Roadmap of the residential legislation in NSW

22 November 2021

Residential legislation in NSW has undergone a rapid transformation since 2017. However, the legislation has been evolving since the introduction of the Home Building Act 1989 (NSW).

Given the number of changes and multiple pieces of legislation, we have prepared a roadmap style visualisation, click here to view.

One of the first major shifts was in 1997, from government provided warranty insurance for building defects to home warranty insurance underwritten by private insurers. For work done under building contracts entered from 1 May 1997, an owners corporation or lot owner could make a claim directly on the policy in the event of building defects being identified. The statutory warranties under s18B of the Home Building Act 1989 (NSW) also commenced at that time.

With the private insurance market tightening and the collapse of a major provider of home warranty insurance, HIH, another shift occurred in 2002, when home warranty insurance became a policy of last resort (ie the builder must have died, disappeared or become insolvent). The next shift in home warranty insurance occurred in 2010, when the NSW Government once again became the sole provider of home warranty insurance for building defects.

The statutory warranties in the Home Building Act 1989 (NSW) underwent a number of changes, including shifting from 7 years to 6 years (structural defects) / 2 years (other defects) in 2012. The concept of “structural” defects shifted, this time to “major” defects in 2015.

Residential building reform changed at an even more rapid pace following the Grenfell Tower fire in June 2017. NSW Parliament introduced the Building Products (Safety) Act 2017 (NSW) followed by a ban on aluminium composite panels with a core comprised of more than 30% polyethylene by mass in August 2018.   A registration scheme for combustible cladding was introduced in October 2018, under the Environmental Planning and Assessment Amendment (Identification of Buildings with External Combustible Cladding) Regulation 2018 (NSW).

More industry wide reforms also took place, starting with the introduction of the building bonds scheme under the Strata Schemes Management Act 2015 (NSW) in January 2018.

The NSW Building Commissioner, David Chandler OAM, was appointed in August 2019 and to complement that appointment, the Design and Building Practitioners Act 2020 (NSW) and Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) came into force in 2020.

Certifiers did not escape the reforms. The Building and Development Certifiers Act 2018 (NSW) came into force in 2020.

The transformation of the residential construction industry is still underway. Construct NSW has its 6 pillars to guide the future transformation of the industry, including rating systems for developers, lifting skills and training and using digital platforms to drive enhanced accountability.

In September 2021, the NSW Government announced a proposal to introduce  a new mandatory defects insurance scheme (decennial liability insurance) designed to provide insurance coverage to residential apartment building owners for up to 10 years after the completion of construction.

This article was written by Sheldon Garcia, Partner.

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