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Changes are coming to the residential building industry
Visit the NSW Fair Trading website to find out more about these changes, including two new registration schemes for class 2-related work: one for Professional Engineers and one for designers and builders.”
Laws to better protect buyers and residents
Two new laws support the NSW Building Commissioner's comprehensive reform package that will transform the building sector into a customer‑centric industry focused on the quality of construction.
Powers under the Residential Apartment Buildings (RAB) Act
Under the RAB Act, the NSW Building Commissioner and authorised officers have the powers to:
- gather information
- enter premises
- take actions against non-compliant developers and serious defects identified in residential buildings
- investigate and order the rectification of work or prohibit building work from being completed, for example, stop work orders and building work rectification orders
- operate proactively while buildings are under construction to prevent defects from being inherited by future owners
- take action against defects identified in existing buildings that have been completed within six years of the issue of the occupation certificate and, in extreme cases, up to 10 years.
Definitions under the RAB Act
A developer is defined in s4 of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 as any one of the following:
- the person who contracted, arranged or facilitated building work to be carried out
- the owner of the land on which a building or part of a building is erected or constructed (who was the owner when the building work was being carried out)
- the principal contractor for the building work within the meaning of the Environmental Planning and Assessment Act 1979
- the developer for building work for a strata scheme within the meaning of the Strata Schemes Management Act 2015.
Section 5 of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 defines building work as
- any physical activity involved in the erection of a building or part of a building
- any work involved in (including coordinating or supervising work involved in)
- the construction of a building or part of a building
- the making of alterations or additions to a building or part of a building
- the repair, renovation or protective treatment of a building or part of a building.
A serious defect includes
- any defect that is likely to cause the inability to inhabit or use the building or part of the building for its intended purposes, or
- any building element that does not comply with the requirements of the Building Code of Australia, relevant Australian Standard or relevant approved plans, or
- any use of products in contravention of the Building Products (Safety) Act 2017 (NSW).
Design and Building Practitioners Act 2020
Changes related to the Design and Building Practitioners Act 2020 will apply from 1 July 2021.
The Design and Building Practitioners Act was developed through extensive consultation with the public and industry stakeholders. The Act ensures NSW has a leading system of design and building regulations that delivers well-constructed buildings into the future. It implements key reforms that will strengthen accountability in the design, building and construction sector.
Duty of care
A new industry-wide principle of duty of care has been introduced, enabling homeowners to seek compensation if a building practitioner has been negligent.
Design practitioners, builders and project managers, must exercise reasonable care to avoid financial loss to current and future homeowners caused by building defects.
This applies to all new buildings and retrospectively to buildings less than 10 years old.
Practitioner registration and regulated designs
A new registration scheme is being introduced for currently unregistered design and building practitioners and professional engineers. This will ensure they are competent, have the appropriate skills and insurance, and can be held accountable for their actions.
From 1 July 2021, only registered design and building practitioners will be able to lodge a design compliance declaration, in line with the Building Code of Australia.
Registered design and building practitioners must obtain and build in accordance with these designs and issue a compliance declaration stating that the final building follows the Code.
A new register is being established with the Department of Customer Service for companies and individuals that will need to be able to lodge compliance declarations.
Reporting a defect
The RAB Act applies retrospectively for buildings up to 10 years old.
Homeowners and residents can report building defects or make a complaint to NSW Fair Trading.
Individual strata and community lot owners can report issues or make a complaint to NSW Fair Trading.
Each complaint will be reviewed and assessed to identify the appropriate response. It is important to note that not every compliant will result in an investigation.
Caretakers and others who control access to areas of the common property will be obligated to cooperate with inspectors to enable the inspection to be carried out.
Read more about making a complaint to NSW Fair Trading.
Obligations of developers
Giving notice of intended completion
Under the RAB Act, a developer with building work that is approaching completion on or after 1 September 2020, must give notice of the date they plan to apply for an occupation certificate.
Notice is to be given:
- at least six months before the application for an occupation certificate is made, and
- no more than 12 months before the application for an occupation certificate is made.
Transitional timeframes apply for the first two weeks from 1 September 2020.
There can be serious consequences if notice is not provided. This could include fines and a prohibition order that delays the occupation certificate being issued.
Giving notice of an application for an occupation certificate allows time for a review of the building development. This includes a possible occupation certificate audit to identify any serious defects before the building is completed and buyers settle their contracts.
Developers who expect to seek an occupation certificate in the six-month period of 1 September 2020 to 28 February 2021 will be required to comply with a transitional arrangement.
In this period, a developer will not be able to apply for an occupation certificate unless they notify of their proposed application date by 14 September 2020.
Details required in the notice
The notice must:
- set out the date that the developer expects to make the application for the occupation certificate for the building or part of the building (the expected date)
- include the following information
- name of the builder, physical address, builder’s licence number, email, telephone and contact officer name
- the Development Application consent reference number
- the site address where the building work is being undertaken
- whether a strata plan or a strata plan of a subdivision will be registered
- for a developer who is a body corporate – the name, physical address, registered office address, email address and contact officer name
- for a developer who is an individual – the name, physical address and registered office address (if available), email address.
How the notice should be lodged
There are two ways that notice can be given.
1. Online via the NSW Planning Portal
If your planning application is already in the NSW Planning Portal, then you should lodge the notice via the portal as part of the intent to lodge an occupation certificate process.
Councils and Principal Certifying Authorities (PCAs) in the Sydney Metropolitan, Illawarra, Central Coast and Newcastle areas have been using the NSW Planning Portal from 1 July 2020 and must process all planning applications this way from 31 December 2020.
2. Manually complete and submit a form
If your planning application for the building work is not in the NSW Planning Portal then you must manually complete an Expected Completion Notice form.
Change of expected completion date
If the expected completion date is late or early by more than 60 days, then the developer must notify of the new date within 7 days of becoming aware of the change in circumstances.
Lodgement of the strata bond
From 1 September 2020, developers must lodge the 2% strata building bond and associated documents via the NSW Planning Portal. This was previously done via NSW Fair Trading’s the SBBIS e-Portal.
Compliance checks will ensure the building bond is lodged before the application for issue of an occupation certificate.
Post-construction, building inspections are carried out and if defective work is not repaired, the building bond is used by owners corporations for repairs.
Read more about strata building bonds.
Inspections and audits
After the notice is lodged, the project will be reviewed and may be selected for an occupation certificate audit. The audit will be carried out by inspectors from the Department of Customer Service.
Being chosen for an inspection does not necessarily imply a likelihood of non-compliance or a high risk project. Selections will be based on a range of parameters and include random choices.
The audit will involve a review of designs and documents (including contracts) for building work as well as a physical inspection. The focus during inspections is on the key building elements of structure, waterproofing, fire rating systems, building services and external enclosures.
The RAB Act 2020 provides information-gathering powers and powers of entry which are relied on to carry out the audit.
A prohibition order, stop work order or building rectification order can be made if inspectors find any serious defects.
Enforcement and penalties
If serious breaches have occurred, the Act allows for an occupancy certificate or registration of a strata scheme to be stopped.
Failure to comply with the new laws could result in fines of up to $330,000 and up to two years imprisonment.