Developer buys back $600m disaster suburb
Hundreds of millions of dollars in compensation will be offered to 841 homeowners in Western Sydney's 'sinking suburb' following a pre-Christmas handout from one of the country's biggest development companies.
In what is effectively buying back a suburban area, Lendlease has offered to repurchase every home in Jordan Springs East that is marked by Penrith City Council as susceptible to significant damage caused by subsidence - if they are actually damaged.
The commitment directly impacts more than $600m worth of real estate and comes after residents discovered major cracks inside and out, sunken driveways and crumbling roads in 2018.
The matter only became public in January 2020, with many residents signing confidentiality agreements with the $8.5 billion company.
Two homes along Armoury Rd have been demolished because they were beyond repair, while 20 out of 45 homeowners have taken company offers to buy back their homes
While Lendlease maintains that the damage is limited to one or two streets and about 90 homes, in September Penrith Council increased the number of notifications on homes from 195 to 841 homes.
These notifications appear on planning certificates and tell potential buyers that there may be "fill of low relative compaction" beneath the properties and that the council is investigating.
Disagreements between council and company engineers over the extent of the damage have left many homeowners with council notifications but no access to the existing Lendlease compensation scheme.
Homeowners also have the option to receive compensation and company-backed repairs until 2035 or five years after council notifications are removed.
"Lendlease does not believe it has any legal obligation to provide this commitment but is doing so because we stand behind our communities, our technical consultants and geotechnical testing and most importantly, our customers," Lendlease senior development manager Kevin Montier said.
"The customers are caught in that position where they see us and council - for sometime now - talking about the fact that we need to get our experts to agree.
"And then, they have since had that notation placed on the property by council so there is that anxiety and nervousness.
"It gives them the peace of mind."
While the company refuses to entertain the causes of the damage, industry sources believe using oversized rocks instead of soil, failing to allow adequate time for land to settle, putting houses on 8m of fill and filling in a creek all contributed to the debacle.
The Federal Government sold the former Australian Defence Industries site to Lendlease in 2004, five years after Penrith Council first raised concerns about both flooding and the need to significantly raise the level of the land to allow construction.
The decision by Lendlease has been praised by NSW Building Commissioner David Chandler, who has been advocating for a speedy resolution for consumers.
"It's not fair to expect owners to wait for Lendlease and council to agree whether the current planning notation will be removed or will stay," he said.
"This amendment to the current compensation scheme will give more residents the support they've been seeking, by ensuring that they are protected if latent defects emerge in their properties.
"The additional 'latent defects' commitment, will protect residents if settlement issues beyond the Australian Standard appear for up to 15 years."
Penrith councillor Marcus Cornish said the company's decision shows that the council was right to put notifications on properties.
"It shows that the council has been working in the best interests of the residents," he said.
"This also shows the problems when planning determinations are taken out of the hands of local councils.
"It also reveals issues with private certification."
Londonderry Labor MP Prue Car said "this has been a very stressful year for hundreds of local families".
"I hope this announcement will provide some piece of mind as we head towards Christmas and 2021," she said.
When Vibhuti and Jimit Shah moved to Sydney from the UK, they were looking for their "dream home in their dream country" and they found it in a double story home on Flynn Circuit in the new suburb of Jordan Springs.
The couple and their 11-year-old son Moksh moved into the property in March last year
after paying a total of $800,000.
But their dreams were shattered after friends and family called them, worried about their house in Sydney's "sinking suburb".
"We heard the first incident about a year ago when someone had a crack in the driveway and we thought it was a one-off incident. There was a sunken road as well because of which we had issues with buses," Mrs Shah said.
"When we bought it there were plans for a school and a bus route but with the sinking road they couldn't extend the route. We had to buy two cars just to drive to the station because we both work. That was frustrating. They didn't stand up to the promises that were made when they sold the land."
The couple's property is one of 841 homes that have been given a notation that they could be build on land that is at risk of subsiding.
"Initially we thought maybe it's not a big deal. But then we had quite a few more properties getting impacted and now the whole suburb is called a sinking suburb," she said.
"It was really embarrassing to hear from friends that we live in this sinking suburb. It was really stressful. Three months ago they put a notation on the property to say we are one of 800 houses at potential risk and that if we were to sell the property the buyer has the right to know the house may be at risk of subsidisation," she said.
"We moved here from England and we bought the land because we came to dinner in this area and fell in love. We walked up to the Lendlease office and signed the papers without a mortgage, right there and then.
"This was our dream home and it was meant to be the last move."
Mrs Shah said while Lendlease's promise to buy the property or offer compensation if their home does have damage in the future provides some relief but it isn't a perfect solution.
"The value of the property is definitely declining. We have spend a lot of money on in-home improvements and its disturbing and stressful to think about this. But this new update does give us a little bit of hope and some peace of mind," she said.
"We haven't had any damage yet but it's always there in the back of my mind. I really want to know when this notation will be taken off as it's been more than a year since the first incident. No one has given us a timeline."
Originally published as Developer buys back $600m disaster suburb