This issue is dedicated to preparing you for the new home building laws about to commence.

Most of the new laws take effect on 15 January 2015. Changes that directly affect how businesses operate, such as changes related to contract requirements, will begin on 1 March 2015, giving industry more time for this transition. Below we look at some of the major changes and how they affect your rights and responsibilities. 

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Major changes to home building laws

Licensing 

Changes to licensing will help protect industry from bad debts and consumers' significant investment in their homes. They will enable NSW Fair Trading to crack down on illegal ‘phoenixing’; where a building company closes down to avoid debts then restarts under a new name.

Under the new laws, a licence application may be revoked or refused if a tradesperson has had a history of involvement in failed businesses, excessive complaints or disciplinary matters. NSW Fair Trading will be allowed to examine the actions or involvement of a current or former director of a company that has gone into external administration. 

The threshold for requiring a licence for building and trade work is increasing to over $5,000 (including labour and materials). Additionally a licence is no longer required for internal paintwork and work related to tennis courts, ponds and water features, unless done with other home building work.

tradie at work

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Disputes, defects and statutory warranties

Disputes between home owners and builders cost everyone time and money. The new laws recognise that the most efficient way to resolve a dispute is for the original builder to fix the work. To support this, courts and tribunals will need to consider rectification as the preferred outcome.

To prevent work being stalled, the home owner will not be able to unreasonably refuse the builder access to their property. Fair Trading Building Inspectors may now issue Rectification Orders with stages and dates for completion of the different works. Inspectors' powers are being strengthened to allow orders requiring owners to pay money due under the contract.

The new laws introduce the concept of a ‘major defect’ to replace the current definition of ‘structural defect’. Major defects continue to be covered by the 6-year statutory warranty and all other defects continue to be covered by a 2-year statutory warranty. Information to help you determine what is a 'major defect' can be found at our website (jump to More information on home building laws). 

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Home Building Compensation Fund

The Home Warranty Insurance Scheme is being renamed as the Home Building Compensation Fund to better describe the type of protection it provides.

From 15 January 2015, home owners will be able to check certificates issued by the Fund and previous claims on a property through a new public register of Home Building Compensation Fund certificates. Further information on how to access this register will be updated on our website by mid-January 2015.

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Contracts 

Changes related to contracts don't begin until 1 March 2015. These include:

  • Reducing red tape by only requiring the more detailed contract for work over $20,000. Contracts between $5,000 and $20,000 will still require a ‘minor works’ contract.
  • Progress payment schedules must be included in contracts over $20,000. This will help ensure that home owners only pay for work as it is completed throughout the project. It will also help builders to ensure the contract makes clear when they are due to be paid as the job progresses. This will help builders and home owners manage their finances throughout the project.
  • The maximum deposit for work over $20,000 will increase to 10%, improving cash flow for the building project.
  • The mandatory consumer building guide, provided to consumers before entering a contract, will be a new, convenient 2-page document containing essential information on both parties’ rights and responsibilities.

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More information on home building laws

Prepare now for the changes by visiting our Major changes to home building laws page. From here you can also drill down into specific changes with our handy new Frequently Asked Questions. 

You can also read the media release: NSW Government reforms home building laws.

For enquiries, call 13 32 20, noting our opening hours over the 2014-15 holiday period.

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Your say: trust scheme proposed to protect subcontractor retention money

Reforms are proposed to Security of Payment Regulation to better protect subcontractors' retention money in the event of a construction company collapse. This forms part of the NSW Government's continued response to the Collins Inquiry, examining insolvency in the building industry.

The changes would include a new requirement for subcontractor retention money to be held in trust, applying to contracts between head contractors and subcontractors for non-residential building work worth over $20 million. 

Read the media release:  NSW building industry gets Australia's first retention trust scheme. The consultation has been extended until mid-January 2015. For details, visit our Security of payment regulation page.  

Non-residential building construction

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Mutual recognition of electricians' licences in Queensland, Victoria and NSW

New Mutual Recognition laws have come into effect and now apply to certain electricians working across Queensland, Victoria and NSW. For your licence to be recognised in another East Coast state, your principal place of residence must be in one of these states and your licence must be current.

To see if you meet the requirements, check the equivalent licence list on our  Automatic Mutual Recognition - East Coast Electricians page.

If you permanently move states you will need to reapply for a licence in that state. For more details, visit our Interstate and New Zealand licences page.

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How watertight is your knowledge of MyInspections? 

For plumbers, drainers or builders in the Sydney, Blue Mountains, Illawarra or Newcastle region, the MyInspections online system will be used for paying all plumbing and drainage audit inspection fees and submitting forms in 2015. 

QuickCheck agents can no longer accept payment for a plumbing and drainage audit inspection after 31 December 2014.

For enquiries email piasstrategy@finance.nsw.gov.au plus find out more about MyInspections at our MyInspections page.

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