The Elephant in the Room Property Podcast | Australian real estate
The Elephant In The Room Property Podcast with Veronica Morgan & Chris Bates

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Episode 87 | Building approvals, conflicts of interest & who’s to blame for construction issues? | Kerry Hunt, Manager Building Construction Team IW Council

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The ins & outs of the DA process

We get the inside scoop from Kerry Hunt, Manager of the Building Certification Team at Inner West Council in Sydney. With 40 years in Building Surveying in local government both here and in the UK she’s adept at navigating the complexity of planning, building and certification legislation.

We look at the nuts & bolts of:

  • Building approvals & conflicts of interest in the Building Certifying Act & what needs to change.

  • Who is really to blame for the poor quality of our apartment buildings? 

  • What does a certifier do & are private certifiers high risk options?

  • Why did councils lose the power? What is the difference between the way things used to be done and how they are now?

  • Sub-contractors: how to check they are highly skilled & fully licensed.

  • What certificates should be in a contract of sale and what do they all mean?

  • Why it’s critical to invest time in due diligence pre purchase.

It’s a great episode, exposing some home truths.

GUEST WEBSITES:
Inner West Council Building Certification Team - Kerry Hunt

Work with Veronica? info@gooddeeds.com.au

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EPISODE TRANSCRIPT: 

Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…

This episode was recorded on 5th September, 2019.

Veronica:          You're listening to the elephant in the room property podcast where the big things that never get talked about actually get talked about. I'm Veronica Morgan, real estate agent buyer's agent, cohost of Foxtel's Location, Location, Location Australia and author of a new book "Auction Ready how to buy Property Even Though you're Scared Shitless".

Chris:                   And I'm Chris Bates, financial planner, mortgage broker, and together we're going to uncover who's really making the decisions when you buy a property.

Veronica:          Don't forget that you can access the transcript for this episode on the website as well as download our free food or forecaster report. Which experts can you trust to get it right? www.theelephantintheroom.com.au

Chris:                   Please stick around for this week's elephant rider bootcamp and we have a cracking dumbo the week coming up!

Chris:                   Before we get started. Everything we talk about on this podcast is generally nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent, they will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica:          Are private certifiers really to blame for the poor quality of our apartment buildings. We've been discussing build quality on this podcast for some time now even before the Opal Tower fiasco and now we're becoming aware of more buildings with major structural defects and not all of these are brand new, Mascot Towers being a case in point as it was 12 years old when it was evacuated. Now, back in the old days, local council certified buildings, but why did councils lose the power? What is the difference between the way things used to be done and how they are now done?

Veronica:          In this episode we'll get the inside scoop from Kerrie Hunt, Manager of the Building's Certification Team at the Inner West Council in Sydney. Kerr has over 40 years experience in building surveying in local government both here and in the U K and she's known as a straight forward practical professional, pretty pragmatic and she's worked across a wide array of building jobs from complex multi residential industrial, commercial jobs and fire upgrades to all varieties of residential jobs. Just your little home on its own little block of land. She's also adept at navigating the complexity of planning, building in certification legislation, which is very complex now. Over the years, Kerry has represented local government building certifiers on many technical advisory committees, especially during the early changes to legislation, which saw the introduction of private certification 20 years ago and the outcomes since then in the building industry today. This is exactly what we want to learn more about. Thank you for joining us, Kerry.

Kerry:                  Thank you.

Chris:                   Hi Kerry.

Kerry:                  How are you going?

Chris:                   I'm very good. Thank you r being here and giving us your valuable time. Before we get into the, uh, the more, you know, complex parts, I mean, for our listeners, what is it actually certifies really do and how do they kind of fit into the whole building process? I think there's a lot of bit of misunderstanding there.

Kerry:                  et's go back a little bit further to what I was originally. Uh, when I originally trained, I was a health and building inspector as I think the terminology about the role has changed over the years. So when you think about health and building inspector, it sort of implies that you're going to go and inspect something, you're going to go and look at it, you're going to have an overview of what actually happens either in a food shop or on a building site.

Chris:                   Not Scary word compared to certify. Right. And inspectors like,

Kerry:                  Oh and you know we were talking about if you went onto site and they went all the building inspectors here or the health inspector in a restaurant, people like, she really sort of went, oh my God what? What have I done wrong or what are the problems here that I may have not met, might have missed that this inspector is going to look at. So that's the big thing. I think the first is the change of name. So it went from inspector to surveyor to now certifier.

Chris:                   And is the army inspector, are they? Is it like certifies coming on Tuesday at nine o'clock let's get the place ready? Or is it random? The certifier is here just to kind of rock up and check your, everything's okay.

Kerry:                  There's no random inspections, you'd have to carry out mandatory inspections. And so part of that is someone will ring you and say, I'm ready for this particular type of inspection. So the inspections are actually set up by legislation. There's two types of inspections for class one a buildings, which is your normal dwellings, of which there's up to five mandatory inspections. Oh, for class two to nine buildings, which are your multi-residential, your coffee shops, your commercial buildings, and all the rest of it. And in those there are, there are, there is a regime of mandatory inspections. But for those, for instance, in a class two building, you only have to inspect 10% of the waterproofing. If you've got a hundred units in development, you only have to inspect 10 of those 10 of those waterproofing.

Veronica:          So that random,

Kerry:                  No, and again, it would be the developer or the builder ringing and saying, I'm ready for this inspection so they can get it ready. So yeah, like I said, I would say 10% is these two apartments here. Yep. Just look at them. Yep. Let's walk around here. You can look at that one. That one didn't, that one, right.

Chris:                   I can't see any issues with that. .....

Kerry:                  Oh absolutely not. Because what you see as a completed product, you don't see the waterproofing going down. You don't necessarily even see that the product that they've used, the number of coats, various other bits since it, you see a completed waterproofed area in a bathroom or what have you.

Chris:                   So in the olden days or was it like that though? Was it the olden days?

Kerry:                  In the olden days, been around 40 years, but mostly, um, there was odd, I just realized anyway go on. So when councils had the whole of the, the building approval and inspection regime, it was custom and practice. So you would talk to the builder at the beginning of the job and then say, I'll come and have a look at your footings or look at your frame. I'll look at your waterproofing. And though a lot of those, those wood were, uh, con, sorry, copper trays and similar things to that. So products have changed over the years and I'll come and look at it before the people move in. But what happened was was that when it went to certification, if it wasn't in the legislation, there was no obligation for the private certifier, for instance, to actually carry out those inspections.

