Buyers left waiting after ‘serious defects’ uncovered in Sydney development

A multimillion-dollar Surry Hills apartment development has come under scrutiny from the state’s building watchdog after inspectors uncovered 13 serious defects at the site including structural cracking, critical fire safety failures and extensive waterproofing problems.

The Building Commission NSW has issued rectification and prohibition orders covering the six-storey development under construction at 23-47 Flinders Street, known as The Rathbone, preventing future buyers from moving into the building until extensive repairs are carried out.

The defects were identified during an inspection by regulators of the six-storey development.Wolter PeetersThe intervention follows a visit by building inspectors on August 18, which identified significant concerns about the safety, structural integrity and long-term durability of the building being marketed to prospective buyers as a “luxury” and “boutique” development.

Among the most serious findings were extensive defects in structural elements of the basement, including “excessive cracking” in reinforced concrete walls, exposed steel reinforcement and concrete spalling on structural beams.

The regulator warned the defects could accelerate corrosion, reduce the building’s lifespan and potentially “compromising its structural integrity”.

Waterproofing failures were another area of concern, with inspectors identifying water penetrating through walls, windows and sections of the roof along with incomplete shower waterproofing works and membranes showing signs of peeling.

The development is located on the site of a former petrol station in Surry Hills.Wolter PeetersNSW Building Commissioner James Sherrard said the combined defects had the potential to create unhealthy or dangerous living standards for future residents.

“The penetration of water has led to water ingress and caused unhealthy or dangerous conditions, loss of amenity [and] undue dampness or deterioration of building elements,” he wrote in his orders.

Fire safety deficiencies added to concerns with inspectors identifying improperly installed fire hose reels and unprotected service penetrations through fire-rated walls that did not meet testing standards.

In his statement of reasons, Sherrard warned the combined defects presented an unacceptable risk to future occupants, with the potential to cause progressive building deterioration and safety hazards if left unaddressed.

The commission has given the developer Murfield Pty Ltd, which is owned by Avid Property Group, 240 days to complete the remediation works. Technical reports and rectification designs must also be submitted by January 31.

An Avid Property Group spokeswoman said in a statement its current builder, Buildcorp, had been engaged to finish the development and rectify defects left by a previous contractor.

“The defects relate to unfinished work by a previous builder [and] Buildcorp are now engaged to rectify all existing defects and complete the project,” she said.

“We are preparing a program to satisfy all requirements and reach practical completion as soon as possible. We will continue to provide monthly updates to our current purchasers and look forward to welcoming them into their new homes.”

Planning records show the $24.1 million development, located on the site of a former petrol station, was approved by the City of Sydney in 2018.

The orders come amid heightened scrutiny of construction standards across NSW, with the Building Commission conducting a record 1015 inspections of development sites during the 2024-25 financial year and issuing 455 rectification orders.

NSW Building Minister Anoulack Chanthivong told a budget estimates hearing earlier this year that construction quality in the sector had improved following regulatory reforms, including expanded powers to cancel licences of tradespeople found guilty of misconduct.

“The quality has improved, but there’s more room for improvement,” he said.

“Our compliance blitz is all about making sure that building compliance is actually done and done at high quality, but also working with the industry so that we have fewer defects.”

The prohibition order on The Rathbone will remain in force until formally revoked by the Building Commission.

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