New Laws Shake Up Developers in NSW


Following high-profile construction failures at Opal Tower and Mascot Towers, regulators will now be armed with a suite of powers to ensure buildings are constructed to a high standard.

Earlier this month the NSW government passed two new bills, the Design and Building Practitioners Bill 2020 and the Residential Apartment Buildings (Compliance and Enforcement Powers) Bill 2020, enacted to empower apartment owners and hold developers accountable for their work.

The two bills will provide the legislation needed to support the government's six-pillar building reform package.

At the heart of the new legislation is an ability for the secretary of the Department of Customer Service to order the correction of “serious defects” in residential apartment buildings which will be overseen by the NSW building commissioner.

Developers that directly fail to comply with performance requirements of the Building Code of Australia, that deny habitability or use of the building for its intended purpose, or use banned products will be held accountable.

▲ The new legislation is a big win for apartment buyers who have traditionally had weak consumer protection.
▲ The new legislation is a big win for apartment buyers who have traditionally had weak consumer protection.

The new statutory duty of care will be introduced and owed to each owner of the land in relation to which the construction work is carried out, including all subsequent owners.

Owners will be able to claim damages for any breach of the duty of care by any person who carries out construction work, including head contractors, subcontractors, manufacturers, suppliers and consultants.

Owners of buildings that are part of existing legal actions are unable to make negligence claims under the new law, however.

There are also limits to the scope for claims, with the law requiring negligence actions for defects to be launched within six years of a defect becoming known, and within 10 years of a building’s completion.

The NSW building commissioner, David Chandler, will also be equipped with the power to prevent occupation certificates or strata plan registrations before defective buildings can enter the market.

The legislation largely leaves it to the Department of Customer Service to appoint “authorised officers”.

The minister has indicated these officers will be the building commissioner and his staff.

A new digitised system for regulating design and building work, including registration of designers, engineers, builders and other specialist practitioners, will also come into play.

Developers, builders and certifiers will be rated on their record of building failures, finances, complaints, insurance claims and other such factors under a new tool developed by data company Equifax.

The legal reforms will also give Chandler the power to call in the developer, builder and building certifier on these projects, six months ahead of the date they plan to issue an occupancy certificate.

Sydney-based consultant Peter Faludi said the new regime would fundamentally change the development landscape.

“New participants in the development market will not be able to get involved in high-rise residential development until they develop a good track record in Australia,” Faludi said.

“Due to the reduced number of developers involved in high-rise development, and the increased costs resulting from the new regime, supply may be constrained which may result in the prices of apartments in such developments increasing.”

The NSW construction industry and its regulators will now roll out these new initiatives to ensure dwellings are built to keep their occupants safe, and in turn attempt to rebuild and restore public confidence.

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