Kerry:                  So the legislators changed the legislation to make mandatory or critical stage inspections, part of an inspection regime. They also had to change that before you issued a, an approval, you had to do a pre commencement inspections because what they were finding was as people were issuing approvals from the, from the offices or the back of their garages or wherever they are working. So that meant that no one was actually looking at the site before they actually issued something. So to have to be put into legislation, you must go out and site and have a look at it before you approve something. It was something that was showed that there was issues in the industry.

Chris:                   So, you know, we've got lots of building issues at the moment, but is there lots of little things that we need to fix or is it one big issue that we'll fix? You know, 80% of the problems.

Kerry:                  I think it's really complex because part of the problem is, is that, um, for my job as a s as, as a council certifier, I have a civil and a moral responsibility and seek, sorry, a civic and a moral responsibility to service whoever walked through the door. My job is to protect the community and to look after anyone who walks in the door from a multimillion dollar, develop it to Mrs Kaffups from down the road because that's my job. That's what I'm employed as on public servant. I'm a public official, so therefore my dedication is to make sure that those people get the proper service that they do. So it is, it's quite complex and I don't think there's a real appetite from the government through all of these inquiries that are going on to change that because they don't want to wind back. What has happened for the last 20 years.

Veronica:          What did happen because obviously 20 years ago things change. Do you have an a a view on why they change it and what was that change?

Kerry:                  Okay, so if you go back and look at building regulations, for instance, the Building Code of Australia was brought in in 1996 prior to that New South Wales had an ordinance that was attached to the Local Government Act called Ordinance 70 it was a prescriptive piece of legislation that had been developed over years and years and years, but it was prescriptive. So it said if you had to be 900 you had to be 900 theBuilding Code of Australia came in 1996 was for the whole of Australia and it became a performance based document. So if you met an objective about something about ensuring that the building was safe to live in, you could deal with that through a couple of measures.

Kerry:                  It still had prescriptive deem to satisfy requirements, but you also could try new things as long as it was comparable to deem to satisfied. Right. So in 1998 the New South Wales government took all of the responsabilities out of the local government act for building approvals for instance and building inspections and put them in the environmental planning and Assessment Act. So the act changed in 1998 and what that allowed for was for private certifiers to come into the market to allow them to issue construction certificates and complying development certificates and carry out inspections.

Chris:                   Prior to that it was the government, it was always always councils.

Kerry:                  Councils had done it for 120 years before that and it was part of the flavor at that particular time was about decreasing the amount of works that mandatory authorities had and put it out into the open market so that there was supposed to be more efficiencies. It's supposed to be faster, quicker, easier and the fact that the market would find its level as to how that would happen.

Chris:                   There's been having quite a lot of different industries like privatization of certain things, you know, is meant to create those things. But end of the day, you're in a capitalist society where people are running businesses and he's that kind of where you think that the problem is like a lot of people are certified as a, I just want to start writing, getting more customers and they start getting busier and things, the standards start falling. Is that, do you think what's happening?

Kerry:                  It's an imperative in business. You get return business. So you know, as a, as a man, as someone who's a regulator or an enforcer, you're not going to say to your client, Hey mate, that's no good. Pull it down. Even another example. So about the same time they also got rid of the builders licensing board who were the insurers for everybody and they put it out to the open market. And we've seen what's happened with insurance over time, whether it's home, warranty, insurance, public liability insurance, all the rest of it. I think the insurance companies last year got in something like $68 million worth of money in, but they paid out about $204 million. So there's always going to be a problem where, um, capitalist capitalism is not going to make money so they're going to want to pull out of the market. So we had a, not a time they, when you couldn't get home warranty, insurance builders could not get home warranty insurance one wasn't it? So they had to, the government had to come in and prop it up and they've had to do it again purely because the market does not tolerate very much if they got it. If they're not, if they've got to pay out more than they're getting in,

Veronica:          then you have to think about why are they paying out more?

Chris:                   Well, there's more building defects and the evidence has come through that there is. The building quality has certainly deteriorated. 2002 there was a Campbell report into the quality of buildings. So the 1998 to 2002 we already started to get see these issues. A report. But now 17 years later, we're still talking about it.

Kerry:                  We said the system would fall over in 10 years and it did. And then we said, but the real cracks are not, excuse the pun, it really occurred now where we have major, I think trillions of dollars. They're talking about having to, for repairs in, in multi-residential buildings, combustible cladding. It was this morning or they were talking about that the possible bill for this will be up to a trillion dollars.

Veronica:          So you know, and who's going to foot it?

Kerry:                  The poor consumer. And you know, we, we, we talk about consumers jump into something because they get anxious about not being in the market or what have you, but they don't do very much research or understand what they're actually spending. The risks, the money, all the risks associated with it all. So,

Veronica:          So back to back to 1998 legislation or legislation change on the back of the Australian building code.

Kerry:                  That was a part of it. Yeah.

Kerry:                  Cause I remember, you know, rats in the ranks and was it, you know, there was actually an ABC, you know, mockumentary on that wasn't me. Like our council in particular was, was, was renowned for taking bribes from developers. So clearly there's always been an issue even before then. Um, and also then that, that perception of it took forever and again, a DA through, you know, and so then you'd see these, these ranked county councils ranked across the country, you know, who took more days in three months to approve DA, et Cetera, et cetera. So the clearly were problems oregionally. Um, but it sounds to me a little like a lot of those problems came about for the same reasons that we've still got problems. I e you know, and I'm a conscious capitalism, a capitalist, I'm not a socialist. Right? Um, but there are unconscious, no unconscionable cap capital. It's out there clearly. And when there's a buck to be made, obviously there's, there's dollars to be, you know, bribed and all sorts of stuff. Right. So it sounds like similar underlying problem really.

Kerry:                  It's interesting because there's an inquiry at the moment and one of the allegations that was made by the property council was that the whole system was falling apart because of corruption. There's no evidence. So there's one evidence in ICAC where a building's device took some money, right? So the fact is is that you've got to separate the political masters away from the people who are doing the nuts and bolts of things. And part of the problem with, and that's why they've now got planning panels and they've got independent people that sit instead of councils to make decisions on development approvals. They have planning panels both at a state and a regional level as well as a local level to take it out from the influence, if you like, of 12 of us men and women sitting around a table playing, you know, scoring political points against everybody else, which is what really rats in the ranks was, was all about getting someone elected as mayor. So as council officers, and I've been in the industry for 40 years and I can say probably unequivocally it doesn't happen. It doesn't happen as much as the perception is that it does.

