Important Changes to Home Building Laws

In August this year, the NSW government proposed significant changes to the home building legislative framework. The focus of the reforms is to consolidate regulation with the purpose of restoring consumer confidence in the building and construction industry.

The proposed changes seek to create clear lines of accountability and propose more significant consequences for builders and other professionals, such as architects and engineers, who deliver substandard work.

The proposed amendments apply to a number of Acts, including, amongst others, the Home Building Act 1989 (NSW), the Design and Building Practitioners Act 2020 (NSW) and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW).

The bills were open for public submissions until the end of last month and are will now be considered by both houses of parliament. If passed, the changes are expected to commence in early 2023.

What changes are proposed?

The new framework will impact all construction industry participants.

Key changes include:

• Expansion of the statutory duty of care under the recent Design and Building Practitioners Act 2020 (NSW), which will include certification and inspection of building work
• Mandating documentation for variations and maximum progress payments for stages for home building works
• Expansion of the term ‘developer’, which will now include more parties to be potentially held liable for defective works and more defences for builders in home building claims
• Extending consumer protections to manufacturers of construction materials off-site and prefabricated buildings
• Consolidation of various works certificates currently required for building works into one system
• Expansion of licensing requirements in commercial building works, meaning that builders, designers, engineers, and inspectors will require a license moving forward
• Amendment of the definition of a ‘major defect’ for the purpose of enforcing the statutory warranties for home building work under the Home Building Act 1989 (NSW)
• Extension of the limitation period for which proceedings may be brought for a ‘major defect’, from 6 years to 10 years, and from 2 years to 3 years for ‘any other defect’, under the Home Building Act 1989 (NSW)
• Greater supervision of non-license holders in respect of owner-builder work

What does this mean for you?

Building laws are tightening up across the state and significant penalties are being proposed to professionals found to have done defective work.

Extension of the warranty period for major and minor defects under the proposed Bills means that property owners will have extra time to bring an action against professionals for defective work.

This means that is important now more than ever for construction industry professionals to understand their responsibilities and ensure that they are compliant with the new framework.

We will monitor the progress of the Bills closely and will provide further updates as they progress through parliament before commencing as law in 2023.