In brief - Most home building reforms to take effect by 15
The NSW Home Building Amendment Act 2014 has been proclaimed
and will commence in three stages, with most of the changes taking
effect by 15 January 2015. The changes will affect developers,
builders, contractors, subcontractors, tradespeople, owners, owners
corporations, strata-managers, property investors and
Regulations and consumer building guide to be amended
First stage reform: check that relevant insurance is in the
From 31 December 2014, one minor change will
take effect. Insurance under the Home Building Act 1989 will only cover work performed
where the insurance is in the name of the person who contracts to
do the work. Although the Act currently contains a provision that
states that coverage extends to work at an address irrespective of
who is named as the contractor, the provision was only operative
for a month in 2003 before being repeatedly suspended.
Owners, owners corporations, strata managers and builders should
check that relevant insurance is in the correct name, otherwise
work is not insured and builders are not able to claim payment
under their building contracts.
Second stage home building reforms from 15 January 2015
From 15 January 2015, most of the other changes commence and
Licensing requirements: New multiple-offence
prison-term penalties will apply if you hire unlicensed persons, do
any unlicensed work, or offer to do any unlicensed work.
Statutory warranties: Under the revised
"major defect" test, some six year defects will become
two year defects and vice-versa.
Disputes: A new defence will apply where there
has been reliance upon written instructions of a relevant
Defects: There will be a shift towards defect
rectification in preference to compensation.
Owner-builder permits: New mandatory warnings
will be required on certain sales contracts.
Insurance: Home Owners Warranty insurance will
be known as Home Building Compensation Fund (HBCF) insurance.
Third stage home building reforms from 1 March 2015
From 1 March 2015, the few remaining changes take effect:
Deposits: The maximum deposit will increase to
10% (up from 5% for contracts over $20,000).
Payments: Only two types of progress payments
will be allowed and they need to be clearly specified in your
Termination: Your contracts will need to
include a particular statement about termination.
Among other things, this will mean that contracts for works
exceeding $5,000 will need to comply with the "small
jobs" requirements (up from $1,000), and contracts for works
exceeding $20,000 will need to comply with the "other than
small jobs" requirements (up from $5,000).
As a result, the requirements for mandatory contract price
warnings, cooling-off statements, checklists and conditions may be
less likely to apply to smaller jobs.
New consumer building guide to be released in March
A new draft of the consumer building guide will be out by 1
March 2015. It will be cut down to two pages (currently 24). Since
it is a mandatory inclusion in prescribed contracts, be sure to
update your precedents once it is released.
Use the home building compensation fund insurance register
The new public HBCF register, set to go live on 15 January 2015,
will allow interested persons (primarily owners, owners
corporations and strata managers) to check their builder's or
tradesperson's HBCF insurance and whether there have been
previous claims on that insurance.
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
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