Veronica:          And likewise to these, these are feel, looks to me a bit like the certified or private certifiers are being scapegoated for what's going on now as if it's their fault or you know what I mean? So I mean he did talk about, isn't it that separation or that issue with who appoints a certifier and this, that's pretty obvious, I would think you've got to separate that out. But you know how fair is that? I guess too, to say, oh well it's because of the certifiers.

Kerry:                  Well, I think the certifiers had been dumped with it because often they're the only person that has insurance on the job. So it's like everything else. Look at Opal Tower, who are they going for? They're going for the Olympic authority because they owned some of the places in there. So it's the people who have the insurance. And part of that is because of the regulations in the building Professionals Board Act, which says you cannot function as a certifier unless you have certain amount of money of public liability and professional liability insurance. The builder, the, the Tradesman, the sub contractor, the developer doesn't have the insurance.

Veronica:          Wow.

Kerry:                  Home warranty insurance isn't required on any building over four stories. Yeah. Uh, so that's very, very convenient. Thanks very much. Yeah.

Chris:                   So can certifiers get insurance now then, because I mean if you're certifier now you've only gotta look at 10% of the waterproofing as an example, and you start getting all these issues where you haven't looked at 90% of the things in now that building's got problems and then they come to sue you. Well how can you get insurance?

Kerry:                  There's a massive risk about it. And they wasn't a problem too because one of the bits in the regulation says you can't have any conditions on your insurance. But with the combustible cladding issue, which is another big thing that we could talk about, they insurance companies are going, I'll insure you as long as you have nothing to do with combustible cladding. So then the government had to step in again and change regulations to allow certifies to hold insurance with condition on their insurer in on the insurance premium, on the insurance, there's more and more bandaids. Oh, and this is what it is. It's a cobble on cobble on. So if you really like the Lambert report when it came out, said you have to do wholesale regulation and act changes, you can't just keep on putting little bits into the environmental planning assessment act and the regulations to make it better, you have to actually turn it all back again, look at it a fresh, because it's changed so much.

Veronica:          It's not working clearly but youu mentioned the Campbell report that was four years after this changes and now the Lambert report. If so, there's obviously a number of reports that have been written by the sounds of it. Um, can we go back to, firstly, can we go back to the Campbell report? What was in that, what did that say?

Kerry:                  It made a lot of recommendations about, it was about the quality of construction and some of it was about, um, an inspection regimes. There was changes to regulation that came out of it. Some of it was about a level playing field between certifiers private certifies and council certifies because it's, it's a very, and I'm gonna use the word, it's, it's not a very mature industry in the sense that it is literally less than 20 years old. So there's a split between them. It was a quite an antagonistic split as well. So you would be working next to someone one day and they're going, I'm going to go do private certification. Right. And, and you'd say, well, I'm gonna stay in council. Cause that's where I always sat and that's where I want to sit. So it was people who weren't necessarily, um, the best of the industry that we're going out.

Kerry:                  But there was certainly people that had a business mind and wanted to make a lot of money and they've made a lot of money. A lot of them have made a lot of money. Good luck to little split. Yeah. I think there's a philosophical and ideological split as well. And there's some very, very good certifies, don't get me wrong. And I think that one of the pieces of evidence that I gave was that there's some very good certifiers, there are mediocre certifers it. There's some really poor certifiers in the industry. So you've got to weed out the ones that are causing the problem for everybody else. Yep. The responsibility at that time was with Ah, the institutes and then it got, went to the Department of Planning and it went to the building professionals board. So there's this whole 20 year history of trying to fix the problems in the system without looking at the fundamental problem, the system, which is about a conflict of interest.

Chris:                   So we've had all these reports and they'll keep getting reports. There'll be more reports coming out this year. You know, we love reports, but why doesn't the government look, take action on these reports? Like really. They don't want to, um, because they don't want to bring more regulation, but something's gotta be done. But why don't they want to?

Kerry:                  I don't think they have an appetite for it. So they again, play around the edges. We've just got a new building commissioner appointed. He gave evidence at the inquiry recently and what he said was, I'm going to do a light touch on this. He says he doesn't need additional resources. So he's talking about using existing staff within the Department of Fair Trading to assist him in his process. He's appointed Bronwyn Weir who is one of the, uh, from the Shiego Weir report to assist him for initially 10 days to assist with making sense of all of this sort of stuff.

Kerry:                  So I don't have a lot of confidence that that will happen in Victoria. They have a building commission there that I thinking when it was set up, had a, um, a budget of $5.5 Million, which was a lot of money in back in 1997 and a staff of 55. So you get better quality buildings in some respects in Victoria and Queensland because you have a Victorian Building commission and you have a better commission, they say had this overall view of the whole of the industry, not just small parts of it.

Veronica:          And there is some data on that too because there's, we want to interview Dr Nicole Johnson from Deakin University, um, who recently, in fact, she, she was, I first came across her on an amount of farmers podcast. I'm Your strata property and Amanda interviewed her about this report that can, we incidentally came at two days before the mascot towers, um, evacuations. So she's been very busy in media as since then because of that obviously is a lot of work goes into putting together the research behind this report that, and I don't have the exact numbers, but something like 91% of of buildings that was including the reports, there's not even an exhaustive, um, in New South Wales had at least one defect across numerous multi-residential buildings. Yes. Yeah. In Queensland it was something like 71%. In Victoria it was something like 74%. So there's a 20 percentage points difference that I think reflects very clearly the difference between legislational process in those states.

Kerry:                  I think. I think we were discussing before how quickly buildings go up. So concrete doesn't actually achieve full strength until 28 days. So if you're pouring a slab, then you'd leave the scaffolding in, you'd leave everything in there for at least 28 days. You'd cure it properly, do all the rest of it. Before you started loading that slab or before you started stripping off the scaffolding. But what happens now, and you see it because the scaffolding's dedicated on another site on another site and another site. So you talked to builders now doing jobs that would have taken them 12-18 months off the site in 16 wanting being told to be off the site between six to nine months because of either they'd been bought off the plan, there's sunset clauses, there's various various other issues. And so buildings are going up faster and faster and faster.

