NSW Overhauls Housing Construction Rules 1

Wednesday, September 25th, 2013
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Builders in New South Wales will be able to demand as much as 10 per cent from their clients as a deposit for the start of building work of more than $20,000 and the amount of paperwork required for small building jobs will be slashed under a proposed overhaul of housing construction regulations outlined by the state government.

However, contracts worth more than $20,000 will also need to contain termination clauses, while new limits will apply to progress payments made to builders during the course of the building process.

The reforms are among 46 proposed changes to the state’s Home Building Act 1989 outlined in a Position Paper released by State Fair Trading Minister Anthony Roberts earlier this week.

Under the proposed changes, which follow consultations regarding a paper released last year, the maximum amount builders can demand from consumers for work valued at over $20,000 will increase from five per cent of the value of the work to 10 per cent.

The proposed reforms will also increase the threshold for which the more onerous general contract requirements regarding paperwork (as opposed those on ‘small works’ contracts between $1,000 and $5,000) kick in from $5,000 to $20,000.

In a bid to stop builders from placing consumers at risk by ‘front loading’ contracts, however – by demanding large payments early on in the contract period – ‘progress payments’ will be limited to 20 per cent of the contract price (including variations).

The reforms, which include an overhaul to rules regarding statutory warranties, dispute resolution, the owner-builder regime, home warranty insurance and builder licensing, will also introduce a new expert determination model to allow technical issues about building defects to be resolved quickly during disputes and will allow for builders who do unlicensed work without insurance to be jailed.

Roberts says the reforms will provide greater clarity for builders and homeowners, encourage timely resolution of disputes, ensure owner-builder permits are not used to circumvent licensing requirements and help keep phoenix companies and shoddy builders out of the industry.

“The Government has struck a balance between providing an appropriate level of homeowner protection and supporting home building activity and investment in NSW,” Roberts said. “The current Act has become too complex and unclear with endless disputes between homeowners and builders.”

Building industry groups have generally welcomed the reforms. Master Builders Association NSW executive director Brian Seider says the changes will provide a clear definition of what constitutes a building defect, remove unnecessary red tape for small jobs and that the termination clause will make rights and obligations of both parties clear in the event of termination of the contract.

As well as improving protection for consumers, the reforms represent the latest initiative under government efforts to stimulate building activity and address a housing shortage which has built up in recent years amid low volumes of housing starts.

In July, the government unveiled a Bill aimed at overhauling the state’s planning regime by providing a streamlined approval process for new developments which fit within local development schemes, identifying growth suburbs with potential to accommodate greater levels of population, improving infrastructure planning and placing greater focus upon sub-regional plans as opposed to plans of individual municipalities.

Amid growing community concern, however, the government last week backed away from some of the more contentious elements of these reforms.

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  1. Howard Ryan

    It’s OK for Government to implement their opinions on Building Acts but they don’t see them through as intended. The Home Building Act is old. 1989 was the last upgrade. Since this time so many consumers and builders have suffered unnecessary litigation procedures, which in turn they suffer insolvency, embarrassment and possible disgrace through no fault of their own. The changes or reforms to the Home Building Act will have very little effect on what has been happening over the years due to the current untidy reforms. Why does a builder need a deposit to start work? How much is too much and how much is not enough? When a carpenter just starts out as a self-employed subby they are undercapitalized. They are inexperienced and have no training or very little education in communication with other trades and consumers. This is the main reason why disputes materialize.