New South Wales is set to raise the bar further on building quality and safety standards as new laws build further on the state’s national leadership in building industry reform.
The Building Legislation Amendment Bill 2023 has passed both houses of Parliament with unanimous support.
The Bill is now awaiting ascent before being passed into law.
Part of ongoing efforts to restore consumer confidence in the state’s building industry, the Bill aims to expand on previous reforms and to further enhance the quality and safety of buildings throughout the state.
When passed into law, the new legislation will:
- Extend powers of the NSW Building Commissioner to audit building sites and issue stop work and/or rectification orders to cover lower density residential buildings such as detached houses, units and townhouses.
- Help protect against illegal phoenixing activity by allowing for the refusal or cancellation of builder licences in certain cases where practitioners have been involved in bankruptcy or insolvency.
- Introduce new duties that will be applied upon those involved in the building product supply chain to ensure that products which are used in building projects are safe, compliant with codes and standards and suitable for their intended use.
- Make amendments to support the uptake of 10-year decennial liability insurance (DLI) in preparation for more comprehensive and prescriptive legislation regarding DLI which is expected next year.
The new legislation comes as New South Wales continues to lead the nation in efforts to improve the quality and safety of new buildings.
As noted in a recent report, most states and territories across Australia have taken only limited action to implement reforms that were recommended in the landmark Building Confidence Report which was prepared for the Building Ministers Forum (now called the Building Ministers Meeting) in 2018.
In NSW, however, the state is leading an ambitious program of reform led by Building Commissioner David Chandler.
The latest changes seek to further expand on these efforts.
Upon becoming law, the Bill will deliver change in several areas.
First, it will expand existing powers of the Building Commissioner to audit quality during construction of multi-storey buildings to also cover low-rise and single-story residential housing.
As things stand, the Building Commissioner is afforded powers under the Residential Apartment Building Act (RAB Act) to audit the quality of construction for buildings which are classified as either Class 2, 3 or 9C buildings under the National Construction Code. This includes, apartment buildings, hotels, commercial accommodation and residential aged care buildings (see building classifications).
These powers include the ability to enter sites, undertake audits and issue a range of orders such as stop work orders, building rectification orders and prohibition orders (preventing the issuing of an occupancy certificate).
Under the new legislation, enforcement powers will now be extended to Class 1 buildings, which typically include detached houses, units and townhouses. This will occur through amendments to the NSW Home Building Act 1989.
As a result, the Commissioner will have the ability to enter houses which are under construction, undertake inspections in regard to the quality and safety of construction and issue stop-work and/or rectification orders where necessary.
In his Second Reading speech accompanying the legislation, Anoulack Chanthivong, Minister for Better Regulation and Fair Trading, said the importance of the new provisions should not be underestimated.
As of March 31, NSW had more than 37,000 Class 1 buildings under construction.
Yet under the current Home Building Act, the Building Commissioner does not have any powers to audit work during construction of such buildings and as such does not have any means through which to ensure that such homes are property built prior to occupation.
Next, new provisions will be inserted into the Home Building Act as a further measure to help prevent phoenix activity.
Under the new provisions, the Act will be amended to enable the building regulator to refuse or cancel licences where people have become bankrupt or have been a director or manager of a company that has either become insolvent or has been convicted of an offence under the relevant provisions of the Corporations Act.
In order to obtain a licence, such people will need to demonstrate why they are not a risk to subcontractors and others.
Third, the Bill also aims to address concerns about unsafe and/or non-compliant products being used on buildings.
Toward this end, it will amend the Building Products (Safety) Act 2017 to impose a legal responsibility on all parties who are involved in the building product supply chain to ensure that products which are used in buildings are safe and compliant and are suitable for the purpose in which they are being used.
The responsibility will apply to all parties who are involved in the building product lifecycle. This includes product manufacturers and suppliers, those such as architects and engineers who prepare building designs, and those who install products such as builders or tradespeople.
These people will have a duty to ensure as far as they can that products which are used on buildings are both conforming and compliant. This means that the product not only meets performance standards under the National Construction Code or prescribed standard but is used in a way that conforms with how it has been manufactured to ensure it does not create a safety or build quality risk.
Certain wall systems, for example, may be suitable and appropriate when used as internal walls but not if used for structural loadbearing purposes.
To help ensure that products are used in a compliant manner, new information requirements will require each party within the building product supply chain to provide information about the product in question to the next party.
This will include the suitability of the product or otherwise for its intended use; any conditions or limitations regarding suitable uses; and instructions on how the product is to be used in a compliant manner, correctly installed and properly maintained.
Once the Bill becomes law, New South Wales will join Queensland as being the only states to implement laws which extend the responsibility for building product compliance through the supply chain.
This is the case notwithstanding the unsafe and non-compliant products have been an area of concern across the building industry for many years and were a significant focus of the aforementioned Building Confidence Report.
Finally, the law makes changes to help to encourage uptake of the new 10-year decennial liability insurance (DLI) products which are being offered in residential settings.
These include clarifying that developers who obtain DLI for Class 2 buildings are exempt from needing to pay the existing developer bond and enabling regulations that will allow DLI to be taken out on low-density residential buildings as opposed to the exiting compulsory home building compensation insurance scheme.
The changes are a precursor to more extensive and prescriptive changes in regard to DLI which are being considered for introduction next year in consultation with insurers and the development industry. These include consideration of a mandatory model for DLI uptake.
NSW Premier Chris Minns welcomed the passing of the Bill in the upper house.
“We’re delivering more homes across the state but we won’t let quantity get in the way of quality,” Minns said.
“Home buyers in NSW can be confident that we’ve got a tough cop on the beat in the building industry, ensuring that they can have confidence in the quality of the home they’re buying.
“We’re making the right investments and delivering the right powers to rebuild trust and integrity in this sector to help tackle the housing crisis in our state.”
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