Chris:                   And I started on like the level, so you do the slab 28 days, but if you're going level one, do you need another 28 days? You should. You should literally let the building settle and yeah, and the materials within it, they used lots of fast wall systems now. So there's a couple of proprietary products around that are like a form work, but they're a former Creech like core fill with concrete. They put ah, stealing them and all the rest of it. Yeah. So that means you don't need a concrete block layer on the site. So it, it also dumps down a little bit in building. You don't have as many, uh, mastered brick layers or concrete block layers and all of those other sorts of people. You have fossils systems, you have lightweight construction, you have a whole lot of stuff that goes in faster and quicker, um, and with less supervision on of, on some of them as well.

Speaker 2:        That's the, so to get speed you have to sometimes reduce quality, right? And so I guess if you're doing that, you know, and you're constantly looking for efficiency and faster at some point the compounding of quality is just starting to add up to a lot of smaller.

Kerry:                  It's gonna break down. They also talk about the design and build process. Say you're building as you're designing it. So you'll get a, you'll get a concept design of something. And then each of the experts will come in and give you more and more and more detailed drawings. So that's there. It's been pointed out that that is a problem. Uh, there's also, if you've contracted to someone and they may subcontract someone else, you'll look for cost savings in that. Is it? Yeah. Big issue about what materials are being also imported into Australia. It was a big issue about, uh, electrical conduits and electrical covering on, uh, wiring that came in from from China that was substituted in. So there is hundreds of thousands of kilometers of electrical wiring in houses everywhere else with the casing breaks down much, much quicker. I had a little stamp on it that said it was Australian standard, but if you look at, it had an another little sort of emblem on it, if you knew what you were looking for. It was one, but my old appearance service purposes, it looked like it was a proper electrical cabling.

Chris:                   So the subcontracting thing I think is interesting. So yeah, a lot of people think the employing one builder and one builder has built the whole development. So, you know, I bought a development by x, but did they always build the building?

Kerry:                  Not always because they, they will subcontract who will in sometimes subcontract to someone else. So, um, s uh, situation where uh, a Western Australian developer had bought a property, he had contracted to demolish it to demolish what was 1980s house next to an 1880s terrace.

Speaker 2:        By the time someone got on the site, it had been subcontracted out about three or four times. So instead of a very reputable building company demolishing it, it was two blokes that turned up on site with a couple of sledgehammers and had no idea what they were doing. You go back to the developing, so who's on your site? I have no idea. I contracted to this person. So he's paid that person. But then as it goes down the line, someone else's making money out of the subcontract, out of the subcontract. So it's a real risk in the situation. Who is on your side? Who is building? Are they licensed? Do they have the education, do they have the skills, do they have all of those other sorts of things? To make sure that you're going to get a good build product at the end that people are going to live in and it's going to be safe?

Chris:                   so the elephant in the room is 100% for you.

Veronica:          The reason that Chris and I do these podcasts is because we passionately believe that property buyers can do it better. We really want to help all of you understand all the risks, but also the ways in which you can avoid your elephant making the decisions.

Chris:                   But what we would love for you to do is just to share this episode and share other episodes with people around you that are going through the property process. Just by you sharing our episodes, you're really helping us.

Veronica:          Give us a review on iTunes. Five-Star, please would be very appreciated because this is about making sure that we all benefit from the wonderful information that our guests have been sharing with us.

Chris:                   Now obviously we on this podcast, we're kind of preaching to the converted. I think a lot of our listeners don't go and buy these new properties and you know, they've understand the issues and things like that. Um, but when it's a very big issue in society, but a lot of people say if you go buy an off the plan, just pick a good builder. But you know, the problem with sub contracting is are they, are they really building it or they got other projects or they, you know, you can't just, I feel like you just can't trust even the builder. It's just, it's just hard to know if you're safe there either.

Kerry:                  You probably know more your, um, where your porks coming from because you can go back to the source of where it came from, what farm if you buy it from particular places. But if you said, who was my electrician on the site? Or who was my data cabler or who was my plumber or the firing fire installer you'd get a certificate at the end. But who knows? It's a piece of paper. So that's the real problem that a lot of the stuff they're doing around the edges is all about documentation, but it's actually physically on the site. What's going on on the site, who's actually doing the physical work and what are they using makes all the difference and what are they using and who's, who's supervising them.

Chris:                   Yeah. I feel like I'm being a bit ignorant here because um, I kind of over the last few months have been thought, you know, well there's going to be this two tier system, anything that's been built from maybe 1998, 2002 which you were talking about there to say 2020 is going to be stuff that you just don't want to go anywhere nere but in 2022, you know, there's going to be this new legislation. I was kind of being a bit hopeful. There's going to be better certification, et Cetera, and there's going to be these new options that, you know, we'll be a, we're going to start building good products, but do you believe that, you know, in five years time we're going to do that? Or is it just going to be light touches around the edges and we're gonna still have the same problems in 10, 15 years time?

Kerry:                  I think there's going to be a lot of light touches around the edges. They don't want to introduce more regulation. They don't want to increase more red tape because that increased costs. Um, so I, I don't hold out much hope or have much confidence that things will change to the point so drastically that we'll go back to the old days of is the three-story walk up supervised by a clock of works on the site by a reputable builder who was really proud of what they did. I think that, I think those days have gone. Um, there are good builders around. Obviously there's some good companies around that do stuff, but like if you look at commercial builders, you have one client. The problem with this is you have a developer and a builder that's building for a number of owners who haven't even come together as an owner's corporation.

Kerry:                  So there are individuals who are not very well educated. They can't get on site during the build because they're not allowed to. They've built off the plan, they've panicked to get in there, and there's no one person that they're going to say, that person's going to use that premises. And that's where I think there's a big problem. You build a shopping center, you know you're building a shopping center for a particular developer or a particular company, they're going to make sure there's checks and balances in the whole system. Yeah. As if it isn't, they'll sue the sue, the end off the off the builder who is allowed the water to come in and all the fire service person or what have you. So I think that's the real drama is that yeah, you've got a multitude of end users who are no, not even on the site. They're not looking at it. They're not supervising and they've not educated enough to go, Oh God, I missed that money. I've got the main like heart. They have, you know, like, you know,

Chris:                   We usually had tried mock sort of thing at the moment where you know, the legal costs of aquatics expensive. Um, and you know, the reality is like, it's extremely expensive to get lawyers involved as expensive to end. You don't really want to and things like that. So I mean if we move it from a different type of new buildings on the older buildings, you've done lots of certification over 40 years. What are some of the issues though that you know, our listeners, if they're going to buy an old apartment or an older house that they really need to focus that things might not have been built well.

