Not sure about that apartment purchase? Check out the new digital tool bringing surety back

A new digital tool is providing surety for would-be apartment buyers in NSW. Here, Laszlo Peter, partner at KPMG Origins, explains how the Building Trustworthy Indicator works — and why it’s essential for investors and homeowners alike.

What is the Building Trustworthy Indicator? When was it introduced?

The Building Trustworthy Indicator is a unique digital product, developed by KPMG Origins in conjunction with the property industry, universities and the NSW Government that provides greater transparency of apartment buildings in NSW. The Building Trustworthy Indicator (BTI) provides consumers, financiers and insurers with information on who was involved in creating the apartment buildings, what materials were used, and what certifications were achieved for critical elements, such as waterproofing, fire systems and structure. The Trustworthy Indicator enables differentiation between trustworthy and non-trustworthy apartment buildings and brings greater transparency to construction processes.

It was launched in July 2022, focused on apartment buildings in NSW.

How did it come about?

KPMG Origins BTI was developed as a response to Building Commissioner David Chandler’s six-pillar agenda to bring back trust to the residential construction sector.

The aims of the agenda are to restore confidence to the multi-storey residential market to ensure buildings are safe throughout their life and defects, if they are identified, are addressed by the developers. Going forward, this enables the regulator to be empowered and strengthened by data for impactful compliance activities across the sector.

BTI contributes to this agenda by bringing greater information about the built asset, creating a building DNA for everyone to access.

Why is it necessary?

Residential construction in NSW faces a unique challenge with significant defects appearing post-completion with many owners left to deal with expensive remediation. The Building Trustworthy Indicator helps consumers understand the trustworthiness of the asset by highlighting the involvement of trustworthy players (WHO) compliant use of materials (WHAT) and appropriate quality documentation (HOW). This highlights the potential risks associated with an asset and showcases lower risk buildings informing consumers, investors and insurers in their key decisions.

What are the benefits of having it in place?

Access to the BTI helps would-be buyers better understand the riskiness of the apartment they are buying. Combining this data with other decision-making factors such as location, price and size enables informed decisions and consumers are reassured that any defects found will be addressed by the developer. Developers can differentiate their assets in market, highlighting best construction practices and quality documentation. Demonstrating trustworthiness throughout the lifecycle from design to completion helps with pre-sales and greater market access. The BTI also helps developers streamline data collection required to meet regulatory obligations prior to completion.

How does it work?

Property developers, builders and contractors upload documents to the BTI product, such as the details of the contractors, documents showing the materials used in each building element and inspections certificates, that are ultimately used to create a BTI score for that building. Using a risk-based methodology developed in collaboration with universities, the BTI score weighs the trustworthiness of each element and calculates the aggregate output, giving buyers confidence that best practices have been used. The higher the number of stars, the higher the trustworthiness.

How will they access it?

A developer receives acknowledgement of their BTI result in the form of official BTI badges to market their project. A specific landing page is created to promote the result, and market the apartment building to consumers.

Property developers can use these assets in their own marketing initiatives across print, digital and out of home (signage outside the property) as well. Access to BTI badges helps with promotional materials across pre-sales and sales and has even been known to help with secondary market resale.

We are also hearing of stories where current apartment owners are requesting the information from developers in order to utilise the positive results for future resale opportunities.

What does a trustworthy building look like?

There are 4 levels of BTI scores. Prior to construction commencing and to support pre-sales, developers are able to obtain a Trustworthy as Designed indicator.

BTI Trustworthy as Designed — Demonstrates support has been provided for design requirements to be met, designs have been reviewed to verify the design process and materials are suitable for the design. Once the construction process has been completed, three levels of of trustworthiness are available for the as-built asset.

BTI 3 Stars Trustworthy as Built – Confidence in the design and construction to a trusted level of standard beyond regulatory practice has been achieved.

BTI 4 Stars Leading as Built — Confidence in the design and construction processes and certifications equal to the highest levels of trust in the industry.

BTI 5 Stars Benchmark as Built — Confidence in the design and construction to an industry-benchmark level of excellence

How does the BTI fit in with the iCIRT and Latent Defects Insurance products to provide surety for buyers?

BTI, iCIRT and LDI are three pillars of Building Commissioner David Chandler’s agendas to support improved trust and transparency in the construction sector. They work as follows:

BTI – Focuses on the trustworthiness of the asset (an apartment building in this case)

iCIRT – Focuses on the history and financials of the developer

LDI – Enables insurance for the asset to cover any defects that may occur after completion

Why should developers and builders seek BTI approval?

It’s the only way to provide confidence in a finished project and the underlying asset. This allows developers and builders to market and promote the trustworthiness of the building for pre-sales purposes.

What does it mean for the quality of residential development going forward?

Property developers risk being left behind when consumers are demanding these initiatives are in place before they purchase a property. Consumers are now asking sales offices and property developers to provide as much information as possible to ensure that the property they are buying is trustworthy. With the increased transparency, and consumer awareness of such tools, developers are working harder to ensure that the right materials and processes are followed to produce a trustworthy building/project.

What opportunities exist for BTI in the future?

As the BTI is evolving, and developers, consumers, financiers and insurers begin to embrace these new measures, there are new opportunities arising.

In recent projects, owners are now asking for the BTI data to help present their apartment for resale. Insurers are also beginning to ask for benchmarking reports and developers are beginning to use ‘templates’ of a trustworthy project to brief builders and contractors and issue tenders.

These use cases for BTI and the associated data are beginning to introduce efficiencies and greater productivity in the sector.

