The NSW Building Commission is ramping up pressure on a builder and an Illawarra council to fix "shocking" defects to more than 300 homes in the lifestyle marina community of Shell Cove.

Shellharbour Council and Frasers Property are in a joint venture to deliver homes in the area.

The Singapore-based developer has self-identified defects in 325 of the 354 homes it has built on the since 2019.

Assistant Commissioner Matt Press said it was "a really shocking scenario".

"It has definitely been affecting residents' lives, particularly with bedrooms and other rooms that are essentially unusable because the carpets are wet and soggy.

"Front doors don't shut particularly well, so a whole range of defects."

Mr Press said the Commission has asked Frasers and the Shellharbour Council to commit to a formal undertaking to fix the defects to ensure "rigour around the remediation process".

"We're going to make sure that, regardless of who out of those two parties is liable financially or otherwise, that the work is done and we can get these 300 buildings fixed as quickly as possible."

He said Frasers had been working through the issues.

"We've only really got a few fragments of information so far, so we really want to use our local presence to get into this and tie at all together in a much more robust process,” mr Press said.

The state government recently announced a permanent office in the Illawarra, with two new inspectors.

More residents asked to come forward

Mr Press said only nine residents had made formal complaints to the Commission, so it was distributing pamphlets in the area. seeking more community feedback.

He said, once information had been gathered, affected buildings would be inspected and the evidence used to "force the issue with Fraser". 

"If we can't agree to an undertaking, then we can use our powers to issue rectification orders," he said.

Frasers already has a project in the Sydney suburb of Chippendale, the One Central Park high-rise building that's been served with a building rectification order.

Push for industry rating 

Mr Press said he was concerned Frasers did not have an iCIRT (Independent Construction Industry Rating Tool) which gives the state government information about the company's character and financial resilience.

The voluntary rating tool was adopted by the NSW Building Commission in 2022.

The Building Commission hopes it will be adopted by developers, builders, sub-contractors, certifiers and consultants that shows a rating of between one and five stars.

Mr Press said the ratings were resulting in practical benefits for consumers.

"In the Illawarra, there are about seven projects in the design stage that will get latent-defect insurance because of their ratings from the scheme," he said.

The council and Frasers declined the ABC's requests for interviews about whether they would enter into a formal undertaking to fix the defects. 

But in a statement, Shellharbour Council said:

"Frasers Property Group is the builder of the townhomes in Shell Cove and issues regarding home warranty, outstanding rectification works or housing numbers should be directed to Frasers Property Group."

The council said it expected the builder to conduct any outstanding rectification works as a priority and to communicate regularly with property buyers.

It also stated that the council was not "managing, funding or delivering any warranty works as per the partnership of the Shell Cove Project'".

Committed to fixing issues

In a statement, a spokesperson for Frasers said it was committed to fixing the issues.

"The Building Commission NSW is fully aware of the commitment, approach and resources we are dedicating to the program.

"We continue to transparently and individually communicate with our customers to ensure they're aware of the process, including key milestones and timeframes, and we continue to provide support to customers while works are underway."

Frasers said it hoped to complete the work by 2026 and was in the process of gaining iCIRT accreditation.