Kerry:                  um, every, every, you can look at general generations of building if you like. So it doesn't matter whether you buy something from the 1880s through two into war ones. Every house has its or every dwelling. Let's go back to dwellings against singles. Single dwellings. Yeah. Has an inherit defects. Yup. So if it's an 1880 nineties building, it's unlikely you'd have a damn proof course. It's luck to have rising dam. It might have had, it's all, it's timber just built straight off the ground. So you might have termites, you might have damp pproblems, you might have very good electrical or plumbing and all those other sorts of things unless it's been renovated and it might have been renovated in the 50s in the 60s and so you're now in the, you know, you're now 60 or 70 years later. So those things deteriorate. So it doesn't matter what era of dwelling you're looking at by all have their own inherent things and you have to do your due diligence.

Chris:                   And why is damp for real problem though? Cause like, you know, I know our listeners probably think, oh damn, it's a problem. But really why is it such a big problem?

Kerry:                  Well rising, you have rising or penetrating damp. So rising damp will cause problems because it attracts termites for a start. Termites love Nice dark damn places you have have a timber that's not treated so too much are a problem. If you've got rising dam, you've got other rizing. Dave is obviously you create damp conditions within a, within a building which isn't great for your health, you get more growth. You could get all those other sorts of bits and pieces. So the damp really important and you've got to unsightly walls cause the, all the, all the salt comes out or if you have a defective roof or a ceiling, if you've got old plaster and Lath ceilings for instance, stains, the ceilings, you lose the bond on it. And again, you get problems with vermin getting into the roofs surfaces. It's unsightly. There's a whole lot of whole lot of defects that can actually make it unpleasant to live in a property.

Chris:                   Yyeah, the termites thing's interesting, right? Because you know, most people think, you know, termites aren't really a problem out there. I mean you've seen a lot of them say that it's a lot of things. You've, you haven't been exposed to something or you haven't seen it or you haven't gone through the experience. You're a little bit ignorant of these things and it's not really on the papers or anything like that. You if you haven't, your parents haven't had that or et cetera. So yeah,

Veronica:          But pretty much every single house, like in the inner west where where I operate for instance, and the eastern suburbs and Logan or shore, pretty much every house except for new recent builds has had termites at some point of its history really much. Every single building inspector will say at some point there is too much damage. So it's a really, really common and in fact I was living in was renting years ago this, you'll know these, this development it's in Annandale and apparently they've had massive amount of rectification works, but apparently as a townhouse I want to give you a dress for those poor people that do live there. But apparently it was originally built for social housing, but then it got changed and was sold commercially or sold them to the open market. We were living in it when it was only two years old and it was really, really poorly constructed.

Veronica:          They've spent so much on this years later. But anyway, I went to the bathroom one day. I looked in the door jam and there was all these refuse coming out. I went, I didn't know better. I would think that there's termites in this joint and this is upstairs and two story townhouse. And um, sure enough. Anyway, so I went to the property manager and I said, Oh, I think this place got termites, turned out. The place was riddled with them and riddled everywhere. I sprayed bay,gone into the door jam one day. I had no money in the strata to pay for it, to treat it. So they came around, someone came around and squirted a couple of cans of something and they kept munching away. I sprayed baygone into that, um, door jam one day and I could hear them screaming in the walls from a squirt of baygon sleep in the bedroom.

Kerry:                  Well, they reckon on a, on a quiet summer's evening, if you're out on the peninsula anywhere, you can literally hear the too much. Just just, and they use some, they use spend, your dogs go into houses that are specifically trained to here to might socially eating and they're very clever little insects because the on a nice balmy summer's evening, just as the sun setting, you will suddenly see lots of swarms of what looks like flying ants. So there actually termites termite night. Yes. And if you get them into your house, so suddenly you go, oh, there's a lot of terms or there's a lot of answer out flying around my house. That's a really big trigger that says you've got termintes much somewhere in your property that you need to then get treated.

Chris:                   Or how fast are they actually eat your house?

Kerry:                  Oh, they take, they can take quite a long time. It depends on the timbers and it also depends. They're very good at ensuring that the structural, the structural outside of the team of that they're eating stays intact because they're subterranean, so they can't live in light. That's why the muddy, or they call it the money, the refuse that you call is the money so that they build little tracks for themselves to run up and down. So when you put an end cap on top of a pier, it has a little angle on it so that you can actually see it doesn't stop termites. It just makes them more obvious for the 45 degree angle means that they build the mud up the side of the pier and then underneath. So therefore visual inspection is really important in sub floor areas and also the, the termite baiting systems. I think that's hilarious. So they actually, you know, they attract the termite to your house. So I can check it and go. You have termites, like hello. Hilarious.

Veronica:          But the thing is that, um, yeah, they're in trees. They're everywhere. Yeah. And I think a lot of people think of they buy a brick house that they're not subject to termites. However, there's more hidden, you know, where the board is going to be more obvious straight away. Um, but yeah, they can do more damage in a brick, I reckon.

Kerry:                  But there's lots of products around the Australian standard for instance. And the building code of Australia is the same. It only applies to new builds. So there's a struggle sometimes to say here I've got a uh,1930's house on building a reed dwelling addition on it. The new read dueling edition has to comply with the building code of Australia. The termite protection has too, but there's nothing in the Australian standard says, how do I protect the new bit from the old bit?

Veronica:          Wow. That's a really important.

Kerry:                  So things like quarter, there's certain products that are around that, that have to be installed by proper installers and certified and all the rest of it because the linking between the old and the new is really important that you don't allow the termites to travel through. So it's, it's,

New Speaker: Oh, we think about renovating. So when you're buying, there's lots of different certificates that, you know, we look for in a contract. For instance, we look, you know, for does have a building certificate. Does it have an occupation certificate? You know, can we see that they had a, it was a DA even approved. Did they build what was approved as a construction stuffy, all those sorts of things. What sort of certificates should somebody look for in a contract of sale when they're buying a property that has actually been renovated or newly built, it's really important to do your own due diligence.

