The New South Wales property market is witnessing a significant shift in how off-the-plan developments are built and sold. Amidst a backdrop of high-profile building defects that have shaken consumer confidence in recent years, a new form of protection is emerging as a game-changer: Latent Defects Insurance (LDI). According to a recent report, adoption of this rigorous insurance policy is accelerating rapidly, with developers recognizing it as an essential tool for winning back the trust of buyers.
A Surge in Adoption
LDI, while a standard feature in property markets across Europe and the Americas for decades, only entered the Australian landscape in 2022 through Resilience Insurance. The uptake has been swift. Corey Nugent, CEO of Resilience Insurance, notes that there has been a marked increase in new projects securing LDI over the past 12 months. “There are now over 3,200 apartments in the pipeline that have, or will have, the Latent Defects Insurance policy,” Nugent says.
This surge is driven by a simple market reality: buyers are wary. “The overarching feedback from prospective buyers in the new development space is that they have an inherent lack of confidence,” explains Nugent. In a competitive market, LDI has become a key differentiator. It signals to buyers that a developer is not just selling a promise but is willing to back the quality of their product with a 10-year structural and waterproofing warranty.
Who is Leading the Charge?
Interestingly, it is the “builder-developers”—companies that handle both the development and construction phases—that are championing this new standard.
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Deicorp was among the early adopters, setting a precedent for others to follow.
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DASCO has implemented LDI across two of its major new projects: Danks Street District in Waterloo and Senso in Epping.
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ALAND, another prolific builder-developer, has introduced the policy at The Walden in North Sydney. Founder Andrew Hrsto emphasized that for buyers in premium markets, this level of certainty is expected.
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GWH in Newcastle has also joined the movement with its ERA development, making it one of the few in the region to offer such protection.
More Than Just Insurance
The value of LDI extends beyond financial compensation. Crucially, the policy mandates a rigorous inspection regime known as the Technical Inspection Service (TIS). This involves independent third-party reviews of both the building’s design and its construction at various stages. By integrating these regular checks, the likelihood of structural defects arising in the first place is significantly reduced.
As Chris Williams from Home789 notes regarding the Central Quarter project in Merrylands, this process adds a layer of credibility that buyers can see and understand. It transforms the “black box” of construction into a verified, monitored process.
The Future is Mandatory?
The momentum behind LDI suggests it is here to stay. Resilience Insurance is currently working with the NSW Government, with expectations that Latent Defects Insurance could become mandatory for all new developments by 2028. Until then, it remains a powerful tool for forward-thinking developers to demonstrate their commitment to quality and for buyers to sleep soundly, knowing their investment is protected for the long haul.
Reference: This article is a summary based on the original news report: Resilience Latent Defect Insurance protection runs hot in New South Wales. You can read the full original article here: Apartments.com.au