The NSW government has proposed the following four new pieces of legislation to better regulate the building industry:
- Building Bill 2022;
- Building Compliance and Enforcement Bill 2022;
- Building and Construction Legislation Amendment Bill 2022; and
- Building and Construction Legislation Amendment Regulation 2022.
Our article covers the key changes and what they mean practically for your business.
The New Building Bill
The Building Bill 2022 intends to replace the Home Building Act 1989 (NSW) (‘HBA’) and is anticipated to commence in 2024 with provisions set to come in to effect over a two to five-year period.
New Definition of Developer
The Building Bill will amend the definition of ‘developer’. The expanded definition of ‘developer’ will ensure that a larger range of professionals will owe statutory duties, warranties, and obligations.
| OLD | NEW |
| You are considered a developer under the HBA, if you are an owner of 4 or more dwellings which have been constructed or are in the process of being constructed, even if you never contracted with the builders of the dwellings | A developer under the Building Bill is defined broadly to include those who contract or arrange for building work, owners of land on which building work is carried out, principal contractors, and strata scheme developers. |
‘Serious Defect’ Term
The term ‘Serious Defect’ is a broader concept which intends to replace the term ‘Major Defect’.
| Current Definition of ‘Major Defect’ under the HBA | New ‘Serious Defect’ term under the Building Bill |
| A “major defect” is defined as a defect in a major element of the building. That defect must cause or be likely to cause: – the inability to utilize the building for its designated purpose. – the destruction of all or part of the building. – the of collapse of all or part of the building. This defect may result from: – defective design – poor workmanship – defective materials, – or a non-compliance with the National Construction Code. A ‘major element’ of the building includes load-bearing components such as foundations, footings, floors, walls and beams, as well as fire safety systems and waterproofing. | A “serious defect” is a defect that can be attributed to a non-compliance with the governing regulations or performance requirements of the National Construction Code imposed at the time the building work was conducted. Additionally, it must cause or have the potential to: – render the building uninhabitable. – result in the collapse of part or all the building – result in the destruction of part or all the building. The definition will extend to all building elements, including internal walls, finishes, and fittings. The NSW Government is also exploring the possibility of increasing the duration of warranties for serious defects from 6 years to 10 years. |
New ‘Construction Work Term’
Under the Building Bill, the term “construction work” stated in section 37 of the Design and Building Practitioners Act (DBP Act) will be substituted with “building work”.
| Current “Construction Work” Term | New “Building Work” Term |
| Section 36 of the DBP Act defines ‘construction work’ to include “supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work”. The definition of “construction work” draws its meaning from the definition of “building work” which had led to confusion as:
| By replacing “Construction Work” with the term “Building Work”, all builders, developers, designers, manufacturers of building products and other stakeholders involved in the construction of a “building” now owe a statutory duty of care to owners and all successive owners of land. This duty will act retrospectively, thus those who have already carried out building work may owe the statutory duty of care where the economic loss has become apparent within the 10 years prior to the commencement of Part 4 of the DBP Act.
|
New Licencing Types For Builders
The Department proposes a gradual approach to implementing the new builder licence framework, with the new classes proposed to commence two years after the Bill is introduced to Parliament.
Existing builders are expected to largely meet the experience requirements.
| Class and Building Type | Specifics | Knowledge requirements | Practical experience requirements authorised by the licence |
| Builder A – Unrestricted | This unrestricted level will permit builders to carry out building work for all National Construction Code (NCC) buildings. | Relevant diploma or tertiary qualification. | 5 years |
| Builder B- Medium Rise | This restricted level will permit builders to carry out building work for all NCC buildings up to three storeys in height, it has removed the 2,000m2 limitation. | Relevant diploma or tertiary qualification. | 3 years |
| Builder C- Low Rise | This restricted level would permit builders to carry out building work in NCC classes 1 (Single Residential Dwellings) and 10 (non-habitable buildings or structures) only. | CERT IV or above | 2 years |
| Builder D- Internal Fit Outs | Non-structural building work and fit outs on any class of building. | CERT IV or above | 1 year |
For more information regarding the Building Bills licensing proposal please refer to our https://keystonelawyers.com.au/new-proposed-building-licensing-regime-in-nsw/
Broader Statutory Duty of Care
The Building Bill aims to combine the duty of care rules found in the DBP Act and Environmental Planning and Assessment Act 1979 (NSW) (EPA Act). This means that a duty of care for defects will apply to both old and new buildings. The scope of the duty of care will also expand to clarify that it includes non-residential buildings (not solely class 2 buildings).
How will the Building Bill impact you?
| Developers |
|
| Builders |
|
| Designers | · An expanded duty of care is owed by every person who carries out construction work, including design work under section 37 of the DPB Act. · It is proposed that designers (including those who will not be making design compliance declarations under the DPB Act) are registered for all design work.
|
| Certifiers/ Inspectors | · A new duty of care in respect of defective building work in any building type. · Enhanced powers to issue rectification orders or require training |
Other Proposed Legislation
Building Compliance and Enforcement Bill 2022
This will replace the Residential Apartment Building (Compliance and Enforcement Powers) Act 2020 and aims to standardise and strengthen investigative and enforcement powers across a broader class of building.
Building and Construction Legislation Amendment Bill 2022 & Building and Construction Legislation Amendment Regulation 2022
Key features include:
- Hold individuals accountable for non-compliant building products and introduces additional Secretary powers for building product supply.
- Allow for rectification of building defects through a developer-supplied building bond.
- A requirement for payment claims to owner occupiers to attach a Homeowners Notice information to help them understand their obligations in responding to a payment claim and the consequences of not doing so; and
- An ability for adjudicators to engage an expert to investigate and report on matters relating to an adjudication claim;
- An ability for a merit review of an adjudication determination;
- Extend protections by requiring retention money to be held in trust for projects with a value threshold of $10 million (currently the requirement only exists if the head contractor’s construction contract with the principal (the main contract) has a value of at least $20 million)