Changes to the regulation of the Construction Industry in NSW
A raft of legislation is headed for NSW in 2023 which will introduce a consolidated framework for the regulation of the construction industry and introduce licensing across all sectors including the residential and commercial markets.
In late 2022 the Government sought feedback on proposed legislation intended to consolidate the regulation of all builders under one Act and do away with the myriad of legislation that currently regulates the construction industry. Drafts Bills were published and feedback was sought from stakeholders. The Bills proposed are the:
- Building Bill 2022.
- Building Compliance and Enforcement Bill 2022(“BCE Bill”).
- Building and Construction Legislation Amendment Bill 2022.
- Building and Construction Legislation Amendment Regulation 2022.
The reforms are significant.
The consultation period has closed.
The Government is finalising the terms of the legislation to be introduced and the timing of the changes. 2024 will be a start date for some of changes with others being phased in over 2 years.
Builders and designers engaged in commercial work will be included in a new licensing scheme. All commercial builders will need to be licenced.
Corporations and directors will be required to ensure work is carried out by an appropriately licensed individual.
Directors will be required to ensure that a corporation complies with the requirements of the Building Bill and appropriate management systems are in place to ensure the corporation complies with all requirements.
Directors will also be required to report to the Secretary certain conduct that they suspect or reasonably suspect is a ground for taking disciplinary action. There will be “a dob yourself in” requirement.
A ‘nominee supervisor’ must be engaged to supervise the building work to ensure it complies with the Building Bill, the BCE Bill and the National Construction Code.
Duty of Care
The duty of care to prevent economic loss imposed on builders and designers by the Design Building Practitioners Act 2020 (NSW) (DBP Act) will be extended to apply to all types of building work and incorporated into the Building Bill.
Changes to the statutory warranty scheme will see a new definition of ‘Developer’ to include those who carry out, facilitate or cause building work to be carried out and all work carried out for a developer will be seen as done by the developer.
The warranties are worded differently, for example work will be required to result in a home ‘reasonably fit for habitation’, instead of ‘reasonably fit for occupation’ as a dwelling.
In addition, the definition of ‘major defect’ in Home Building Act will be replaced with the broader concept of ‘serious defect’ defined as a attributable to a failure to comply with the governing requirements or the performance requirements of the National Construction Code in force at the time the building work was carried out. A further requirement will be that the defect cause or is likely to cause:
- an inability to inhabit or use the building,
- the destruction of the building or
- the threat of collapse of the building.
There is also the possibility of an extension of warranties for serious defects to 10 years an increase from 6 years.
Duty in respect of building products
Duties on all participants in the building product supply chain will be introduced.
Designers, manufacturers, engineers, suppliers, and installers of building products will have the following duties:
- To not design, supply, manufacture or install a non-compliant building product;
- To provide information in respect of the building product to other participants in the supply chain; and
- To notify the Secretary of a building product with a non-compliance or safety risk.,
Security of payment
Changes to the Security of Payment Regime are also proposed.
Adjudicators will be allowed to arrange for testing of the matter to which the adjudicated claim relates, or engage an expert to investigate and report on a matter (unless both parties object).
A review process will also be introduced for claims where the claimed amount exceeds $100,000 with a review of the determination by a ‘review adjudicator’.
2023 will herald further challenges to the construction sector in NSW as the Government seeks to enhance regulation of the sector.