Kerry:                  So looking at what approvals proves are really important. Will you buy a house that's got authorize works, it may not have been inspected, may have termite problems. You've got no insurance on it. There's various other bits and pieces, so certainly having the DA consent in the relevant certificates that go along with it, including the occupation certificate. You mentioned a building certificate and that's really interesting that it used to be the certificate cause it's a certificate of non-action by council and it and it's relevant for seven years. It does go on beyond that, but it basically says that council accepts what's on the site on that day of inspection. So it's looked back through all of the previous approvals and everything else. That's a really strong certificate to have in your contract to make sure that someone else who's independent of the agent. The developer, the builder, the owner has come out and gone. I used my skill decide that there's probably no problems with this house. Visual inspection, but you use your experience to be,

Chris:                   how often are they issued?

Kerry:                  Much. Much, much less than they used to be. We used to record when I was selling, we still recommend everybody got one, but now everyone gets an occupation certificate, but they're two very different certificates using two different pieces of legislation. Right. The occupation certificates is the building will that part of the building is suitable for occupation? What does that actually mean? It has windows. Doors. It doesn't, well it does because it comes off the DA. Right, so it does actually say that that part of it is legal or not the whole, where's the OC? Well, it depends. If you build a whole new property, yes it was.

Chris:                   Yes, but if you're adding on the extension or a pool or something like that, it might say that that's okay, but it might not look at the front saying, actually you had that garage on or something like that.

Kerry:                  That's exactly right. Yes, exactly isn't always for the entire, you can get a whole building certificate for the whole of the building. Yeah. But occupation certificates have changed their nature, and this is the real crux of the matter that the certified at the end issues and occupation certificate based on everyone else's certification. So certify certifies get certificates. So it's a collector of papers that says this has all been done, but that was never really the purpose of an occupation certificate. It was, is the building suitable for occupation? If I was going to use this building, is it safe? Is it, is it, is it safe to live in? Has everything been done right? And it's changed its nature just by default over the last 20 years. I just never existed before 1998 right. So that's why you got to buildings certificate. Right. Interesting. Yes.

Chris:                   So semi hasn't been approved by the council. You've kind of gone and bought it and then you want to sell it. Is it, am I right saying you could just sell that though. And as long as you disclose it, everything's okay.

Chris:                   It's due diligence by the, you know, it's the, by the way situation. And again, if you were spending the amount of money people spend now you'd want to make sure you do your proper research and educate yourself about what you're actually buying because you could be buying the trouble. Anything. It's an owner builders for instance now does not have any home warranty insurance. I cannot give that at all at all. So they've changed so it has no limit thing? No. Oh, oh, oh and again this is an insurance issue is because if you was, if you were an owner builder and you were selling within seven years you would go and get home warranty insurance so that there was a protection for the purchaser. The insurance company have got out of that. So do you no longer a home warranty. Insurance Building Compensation Fund insurance. Wow. As an owner builder now. So if your bag of probate finance too, to be honest. Yeah, that's true. Yeah. How do you get a construction certificate? Cause I thought you had to have that before you get, if they say the construct, you need it, you need an owner builder's permit. Yep. Or you need home warranty insurance. Either or.

Kerry:                  So that's the difference. It all. So there's, there's lots, there's lots of pitfalls. All right. Young players in this, in this game, in old players.

Kerry:                  Let's say clients going out and buying a renovated place, you know, and they, how do they actually check with all the council? They're like, what did they do it themselves? Did they go solicitor or they go to confine. So like who is the experts that they need to employ to make sure everything's okay and they can go out and bid on a property, let's say. It's certainly need a conveyancer, but you can get what they call an access to government information. So you can go and could get called a gipper to actually look at all the details that council has on that particular job. And the problem with that, how long does it take to get a gipper?

Veronica:          Oh, it does take a little while. But a lot of stuff we could have sold in the time. Yeah.

Kerry:                  A lot of stuff though now is online through DNA tracking systems. There's a lot more digital, um, things. So it does make it easier. But usually we use that usually within the last five years. Right? Yup, Yup. Oh, something else go back. Well, it always goes back, like I'd goes back to 2008 online, online, online. So again, it's about, it's still 10 years versus, you know, easily for dollar renovation 20 years ago. And that's only, I'll probably do that one by now. Yeah. In, in Yoga one the saying you can't actually get access to that unless you do one of these givers. Yeah, yeah, yeah. But you're spending a lot of money, so you know what you, it just like, you know, you probably research a car or some people do more than you would research doing that.

Veronica:          People research fridges more than their research buying home with, with that in relation, it's interesting because in a hot market when people are, Fomo is going crazy. Fear of missing out for anyone who doesn't know what five hours, then people will overlook all of that due diligence and they go, oh right, we were right over here. All right. And in a slow market where buyers are scarce, they will take their time and they will go through with a fine tooth comb, everything.

Kerry:                  But getting your building inspection report, getting a pest report. But if you look at those, there's so many disclaimers and it's all pages of disclaimer in about two pages of report.

Kerry:                  Yeah, that's a good point. Around building your purse. I mean really like is that enough to do? Is that enough to guage he, she, you know, how does it actually protect you? Like not really. No, because there's so many disclaimers in it, so I think we outsource so much of our responsibilities. You know, are you going to put a pair of overalls on and crawl underneath the house of a house you're going to buy or are you going to walk into it at six o'clock in the night and go, Gee, it looks pretty because someone's dressed it and I don't have to do any work here cause it's all painted, you know, paint hides a a hundred since, you know, especially the white corn isn't it?

