An overview of building legislation changes passed by NSW Parliament in November 2023.
On this page
Anywhere, anytime inspection powers expansion
Decennial Liability Insurance and Strata Building Bond Inspection Scheme for Class 2 buildings
Key information
Several amendments have been made to building legislation as part of ongoing reforms to transform the regulation of the construction industry and restore trust and confidence in residential buildings.
- Site inspections of residential buildings including freestanding houses and terraces no longer need to be triggered by the lodgement of a building dispute to the regulator. Instead, the work of builders and trades working on residential buildings covered by the Home Building Act (1989) may be inspected at anytime, anywhere.
- Stronger powers for the regulator to refuse an application, cancel a licence or disqualify a person from holding a contractor licence if the person has been involved in the management of a company which has become insolvent in the previous 10 years.
The Building Legislation Amendment Bill 2023 was passed by Parliament in November 2023.
Anywhere, anytime inspection powers expansion
Who does this change impact
Builders and tradespeople working on buildings covered by the Home Building Act (1989) and owners of these building.
What you need to know
Builders and tradespeople need to be aware that inspections may now occur on all residential construction sites and existing premises where residential building work has been undertaken. Homeowners should be aware of these new powers of inspection to homes under construction.
The Act introduces powers into the Home Building Act 1989 for inspectors of the Building Commission NSW to investigate the construction of buildings covered under the Home Building Act, which include for example, freestanding houses, duplexes and terraces (known as Class 1 buildings under the National Construction Code).
Inspectors will be able to enter residential homes under construction or where construction work is being undertaken to inspect build quality. If a building is occupied, an inspector can only enter part of the premises used for residential purposes with permission of the owner or by a search warrant. Inspectors may examine, test, take samples or seize things to determine building compliance or if they believe it may be connected with defects in the building.
The inspector may issue a rectification order to the contractor for:
- Defective building work
- Work that could result in a defect, or
- As a consequence of the defect, other structures or work has been damaged
Inspectors may also issue a stop work order to a developer where they believe that if building work continued, there could be significant harm or loss to the public or occupiers, including future occupiers of the building.
Penalties can apply for failure to comply with a rectification or stop work order.
Site inspections no longer need to be triggered by the lodgement of a building dispute to the regulator. Instead, builders and trades working on these residential buildings are being put on notice that their work may be inspected at any time. This replicates existing powers for residential apartment buildings (known as Class 2 buildings under the National Construction Code).
Anti-phoenixing laws
Who does this change impact
Applicants for, and holders of, a contractor licence (a licence to contract to do residential building work, specialist work, or both) that may have been insolvent, including individual directors.
What you need to know
The construction industry experiences high rates of insolvency when compared to other industries. Sometimes, directors of companies in the construction industry choose to intentionally create a new company to carry on the business of an existing company that has been liquidated to avoid completing work, remediating defects or paying outstanding debts, including subcontractor wages. This is known as intentional phoenixing.
Individuals with a history of intentional phoenixing will be prevented from harming consumers and tradespeople in the residential construction sector thanks to stronger powers introduced in the Home Building Act 1989.
Changes to the law provides grounds for the regulator to refuse an application, cancel a licence or disqualify a person from holding a contractor licence if the person has been involved in the management of a company which has become insolvent in the previous 10 years. This includes where the person was a director at the time of the insolvency event or was a director in the lead up to the insolvency event.
This reverses the presumption of a person securing a licence and places responsibility on applicants to demonstrate they are not at risk of future insolvency.
Decennial Liability Insurance and Strata Building Bond Inspection Scheme
Who does this change impact
Consumers, developers and builders of Class 2 apartment building projects and insurers who offer Decennial Liability Insurance (DLI) products.
What you need to know
Decennial liability insurance (DLI) is an insurance product that covers the common property of strata apartment buildings (known as Class 2 buildings under the National Construction Code) against defects for a period of 10 years.
The developer will take out the insurance policy before occupation of the building and it provides an alternative option to the Strata Building Bond and Inspection Scheme (SBBIS), which operates under the Strata Schemes Management Act 2015.
DLI covers rectification of defects up to the contract cost of the apartment building even if the developer or builder becomes insolvent or ceases operation. The SBBIS will only cover the costs of defect rectification up to the value of the bond paid (currently 2% of construction value).
The Act also allows for changes to be made to the existing strata building bond rate. From 1 July 2024, the rate a developer will be required to hold as a bond against defects will increase from 2% to 3% of the total cost of the building. This will provide greater consumer protection for apartment building owners covered by the SSBIS.
New suspension powers
Who does this change impact
Certifiers registered under the Building and Development Certifiers Act 2018 and all practitioners registered under the Design and Building Practitioners Act 2020.
What you need to know
Powers have been strengthened to allow for the immediate suspension of a certifier, design practitioner, principal design practitioner, building practitioner or professional engineer while disciplinary action is being finalised. This applies if the registration holder has been issued with a show cause notice and the person engaged in conduct that would constitute grounds for a suspension, the person is likely to continue to engage in the conduct and there is a danger of significant harm if the certifier, practitioner or engineer continues to work.
This power is already in place for builders and contractors under the Home Building Act 1989 and the Act duplicates these same powers to ensure the regulator has equal powers to address dangerous and harmful behaviour from certifiers and registered practitioners.
Building products safety
These reforms will come into force during 2025.
Who does this change impact
Everyone involved in the building product supply chain.
What you need to know
The Act introduces a chain of responsibility and new duties for manufacturers, suppliers, importers, designers, and tradespeople involved in building product supply, enhancing accountability throughout the entire process.
The new duties will include ensuring products are compliant and safe for their intended use and that certain information is made available and shared about the product to other persons in the building product supply chain.
New powers have also been provided to issue building product warnings and directions and to ban, recall and investigate non-conforming building products.
Further information on building products safety reform will be available in 2024.
Contact Building Commission NSW
For questions related to changes under the Building Legislation Amendment Act 2023, contact Building Commission NSW on 13 32 20.
More information about Building Commission NSW is available.