Navigating the New Landscape: Unraveling the Latest Building Commission Reforms in New South Wales

On 1 December 2023, the New South Wales Government made significant changes to the construction industry and established the New South Wales Building Commission. This Building Commission is the first ever dedicated regulatory commission dedicated to the construction industry in New South Wales.

What is the new Building Commission?

The recently established Building Commission enables comprehensive oversight of all aspects related to the regulation, licensing, and supervision of the construction industry within the state. By merging these statutory and regulatory bodies, the Building Commission aims to streamline processes and enhance efficiency in managing various facets of the construction sector.

The Building Commission has a core objective to enhance construction quality throughout NSW with the increased authority provided to it by the NSW government. This objective aligns with the NSW Government’s goal to be stricter on substandard industry practices and empower and strengthen the regulatory efforts to uphold industry standards and meet established benchmarks.

What changes have already been made?

Just before the Building Commission was established, the state government passed the Building Legislation Amendment Act 2023 (NSW)in November 2023 that is estimated to be enforced from February 2024.

NSW Premier, Chris Minns, has also provided an additional $24 million to the Building Commission to allow the Building Commission’s staff to increase from 40 staff to 400 which includes an increase in the number of inspectors on staff.

The Building Commission has broadened the authority of inspectors to now be able to look into and check on all standalone houses, duplexes, and terraces that are currently being built, even if there hasn’t been a specific complaint made against the works.

The authority extends further by allowing inspectors of the Building Commission may also make rectification orders, stop work orders and issue penalties on site.

Furthermore, inspectors will also have the authority to enter sites to examine, test, take samples and seize any materials to determine whether they are compliant or defective.

I am a tradesperson – Am I impacted?

These changes impact everyone within the construction industry, which includes “specialist work” such as plumbing, drainage, mechanical services, gas and electricity. As long as the works are considered to be “residential building works”, those works can be investigated for defects.

Anti-phoenixing laws – What does this mean?

The Building Commission has also extended authorities to reject applications, revoke contractor licenses and prohibit individuals and businesses from holding a license, or entirely disqualify professionals that have been linked to the management of liquidated companies as a method to significantly reduce any possible phoenixing attempts.

Pheonixing includes practices such as where a director of a liquidated company establishes a new company to continue the operations of a former liquidated company. Pheonixing is often done to avoid financial obligations due to creditors and or consumers.

The primary goal is to curb unethical directors and corporations from bending the rules, which safeguards both consumers and industry professionals from the negative impacts of phoenixing.

I am a developer for multi-storey buildings, not standalone houses or duplexes – Will I be affected?

Currently, developers of multi-storey buildings are required to contribute 2% of the total building cost as a Strata Building Bond to address any possible identified defects.  However, changes have been made which will increase the amount to 3% of the total building cost as of 1 February 2024.

The Building Commission has provided an option for those who wish to be exempt from the Strata Building Bond payment. An exemption can be granted to developers of multi-storey building if they choose to purchase Decennial Liability Insurance (DLI).

What is this new insurance?

Decennial Liability Insurance (also known as Ten Year Liability Insurance) is a insurance product promoted by the Building Commission within the construction industry. It offers coverage for 10 years against serious defects in multi-storey apartment buildings.

If you’re a developer of apartment buildings, you have the option to request approval from the Building Commission to be relieved from paying the Strata Building Bond. To do so, you need to notify the Commission about your intention to secure a Decennial Liability Insurance policy and provide them with a certificate of currency for the policy. It’s important to submit this certificate before applying for an Occupation Certificate.

I am a Certifier, Professional Engineer, Design Practitioner, or a Building Practitioner – Am I impacted?

The Building Commission also has the authority to suspend the registration of any professionals certified under the Building and Development Certifiers Act 2018 (NSW) and registered practitioners under the Design and Building Practitioners Act 2020 (NSW).

This suspension can occur when the Building Commission has reason to believe that the registered individual has engaged in unlawful conduct or has received a show cause notice.

In cases where a business is suspected of conduct that can pose any possible danger or significant harm, the Building Commissioner can suspend registration for a maximum of 60 days. If your registration is suspended, you have the option to seek a review of the decision by applying to the NSW Civil and Administrative Tribunal.

I design or sell products within the construction industry – Do these changes impact my business?

The changes will also effect companies and professionals who are involved in the supply of construction or building products. This includes those who designs or handles a product with knowledge that it will be used in a building, individuals preparing building designs that incorporate or recommend the use of building products (such as building designers, engineers, and architects), those using products in a building (such as individuals overseeing installation during construction), and any other individuals specified in the new regulations.

Disclaimer: The information contained in this article is provided as general information only. It is not intended to be legal advice and it should not be used or relied on as legal advice.