Veronica:          You know, it's funny, I actually, I'm a bit of a property Dumbo story I guess is that, um, so I went through a property, it was actually in Lilyfield some years back and I could smell the fresh paint and upstairs I could also see it was already starting to bubble in a couple spots. I mean this is and r went to the wall and I literally, I just touched it so softly am I finger went through the gyprock, right? A bit of damp in these hands, but you don't have water problems. And um, so we didn't buy it for a client. I just was interested in it. And sometime later this woman that, um, you know, I'd spoken to her and her husband about helping them buy a property, but no, they decided to do it themselves. Then I happened to be chatting to her and she said, Oh, oh, we bought, we bought that house. And I went, oh, I imagine that you've had to do quite a bit of work about the damp that the water, and she looked at me and she just blinking. She said, how did you know about that? Um, I'll say, because I could see it and smell it when I just wandered through the house. I didn't blind Freddy could really my view. Um, and she went, oh, we didn't get a building inspection. And it's a big house. It has a lot of money that has gone into fixing that. Uh, it would have been a massive problem. Yup. And that was paint and,

Kerry:                  And people don't really understand buildings, I don't think. No. I, I have passionate about buildings. You guys have a passion about buildings. You walk into it is what you smell. It's the, the, the moisture content in the air. There's a whole lot of things. When was it built? How was it built? Who Likely to build it? You know, all those sorts of things add up to go, is this somewhere where I can put down my roots for the next 20 years?

Chris:                   I think that's the thing though, is that most people are thinking about can I live here? Would I like living here? Do I love the look of it? Do you know, looking at all the lifestyle benefits of a property, but then not on a connecting that to this is what I'm buying. I'm buying a structure and I've got a, that's actually an investment and I'm going to have to pay to fix it and I'm going to have to maintain it and one day we have to sell it to someone else. And you know, I think they're just a disconnection there between what they're buying and they think they're buying these lifestyle, which they are, but end of the day their money is buying an asset. It's actually a positive thing.

Chris:                   Yeah. And I'm like, let's just guys, you know, and that's just the, you know, unless you've, he might've bought a house and it's been fine and then so you kind of get this overconfidence built up and you just don't really realize that, you know, you could be throwing money on money, on money and especially if it's things that get out and apartment buildings and things like that. One day you go to sell that and no one wants it cause it's all in the strata report and you just gotta be so careful. Just cut off the emotion sometimes and think, actually now I'm buying a structure .

Kerry:                  I often I often feel sorry for builders. They put a lot of effort into the framework and all these sorts of things. It all gets covered over. They get some nice kitchen, nice kitchen cabinets, you know, the best type of stove or what have you. People walk in and they look at the taps and the stove and go, wow, there's been a lot of money spent here. But in fact, in the actual structure of the building, as you say, a lot of care in a lot of lot of hard work because it's a really hard, dirty job, lot of stress involved with it. Building a property goes into that and the bill and if it's a good builder, they've put their heart and soul into it. Yeah, they do care and then someone looks in and looks at the glossy bits. And I think that must be disheartening sometimes.

Veronica:          Yeah. Well it's a bit like those lipstick on a pig renovations. You know, they're, they are all about the cosmetics, the paint, um, rather than the foundations of that house. Cause fundamentally that's what's going to hold in good stead over time. Not, not the pretty taps and the lovely tiles. Um, yeah, they're not worth anything in the whole scheme of things. They, they depreciate, you know, the foundation even appreciate it's, but you know, if you've got a good foundation and a really solid home and it's got a good floor plan and everything nicely designed, all that stuff that's sort of hidden, then, um, you know, it's a great asset.

Chris:                   every week we hear incredible stories of the dumb things property buyers do, dumb things that end up costing a whole lot of money and, or a whole lot of stress mistakes that can be avoided. Please Kerry, can you give us an example of a property dumbo? We can all learn what not to do from these stories.

Kerry:                  Oh, I've got a really good quite a good one. Actually. It's, um, it was a heritage building, got a DA for it. Um, developer, developer person came along. Um, it was of quite a minor da that was supposed to happen. So we're talking about a corner block, internal party wall with another set of terraces. So we're talking 1880s, various other bits and pieces. The construction certificate that was issued was not consistent with the DA. So instead of it just, they use the same architectural plans, but they use different structural plans. When you looked at the structural plans, they were demolishing the whole back of the building and they were putting concrete slabs on three levels of a two story building. Hmm. The first thing that coundil found, it was the private certifer first in council came about, we had a complaint from the adjoining neighbor that they were two thing out the party wall, so they're taking bricks out and the neighbor suddenly found that bricks were popping out on his side of the party wall, no permission to load the party wall. The DA was got nothing to do with the party wall was on the completely on the other side. They changed materials, they pulled slabs. I rang the certify, it was over Christmas. I said, have you been on this site? Do you realize what you've actually done on? I've not been there, so this developer had gone along to do all of this sort of stuff. He was then being sued by the adjoining neighbor. He had a stop work order on him. That site was sterilized virtually for the next two years. He put an application in for a building certificate. We refused it because of the issues with the party wall. He, he took that to court so it would have cost him so much money at the end because he didn't do his, he didn't follow the plans for the development. He changed the design as he went on. So it was a design build job.

New Speaker: He said go, let's get it built and then complete ignorance. Um, yeah, try to get it done.

Speaker 1:        And, and interestingly enough about them using party walls. I've, I've read about it a semi some years ago and my neighbor wouldn't allow, it, wouldn't, there was no easement on it. This is one thing we look for. Is there an easement? Um, on the party wall there wasn't and that's quite common not to have an easement. Um, so therefore you need the neighbors permission to use the party wall support. So if you're going to go up, you know, you can't just build on top of the party wall unless you've got their permission by this nut job neighbor. Originally, if I'd had to nut job neighbours back before I was a buyer's agent. Now when I'm buying I don't buy near nutjob neighbors. Um, but anyway, I had two nutjob neighbors, um, neither of which would allow me support and this, OK. So I just designed around it. So we actually put our, um, the supports in place. But you know, a lot of people think, oh, you can't renovate a semi, you can't go up in a semi a weekend,

Kerry:                  but you do need it. You do need to get your structural engineer to, to provide an internal portable frame, virtually steel frame internal that doesn't rely on any lateral support or, or, um, horizontal support on the party wall. So costs you more money to do it or get your neighbor on board as well. Get your neighbor on board try. But if you've got a very narrow terrace and you've suddenly pulling in another hundred either side, that makes a big difference sometimes. So keep good with the neighbors is really, really important.

Veronica:          And actually, the terrace is to, because quite a lot of them don't have a firewall up in the attic still. You know all these years, you know, fire protection, all the rest of it, but you've got a row of Victorian terraces that all the attic space is just one big space and people if they want they can go through each other's manholes and drop into other people's,

Kerry:                  Lucky we have lightweight construction these days so that as long as you get permission you can actually put, put lightweight construction to provide fire fire rating between. It's good for your noise rating as well. And it's really good for security.