Sponsored by KPMG Origins

Lorena Ramos and Carlos Moss live and work about 7,500 feet above sea level in the high-plateau megalopolis of Mexico City. But when it came time to commission a vacation home, they took it up a notch, altitude-wise. They built a home about 2,000 feet higher in an area known as the Corridor de la Montaña, or Mountain Corridor, in the state of Hidalgo.

Ramos, a 35-year-old sales director, and Moss, a 38-year-old executive in the construction industry, bought their steep 1/3-acre lot in 2021 for about $73,000. Then they spent roughly $475,000 to build and furnish a new house, working with Mexico City architect Rodrigo Saavedra Pérez-Salas. His design, using a cantilever, suspends the two-storey structure off the side of a densely wooded slope. From the inside, it can feel like a vast, floating treehouse.

undefined They named the property after their boxer, Oruç, now 11, and initially planned to use the home to entertain friends on weekends and holidays, outfitting the lower level with a funky bar. The three bedrooms—some equipped with bunk beds—and three bathrooms can accommodate up to eight people.

But this summer, less than a year after finishing construction, they had their son, Nicolás. That means they have to make some changes to babyproof the house. “We will have to do something,” says Ramos.

The vacation home is part of the first wave of development on the site of what was once a sprawling private estate. The property sits in Mexico’s Sierra de Pachuca mountain range, part of the vast Sierra Madre Oriental that runs along the east of the country. Their area is marked by atmospheric mists and a lengthy rainy season.

For Saavedra, the architect, the hard choice wasn’t where to place the house—a clearing in the woods, in the middle of the lot, was just about the only spot—but how to access the house once it was built. The most direct route would have meant seeing a house sticking out of the woods, says the 35-year-old founder and principal of Saavedra Arquitectos. Instead, he devised what he calls “a narrative” that leads visitors over a bridge, then down and around a series of winding stairs and through a masonry door that acts as a kind of ceremonial portal to the house. When visitors first arrive on the lot, all they see is tree. As they descend and approach the house itself, they are given a tour of the exterior of the building, while glimpsing the evocative mountain terrain beyond and below.

The couple chose moody interiors to play off local conditions, with lots of exposed steel beams, steel-tinted concrete, dark wood and glass walls that let tree-filtered light stream in. A spare open stairwell and thin inner and outer railings add to the minimalist flare.

All this added atmosphere came at a cost. The couple spent about $94,000 on steel, which includes the bridge and the costly cantilever.

Intent on a sustainable home, they managed to reuse what another homeowner might regard as outright waste. They have stored firewood for the great room in leftover steel girders, fashioned into a Brutalist rack, and they used leftover wood from their board-formed concrete molds as paneling in the primary bedroom. Most recently, they have installed a rainwater collection system, with a cistern placed uphill from the house, and they now use the bounty for everything from washing to drinking.

Though Casa Oruç is surrounded by trees, Saavedra managed to build the whole 2,400-square-foot house by only cutting down a handful. This ship-in-a-bottle effect is apparent in an upstairs deck, which incorporates two oyamel firs, a species native to the mountains of central and southern Mexico. Downstairs, the bar area is built around one of the firs, set off by a glass enclosure.

The open-plan kitchen, which Ramos helped design, was a splurge of about $34,000. The couple spent about the same amount on the glass doors and windows—a cost most apparent in the primary bedroom, which has glazing on three sides.

Being nearly 9,500 feet above sea level means the couple can do without air conditioning, and even though it rarely gets below freezing, heating is a must for much of the year. They spent around $15,660 on an electrical heating system, which, depending on where they are in the house, radiates from either the floor or the ceiling. They also spent some $10,500 on two fireplaces—gas-burning for the bedroom, and wood-burning for the great room’s main sitting area. They use them for heat and for added coziness, says Moss.

The couple have kept their lot as wild as possible, putting their landscaping budget at less than $1,000. And they can tour the area’s rough and wild terrain starting right on their property, which contains a few dramatic rock formations. Though their home is nearly as far above sea level as the taller peaks of Montana’s Glacier National Park, the spot is more bucolic than dramatic. The house is high up, concedes Moss, “but not ridiculously high,” invoking a category that for him starts at about 16,000 feet.

Now, looking ahead to the end of the year, when Nicolás will start to crawl, they are set to invest around $3,000 to babyproof. This will include installing tempered glass to close off the bare-bones railings of their main terrace, located off the upper floor’s great room, and protecting the exposed inside stairwell connecting the great room above with the bar area below.

When the baby came, they hadn’t yet decided on blinds or curtains in the primary bedroom, which turned out to be a benefit. “We get to see all the different shades of light—when it’s getting dark, then when the sun comes up,” says Ramos, who appreciates these subtle changes throughout the day. Perhaps her baby does, too. “I always give Nicolás his first feed while in bed, and he loves staring outside,” she says.

Many new arrivals to this altitude might be gasping, but little Nicolás is doing just fine. He likes to “contemplate the view of the sky and tree tops from our laps,” says his mother.

Foundation and framing:

$169,725 (including masonry)

Steel (including cantilever):

$94,000

Kitchen:

$34,000

Bathrooms:

$18,500

Landscaping:

$780

Fireplaces:

$10,450

Electrical work:

$27,260

Floors (including outdoor decks):

$25,000

Glazing (glass doors and windows):

$34,000

Lighting:

$3,100

Not sure about that apartment purchase? Check out the new digital tool bringing surety back

The Building Trust Indicator is the latest tool bringing buyer confidence back to multi-residential development

The owners spent $73,000 on the land, plus another $475,000 building their vacation house