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Residential Focus

15 July 2020

#Property & Real Estate

Published by:

Rebecca Weakley

Residential Focus

Strata building defect bond and inspection scheme amendments take effect

On 1 July 2020, the Strata Schemes Management Amendment (Building Defects Scheme) Act 2018 (NSW) (Amendment Act) commenced. The Amendment Act, which received assent in September 2018, amends Part 11 of the Strata Schemes Management Act 2015 (NSW) to make further provision with respect to the rectification of building defects in new strata schemes. The amendments affect developers, owners corporations, builders, building inspectors and building owners of new strata residential and mixed-used buildings four storeys and above.

To recap, the strata building defect bond and inspections scheme (Scheme) commenced on 1 January 2018. The Scheme introduced a process aimed at streamlining the identification and rectification of defects for the benefit of strata residents, builders and developers.

A bill was introduced in 2018 which proposed various amendments to the Scheme, which was to commence on a date to be proclaimed (1 July 2020). We discussed the Strata Schemes Management Amendment (Building Defects Scheme) Bill 2018 (NSW) in a previous edition here. The amendments introduced in the Amendment Act seek to further improve the operation of the Scheme by providing greater certainty, reducing costs and minimising time delays.

Key changes include:

  • under section 207(1), a building bond needs to be given in terms that are acceptable to the Secretary before an application is made for an occupation certificate
  • under section 207(5), the maximum penalty for a developer who fails to lodge a building bond has been increased from $22,000 to $1.1 million, with a further $22,000 for each day the offence continues
  • under section 209(3), an amount secured by a building bond must be claimed or realised within two years after the date of completion of building work for which it is given, or 90 days after the final report on the building work is given to the Secretary by the building inspector
  • under section 210(A), the Secretary may provide to a developer any release necessary to enable a building bond for building work provided by the developer to be cancelled:
    • if an interim report on the building work does not identify any defects, or
    • on application by the developer, with the agreement of the owners corporation, if part of the amount secured by the building bond has been claimed or realised by the Secretary.
  • under section 211A, debt recovery measures (enforceable by the Secretary) are provided for where the building bond is not provided by the developer or is insufficient
  • under sections 211C to 211E, authorised officers are given extensive powers for Part 11, and may investigate, monitor or enforce compliance, require production of information, records or answers, or enter premises and use search warrants.

The amendments will impact all parties in the residential strata development sector. Further, the timing of the Amendment Act’s commencement coincides with the introduction of the Design and Building Practitioners Act 2020 (D&BP Act), which commenced on 11 June 2020 (with a number of provisions commencing on 1 July 2021), and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (RAB Act), commencing on 1 September 2020. These new pieces of legislation come as part of the NSW Government’s overhaul of the building and construction industry, in a bid to restore public confidence in the sector by cracking down on poor building and construction practices.

The D&BP Act gives the NSW Government the power to regulate almost everyone involved in the design and construction of new buildings, while the RAB Act gives NSW building regulators the unprecedented power to prevent the issuing of occupation certificates or the registration of a strata plan for residential apartment buildings where certain requirements are not met.

In essence, the combined effect of the new legislation will have a significant impact on how the NSW building and construction industry operates, with increased regulation and stricter compliance measures.

Authors: Christine Jones & Rebecca Weakley

In the media

Differing impacts of COVID-19 on Australian construction markets
According to the Rider Levett Bucknall (RLB) 2nd Quarter 2020 Australia Report, the impacts of COVID-19 being felt by Australian construction markets and associated tender costs differ around the country (09 July 2020).  More...

HIA: First home buyers receive another boost: HIA
The release today of 10,000 new guarantees under the First Home Loan Deposit Scheme will provide another boost for home buyers looking to move into their first home.. The First Home Loan Deposit Scheme allows home buyers to access a home loan with a smaller (5 per cent) deposit with 27 lending bodies operating under the Scheme (01 July 2020).  More...

HIA: Building Approvals Data Begins to Reflect COVID-19 Shock
“Building approvals in May fell by 16.4 per cent nationally as the impact of COVID-19 restrictions impeded the flow of new building projects to be undertaken”, stated HIA Economist (01 July 2020).  More...

Framework to improve registration of building practitioners
A discussion paper on a draft National Registration Framework (NRF) for Building Practitioners has been developed in response to BCR recommendations 1 and 2. The NRF, if adopted, is expected to enhance public confidence and improve national consistency in the registration of building practitioners (30 June 2020).  More...

Homebuilder grant: as construction dries up, NSW, Victoria and Qld yet to sign on to scheme
The federal government is still to sign agreements with the bigger states to deliver its $25,000 homebuilder subsidy scheme nearly a month after its announcement. The actual delivery will be via state agencies who must assess the applications to ensure they are within the scheme rules (30 June 2020).  More...

New laws to register engineers in NSW  
Due to similar changes in Victoria last year and the long-standing laws in Queensland, from 1 July 2021 registration will apply in NSW, Victoria and Queensland – covering the three largest states for engineering work and roughly 75% of the Australian economy. (30 June 2020).  More...