Veronica:          Yeah, absolutely. And so obviously if someone's going to get a da on, on an individual terrorist like that, that will be part of the conditions I would imagine. Yeah.

Kerry:                  It's usually part of the actual DA that you get party wall consent and it's really important because you don't want to leave that to the last moment and then suddenly find you've got to change your whole structural design or you've got to change all your architectural design. Cause the, the neighbor has said, I don't want you to build off the party wall.

Chris:                   A client was looking in Rozelle maybe months ago now. And I caught up and he was having coffee with him in the city and he's got a call from the builder and the builders accidentally, uh, the kind of knocking down the walls actually knocked down the neighbor's wall cause the, the kind of the escavator o kind of turned around and hit the wall. And so, um, yeah, he's got these calls. Like I've got to go, I've got to go to this site in Rozelle. Um, you know, the builders taken out the neighbor's wall, so I think he was on, he was on side with the neighbor and then after that it's just bad.

Kerry:                  It can go sometimes. Sometimes the back of the kato is really convenient for knocking down something and I've seen it happen more than, and often it is done on purpose because as we said before, it's very hard to rebuild something that was there before you ask for forgiveness, not approved. That's exactly right.

Chris:                   Trees are a prime example of that. Right. You know, it's like, you know, people can cut down trees and then uh, you know, say, oh sorry, I wasn't meant to do that. But you say that a lot that you know people can kind of become a little bit trigger happy with the trees.

Kerry:                  One of the, one of the good things about the in west is that everyone's got an eye on what everyone else is doing. So often you got someone that's sitting up a tree that you're thinking hang on a minute and they've often been notified about something happening.

Kerry:                  So you know there is, there is that sort of neighborhood neighborhood watch civic eye on everything else that's going on. It's really difficult though because once it is gone it is gone. There's a couple of trees that are on a particular street outside a couple of residential flats that where the guy's been trying to get rid of them for years. So he decided to poison them. But the council sort of been a little bit smart and just left the, dead trees outside there as a, as a thing that said these trees have been vandalized. It happens a lot to street trees. Yeah. People have a thing about trees.

Kerry:                  It's really important to educate yourself. You do your due diligence, don't outsource everything, make your own decisions because at the end of the day, it's your responsibility. You're paying the money and you've got to live in the place.

Veronica:          That's exactly right. Really important.

Veronica:          Yeah. Or if it's an investment, it's the buck stops with you. You know, as we know that all these, these owners in mascot towers, the buck, he's stopping with them. Yup. Hmm.

Chris:                   Yeah, that's really good advice. I mean, you buy once and get it right and it's job done for life, right? Like, it's just the fee bought wrong. So problems just continue. Continue, continue. Thank you very much.

Kerry:                  Thank you very much.

Chris:                   We want to make you a bit elephant rider and this week's elephant rider training is,

Veronica:          oh, we're going to pick up on own part of the conversation with Kerrie where we talked about getting a building and pest inspection. Now, as Kerrie did say, um, you know, they don't that reliable because a lot of them just basically 12 pages of disclaimer and two pages of actual inspection notes. However, you wouldn't want to buy a property without getting one. We certainly would want to buy a house and I don't think really you want to buy a townhouse. Um, and some apartments even, it's worthwhile getting a building and pest inspection. So how do you find a gun inspector.

Veronica:          And what or how should you go about it? Well, I think for starters, once again, like so many industries, there is a fairly low barrier to entry for building your pest inspectors. So therefore you can have people that are doing these inspections that really have never built a property themselves or they're actually not that experienced. So you want to make sure that whoever you're getting to do it has been around the traps for a long time and can actually advise you on the type of building as well. Because Kerrie, also mentioned that different buildings or different ages, uh, have, you know, inherent or, or I guess typical problems. So Victorian terraces typically have damp problems. So therefore the question to ask a building inspector is always, how does this compare with others of a similar age? Because if you compare that with say a, you know, a, I dunno, a 1960s house for instance, she might not have damp problems in a 1960s house. And so you can't compare it as only sixties house with an 1860s house. So it's not fair to do that. So asking how does it compare with properties of a similar age is really relevant. Um, also what we always do when we buy a property for a client or even for ourselves, is that we would go and meet the building inspector towards the end of the inspection and get them to take us on a walk through the house to point out the areas of concern now there are deal breakers in a building inspection and there are also normal stuff that you're going to have to deal with when you own a home, right? So homes have maintenance requirements, roofs don't last forever. You know, paint windows need to be re painted. I mean there's a whole bunch of stuff that needs to be done in terms of maintaining a home. So having that building inspector go through and, and point out those things that you need to be aware of as an owner of that property is really valuable because ongoing you are going to need to be aware of that to keep an eye on it and to actually spend money as time goes on. But also to point out what needs to be done, probably as more as a matter of urgency. So what you need to tackle first when you're moving to that property and then you've got the next sort of layer of problems which are deal breakers. You know, real significant structural defects or problems or things that you can't fix. And in some cases like I've come across properties for instance, where it was built too close to a cliff and there's not enough gap for the water to get away and you will always have problems because of the way the building was built in the first place. Now you wouldn't buy that property. You can't fix it without demolishing it, so why would you buy it? Those sorts of things are really important to understand and get the distinction between those deal breaker defects versus things that are normal part and parcel of owning a house or a home.

Veronica:          Please join us for our next episode and we have a very special guest, Alan Kohler. Now he is one of Australia's most respected finance journalists and he shares a lot of his wisdom with us. We talk about what has happened to the property market as a result of monetary policy and what could be happening in the next, say, six to 12 months as a result of monetary policy. Very interesting chat with Alan. He's got some great insights for us, so please join us.

Chris:                   Don't forget, we're on all the social channels. We're on Facebook, we're on Linkedin, we're on Twitter,

Veronica:          Or you can connect with us on the elephant in the room.com today you, the links are all there for you.

Chris:                   Please connect and send us a message we'd love to hear from you.

Veronica:          The Elephant in the Room Property Podcast is recorded at the Sydney Sound Brewery. This week's podcast was recorded by John Rhesk, editorial by Gordy Fletcher.

Chris:                   Until next week, don't be a dumbo.

Veronica:          Now remember, everything we talked about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent who will tailor and document their advice to your personal circumstances with a statement of advice.

Veronica Morgan