A letter from the Minister for Better Regulation and Innovation, NSW, Kevin Anderson.
" Dear Multi-Unit Developers, Builders and Advisors,
My name is Kevin Anderson and I am the Minister for Better Regulation and Innovation in NSW. I am writing to let you know how we are working to improve the standard of new multi-unit residential buildings and how we can help all involved save time and money.
Over the last year we have introduced new laws affecting multi-unit residential buildings in NSW in order to prevent incidents like Mascot or Opal Towers from happening again.
I have also established a new Office of the Building Commissioner to help lift the standard of residential buildings and ensure that people feel confident to purchase again.
Here are some of the important changes that you should be aware of:
- Developers are not permitted to request or use the deposit of apartment purchasers for any purpose other than holding them in trust until settlement;
- Developers are not permitted to ask buyers to settle on the purchase of an apartment before Occupation Certificate is issued by an accredited certifier;
- Certifiers are required to perform their role with integrity and independence, following the requirements set out in a new Certifiers Practice Standard; and
- For all projects contracted after the 1st January 2018 there are requirements to lodge as-built drawings and strata bonds prior to an Occupation Certificate. More information can be found here.
The NSW Government has also introduced two very important pieces of legislation designed to protect consumers who buy new apartments off the plan, and owners of existing apartments which are up to 10-years old. These laws preserve the right of strata building owners to take action against the people and businesses that constructed their building.
These are very detailed pieces of legislation and you should obtain advice from suitable advisers on how they may affect the strata developments you undertake.
Here are the two new pieces of legislation:
1. The Residential Apartment Buildings (Compliance and Enforcement Powers) Act.
This is known as the RAB Act and it took effect from 1 September 2020.
This law gives the NSW Building Commissioner significant powers to help residential apartment owners. Inspectors can now enter projects both under construction and when completed. They can view documents, stop work or order the opening up of work, and issue orders to builders to rectify defects.
The RAB Act also requires that developers give the NSW Building Commissioner at least 6 months’ notice of their intention to achieve an Occupation Certificate. There are significant penalties and consequences for non-compliance.
Audits of a portion of those buildings which have given notice, will be inspected. The Building Commissioner will select a sample of the notified projects and conduct an independent audit of the remaining phase of the project and review the developer’s builder and certifier inputs ahead of a Certificate of Occupation being issued. In instances where inspectors believe there could be serious defects in the building, they can stop an Occupation Certificate from being issued. When inspectors take this course of action the Orders that they make will be published on the NSW Fair Trading website.
It is important to understand that the Building Commissioner can also inspect projects after an Occupation Certificate has been issued. Where defects are found this could lead to very serious consequences for the workers involved, including fines and suspending building professionals’ licenses.
2. The Design and Building Practitioners Act
This is known as the DBP Act and it will come into effect 1 July 2021. This law will require all developers to engage design consultants who are properly accredited to prepare and submit declared designs into E-Construction.
In addition, developers will need to engage contractors who construct buildings in accordance with the declared designs (in compliance with the Building Code of Australia). Those contractors will be required to prepare as-built drawings of the constructed building and declare that these comply.
They will also be required to lodge these drawings on E-Construction.
All parties will have a legally binding duty of care to the purchasers of the units for the quality of the work they undertake.
What do these changes mean for you?
These changes have been made to raise industry standards and to ensure consumers are confident to enter the market and invest in new multi-unit residential developments.
This will benefit everyone involved.
Those receiving the letter will mostly be developers of new residential buildings. You may simply be a client who engages designers and builders to undertake a project on your behalf, or you may be a developer/builder.
It is important that you understand these changes and that those who advise you are also fully informed of the matters you must comply with from now on. There will be significant penalties and other consequences for non-compliance.
We have observed that many developers arrange for incomplete design drawings and specifications before awarding design and construct contracts to builders who are expected to price and assume the remaining design and building functions.
We have also noticed that these contractors have attempted to transfer some of their obligations to subcontractors who are unlikely to have the qualifications to perform or price this work properly.
This needs to change.
Project managers, quantity surveyors, and certifiers should ensure their buildings are compliant with the approved designs and Australian Standards. If not, you may lose your license or accreditation.
Our goal is to make NSW the best state in Australia buy residential property. Consumers should be confident in the product they are buying and investing their life savings in.
I ask that you share this letter with your employees and industry colleagues. It is important that everyone understand the new rules in NSW. The Building Commissioner and his team conduct frequent industry briefings and they are here to help all stakeholders understand and adjust to the new laws.
Yours sincerely
Kevin Anderson
Minister for Better Regulation
Simplified Chinese and Arabic.
