA estimated the savings of this weather-independent construction to come in at approximately $40,000 on a build worth $6.4 million.

Financing challenges 

Despite their advantages, financing modular and prefab homes presents unique challenges.

Traditional lenders are often hesitant due to the unconventional nature of the construction method. 

Key issues include:

• Funding release: Many lenders typically release funds for construction projects in stages, based on on-site progress. However, because a significant portion of a modular home’s construction is completed off-site, these regular progress checks don’t align with traditional funding models.
• Security concerns: Lenders may also be concerned about the lack of physical collateral during the construction phase, as the property isn’t yet ‘on the land’ it will ultimately occupy.

Creative financing solutions

Fortunately, innovative solutions are emerging to bridge these financing gaps:

• Amended payment terms: To align with the modular construction process, some lenders will agree to modify their payment terms. This can involve specific agreements to release funds based on different stages of off-site and on-site completion.
• Using existing assets as security: Developers might use existing property as collateral to secure funding, providing lenders with the needed security to release funds earlier in the construction process.
• Partnering with modular companies: Some developers and lenders are forming partnerships directly with modular construction companies. These partnerships can include pre-arranged financing agreements that accommodate the unique aspects of modular construction.
• Specialised financial products: A few forward-thinking financial institutions have begun offering loan products specifically designed for modular construction. These products take into account the unique aspects of modular building, such as faster construction times and different risk profiles.

Engaging with lenders early

If you are considering a modular housing project, engaging with lenders early in the process is crucial. 

Discussing the modular construction model upfront will help lenders understand the process and, potentially, tailor their financial products to better meet your needs. 

Working with a specialist property development finance broker such as Crowd Property Capital can help you find the right lender open to more creative funding solutions.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.

 

 

Written by David Lovato – CPC Development Lending Solutions

March 2024

Sydney’s Opal Tower might be the most high-profile case of an apartment block with severe structural problems, but it’s far from being the only one. 

In fact, a recent NSW Building Commission report found that 53% of apartments registered in the state from 2016 to 2022 have had at least one serious defect.

As a property developer, understanding who bears responsibility for building defects is crucial as it helps you manage risks effectively and ensure the project’s success. 

Understanding building defects

Firstly, it’s important to define what constitutes a building defect. 

Generally, it’s any aspect of the building that doesn’t perform to the required standards set out in your building contract, the National Construction Code, or relevant Australian Standards. 

These can range from minor issues like peeling paint, which are more cosmetic, to significant structural failures that can pose safety risks.

The developer’s role

As a developer, you play a pivotal role in the construction process, overseeing the project from conception to completion. 

While you might not be directly involved in the physical construction, you are ultimately responsible for engaging the contractors and professionals who are. 

This means that any defects found can indirectly fall on your shoulders. However, the extent of your responsibility can vary based on contracts, warranties, and the specific circumstances of your case.  

Builders and contractors 

The direct responsibility for correcting defects typically falls to the builders and contractors who carried out the work. 

Under Australian law, builders are required to warrant that their work is free from defects for a certain period — usually around 6 to 7 years for structural defects and 2 years for non-structural defects, depending on the state or territory.

It’s important for you as a developer to have clear, comprehensive contracts with your builders and contractors that outline their obligations regarding defect rectification. This not only ensures clarity but also provides a legal framework for resolving disputes should they arise.

Architect and engineers

Architects and engineers play a critical role in the design and specification of the project. So what happens if a defect is the result of poor design rather than the construction itself? 

Well, in such cases, the responsibility might lie with the engineering and design professionals, who are expected to provide designs that meet regulatory standards and are fit for purpose.

Material suppliers

The quality of materials used in construction also cannot be overlooked. After all, defective or subpar materials can lead to significant issues down the line, from cosmetic flaws to structural failures. 

Suppliers are expected to provide materials that comply with industry standards and specifications. Should a defect arise due to faulty materials, the supplier could be held responsible, again contingent on the terms of their supply agreement.

Dispute resolution

Disagreements over the responsibility for defects can sometimes escalate into disputes. In such cases, mediation and arbitration become important tools for resolution. 

There are also statutory bodies, such as the Building Commission NSW and the Victorian Building Authority, which can offer advice and assistance in resolving disputes over building defects. 

Engaging with these processes can be a constructive way to resolve problems without resorting to lengthy and costly legal battles.

Managing the process

The best approach to dealing with building defects is to mitigate the risks from the start. 

This involves:

• Selecting reputable builders and contractors: Conduct thorough vetting, check references, and review past projects to ensure they meet your standards.
• Implementing strict quality controls: Establish clear quality benchmarks and conduct regular inspections throughout the construction process.
• Maintaining open communication: Foster a culture of transparency and open dialogue with your construction team to quickly address any issues that arise.
• Understanding your legal obligations: Stay informed about your rights and responsibilities under Australian construction law and ensure all contracts are clear and comprehensive.

For property developers, navigating the complexities of building defects is part and parcel of the development process. 

While the responsibility for rectifying defects primarily lies with builders and contractors, remember you’re not just a bystander in this process. Your role involves orchestrating the various moving parts and ensuring that the project adheres to all regulatory and quality standards. This includes diligent oversight of the work being carried out by your contractors as well as the materials being used.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.