The legislative landscape for the building and construction industry in NSW is rapidly changing. This has been characterised by the NSW Government introducing new legislation aimed at restoring public confidence in the building and construction sector. Examples of this type of legislation include the Design and Building Practitioners Act 2020 (NSW) (DBP Act) and Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (RAB Act). These pieces of legislation were initially focused on residential apartments, although the NSW Court of Appeal has recently held that the operation of the DBP extends further than just class 2 buildings.
In this article we examine the key features of the Building Bill and what it may mean for you.
The NSW Government has now shifted its focus to home building and commercial building works in its proposed introduction of the Building Bill 2022 (NSW) (Building Bill).
The Building Bill is intended to "create end-to-end accountability for building work in NSW by consolidating and regulating most elements of the construction industry."1 The Building Bill will replace the Home Building Act 1989 (NSW) (HBA) and will also incorporate the duty of care provisions contained in the DBP Act.
The key features of the Building Bill include:
- Regulating residential and commercial building work, including a new licencing regime for commercial building work.
- Replacing the term "major defect" under the HBA with the term "serious defect" (in alignment with the RAB Act) in relation to the statutory warranties for residential building work.
- Expanding the definition of 'developer' that is currently contained in the HBA to include persons who facilitate home building work to be carried out on three or more self-contained dwellings, being persons who should be responsible for breaches of statutory warranty claims but are currently outside the definition.
- The Building Bill aims to move certification of building and subdivision work from the planning system, the Environmental Planning and Assessment Act 1979 (NSW) (EPAA), to the building system. This will provide greater oversight to the standards of work carried out under building approvals.
- In practice, the Building Bill requires certificates to be issued before several types of work and activities can commence with a development consent, including building work, subdivision work, the occupation or use of a building or subdivision of land.<
- The Building Bill expands licensing requirements for all building classes, including commercial building work. The aim of strict licensing is to deter non-competent people from engaging in building work of any type.
- The Building Bill makes it a requirement for all licence holders to supervise the work of unlicensed persons.
- The Building Bill tightens the eligibility criteria for owner-builders applying to obtain an owner-builder permit.
Duty of care
- The Building Bill proposes that the duty of care provisions contained in the DBP Act will apply to all building work in NSW.
- This is a statutory duty of care that is owed to owners and subsequent owners of land by "a person who carries out construction work" to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the work is done and arising from the construction work.
- This duty of care cannot be delegated or excluded by contract.
- The aim of this is to ensure that there is a single duty of care framework for building work in NSW.
When will changes be implemented?
The consultation period for the Building Bill ended in late 2022, and it is anticipated that the final version of the Building Bill be released later this year.
However, the reforms contemplated in the Building Bill are scheduled to commence in 2024, with some provisions, including the new licensing scheme coming into effect over a two to five year period.
What does it mean for you?
The Building Bill will impact developers, building consultants, and all other individuals carrying out building work, including commercial building work. It imposes additional obligations on corporations licensed to carry out work that is regulated by the Building Bill, as well as directors and 'nominee supervisors' of corporations to ensure that the corporation complies with the requirements of the Building Bill and appropriate management systems are in place to ensure compliance (s 144 of the Building Bill).
The Building Bill has the potential to dramatically change the cost and risk profile of carrying out building work in NSW, and it is important that you familiarise yourself with the obligations imposed by the Building Bill and obtain advice early on the potential legal implications for your business.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.