New Building Levy when working on Class 2 Buildings


Commencing 4 July 2022, it will be compulsory in NSW, in certain circumstances, for developers to pay a building work levy (“the Levy”) as part of their application for an Occupation Certificate relating to a Class 2 building.

The NSW Government has passed the Residential Apartment Buildings (Compliance and Enforcement Powers) Amendment (Building Work Levy) Regulation 2022 (“the Bill”) which makes changes to both the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (“the Act”) and the Home Building Act 1989.

The Bill creates a new Part 2 within the Act that allows the NSW Secretary to impose the Levy on developers. The Levy’s introduction comes as an attempt from the NSW Government to ensure compliance with recent NSW building law reforms and restore public confidence in the building and construction industry.

When will the Levy be payable?

An individual will be required to pay the Levy after 3 July 2022, only when:

  • The individual requires an Occupation Certificate for building works on a Class 2 building (or a building that has a Class 2 component); AND
  • When an “Expected Completion Notice” (“ECN”) is submitted (or amended).

Payment for the Levy is triggered when an ECN is submitted as part of the Intention to seek an Occupation Certificate (“ITSOC”) application.

The Occupation Certificate will not be released until the individual has paid the Levy (unless a written exemption has been granted). The person who submits the ITSOC is liable to pay the Levy.

Exemptions to the Levy

The Levy will not be payable under certain circumstances, which include when:

  • an occupation certificate is not required;
  • works are “Exempt Works” under the Design and Building Practitioners Act 2020 (NSW);
  • there will be fewer than five (5) residential apartments;
  • when works are carried out by or for the New South Wales Land and Housing Corporation;
  • works are to repair, rectify or replace external cladding; or
  • repair, renovation or remediation works are valued at less than $150,000 (including GST).

How much is the Levy?

The Levy will be charged on scale rates based on the type and volume of works completed as below:

New buildings or additional storeys to existing buildings

  • 1-3 storeys (gross floor area less than 6,000m2) = $7,000
  • 1-3 storeys (gross floor area greater than 6,000m2) = $8,400
  • 4-8 storeys = $8,400
  • 9-19 storeys = $11,000
  • 20-30 storeys = $15,500
  • 31 storeys or more = $21,200

Repair, renovation or protective treatment of buildings

  • up to $150,000 = $0 (as outlined in the exemptions above)
  • more than $150,000 but not more than $500,000 = $700
  • more than $500,000 but not more than $1million = $1,300
  • more than $1million but not more than $5million = $2,000
  • more than $5million but not more than $10million = $2,700
  • more than $10million = $4,000

Where the works involves both the construction of additional storeys and protective treatment works, the Levy amount will be the higher of the applicable scaled rates.

It is worth noting the above Levy rates are subject to the Consumer Price Index (CPI) and will be adjusted at the beginning of each financial year.

How to pay the Levy?

Individuals will be able to pay the Levy on the NSW Planning Portal website, as part of their ITSOC application. The Levy will be paid into the Home Building Administration Fund under the Home Building Act 1989 (NSW).

More information about the Levy can be found on the Fair-Trading NSW website.

How can we assist?

Keystone Lawyers are experts in Building and Construction law and can assist you with making sure your legal obligations are satisfied when planning to construct a Class 2 Building.