Slums of the future

Flat Chat 97 - Slumming It

By Jimmy Thomson

There's been a lot of talk about "slums of the future", most recently by opponents of the decision by NSW planning minister Frank Sartor to take control over the Fosters site at Broadway.

But is there any real possibility of slum development being allowed in this day and age? You betcha! The Fosters site may turn out to be the epitome of good planning and excellent workmanship - let's hope so - but too often it works quite differently.

First you cram together too many undersized apartments built to absolute minimum standards in order to maximise developer profits - sorry, that should read "to ensure affordable housing".

Then you offer inducements like a guaranteed two-year mortgage, $10,000 cash in your pocket PLUS $10,000 worth of furniture. You can't go wrong, right?

Wrong. Because then the developer starts selling completed apartments for less than you spent buying off the plan. Then two-bedroom apartments are filled to their already-flaking ceilings with literally dozens of backpackers and students. Then, not surprisingly, other owners can't sell or rent their apartments at any price.

But the killer is when you have to replace that start-up mortgage with a proper one based on the real value of the apartment. The new lenders not only knock off the value of the giveaways you got when you moved in, they look at current prices and tell you that you owe more than the apartment is worth. It's called negative equity, mate.

Meanwhile your building's Executive Committee has signed up with a building manager owned by the developer. They may do a great job keeping the lifts running and they might even not overcharge (just joking) but they won't rush to help you identify defects and get the developers to rectify them.

All new buildings have defects and the cost of fixing them can run into millions of dollars. The time limit for identifying defects is now only six years. The maximum initial term for a building management contract (almost always invoked) is 10 years. You do the maths.

Slums of the future? You're standing in them.