HIA welcomes new NSW Planning Delivery Unit
The Housing Industry Association (HIA) welcomes today’s announcement by Treasurer Perrottet and Minister for Planning and Public Spaces to introduce a new Planning Delivery Unit to work with government agencies and industry to unblock planning projects stuck in the system (01 July 2020).  More...

NSW Government bushfire clean-up meets initial 30 June 2020 target as rebuild begins
The bushfire clean-up program undertaken by the NSW Government has met the initial 2800 property clearing target and today announced further support for communities through a rebuild and housing strategy (30 June 2020).  More...

Published – articles, papers, reports

Australian Bureau of Statistics
01/07/2020 Building Approvals, Australia, May 2020 (cat no. 8731.0)

Practice and courts

ABCB: Proposal to include minimum accessibility standards for housing in the NCC
Consultation RIS open for public consultation addressing a proposal to include minimum accessibility standards for housing in the NCC, with submissions open until 31 August 2020. The ABCB has also released a project overview and RIS explainer document that explain the project, its timelines and the RIS process (06 July 2020).  More...

Comcare: New silica exposure standards
The workplace exposure standard (WES) for respirable crystalline silica (RCS) is being reduced in the Comcare jurisdiction. Comcare will continue to work with duty holders to ensure they are managing risks and applying the new exposure standard (01 July 2020).  More... 

AIBS Professional Development Audit Program – Member Consultation
As part of our ongoing development of professional standards for the professional of building across the country, AIBS has developed a Professional Audit Program for Building Surveyors and is now seeking your feedback on the program (08 July 2020).  More...

2020 National Housing Research Program commences
Research is underway for the suite of projects funded by AHURI as part of the 2020 National Housing Research Program (NHRP). The research will be undertaken by collaborative teams from AHURI’s eight national university research partners. For more details of the 2020 NHRP projects please click here.  More...

AIBS: NSW/ACT Member Update - Legislative Changes and Code Updates
1 July 2020 - Please find information below concerning the adoption of new legislation and amendments for the low rise medium density housing code.  More...

NSW Have Your Say
From:  26 June 2020 To:  24 July 202. NSW Fair Trading is seeking feedback on the new Building and Construction Industry Security of Payment Regulation 2020.  More...

From: 15 June 2020 To:  24 July 2020
The Department of Planning, Industry and Environment is seeking feedback from the community, council and industry to help shape the future of housing in NSW.  More...

NSW Revenue: HomeBuilder program
HomeBuilder will provide eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home where the contract is signed between 4 June 2020 and 31 December 2020. Construction must commence within three months of the contract date.  More...

Building Information Modelling (BIM) for WHS management
What is the best practice and implications of using BIM in WHS management? Timeline of project; Project completion: Mid 2021.  More...

Cases

El-Rihani v Hotait [2020] FCA 912
CONTRACT – construction – Deed of Separation - meaning of “future liabilities” – whether claims lodged before execution of Deed but unpaid at date of execution are “future liabilities”
CONTRACT – frustration – whether Deed of Separation frustrated by appointment of a liquidator Corporations Act 2001 (Cth) ss 198G, 461, 474, 588FA, 601AA The projects undertaken by Mr Hotait and Mr El Rihani included “residential building work” for the purposes of the Home Building Act 1989 (NSW). 

MJH Built Pty Ltd v Robinson [2020] NSWCATAP 133
APPEAL – HOME BUILDING – onus of proof, credibility, leave to appeal. Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Home Building Act 1989 

Bao Long Guo t/as GD Brother Projects v GB Electrical Services Pty Ltd [2020] NSWCATAP 131
(1) In relation to the application for miscellaneous matters filed by GB Electrical Services Pty Limited on 17 February 2020, a hearing is dispensed with pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (NSW). APPEAL – Building and Construction – Quantum Meruit
Home Building Act 1989 (NSW); Civil and Administrative Tribunal Act 2013 (NSW)

McKenzie Group Consulting (NSW) Pty Ltd v Building Professionals Board [2020] NSWCATOD 76
TRADES AND PROFESSIONS – accredited certifier – disciplinary action – application for review – consent orders 

Cohen v Zanzoul trading as Uniq Building Group (No 2) [2020] NSWSC 838
BUILDING AND CONSTRUCTION – contract – defects – whether defendant had opportunity to rectify works – whether plaintiffs failed to mitigate their loss
BUILDING AND CONSTRUCTION – consideration of incomplete works and defective works – use of Scott Schedule

Legislation

Regulations and other miscellaneous instruments

Environmental Planning and Assessment Amendment (Occupation Certificates) Regulation 2020
(2020-391) — published LW 8 July 2020

Environmental Planning and Assessment Amendment (Modification of Consent) Regulation 2020
(2020-367) — published LW 3 July 2020

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Rebecca Weakley

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