Autumn’s here, and with it the next key changes to start under the new home building laws. We’ll take a deeper look at changes to contract requirements that commenced on 1 March 2015, and introduce the refreshed Consumer building guide and updated home building contracts. Also in this issue, we take you behind-the-scenes with our Building Inspectors.
As always, we encourage you to help shape future issues - simply email your feedback to firstname.lastname@example.org.
New home building laws have commenced
If you haven’t already, now is the time to check out the new home building laws and find out how they affect you and your business. There have been important changes to contracts, licensing, insurance under the Home Building Compensation Fund, disputes, defects, statutory warranties and owner-builders. Most changes started on 15 January 2015, although important changes to contracts only just kicked off on 1 March 2015.
Contracts – changes started 1 March 2015
As of 1 March 2015:
- The more detailed contract is now only needed for work over $20,000, helping to reduce red tape. Contracts between $5,000 and $20,000 still require a ‘small jobs’ contract.
- Progress payment schedules must be included in all contracts over $20,000. This will help builders to ensure the contract makes clear when they are due to be paid as the job progresses. It will also ensure that home owners only pay for work as it is completed throughout the project. This will help builders and home owners manage their finances throughout the project. There are restrictions on the kinds of progress payments that may be included, so it is important to understand this change. View our Home Building contracts FAQs for more details.
- The maximum deposit for work over $20,000 will increase to 10%, improving cash flow for the building project. This means the maximum deposit for all contracts, irrespective of value, is capped at a flat rate of 10%.
- A termination clause must be included in contracts for work over $20,000.
NSW Fair Trading has updated the Consumer building guide, as well as their home building contracts, in line with the new laws. Read more about these in the articles below.
Find out more by visiting our Major changes to home building laws page. From here you can also drill down into specific changes with our handy Frequently Asked Questions.
You could also attend a free Fair Trading home building seminar. For details see the last article in this issue or visit the events page on our website.
Our previous issue of Foundations was packed with info on the new laws. If you missed it, read our December issue here.
For enquiries, call 13 32 20.
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Revised consumer building guide
When you contract to do residential building work worth more than $5,000 you must give consumers a copy of the Consumer building guide before they sign the contract.
Based on industry and consumer feedback, we have streamlined the guide into a convenient 2-page document that contains essential information on each party’s rights and responsibilities.
The updated guide reflects the new laws. Old versions of the guide are now out of date and should be deleted or destroyed. You should use the updated guide and update your contracts as soon as possible. NSW Fair Trading will not take action against traders using out-of-date versions of the guide in the first half of 2015, giving time to adjust to the changes.
To download and print copies of the new guide visit the Consumer building guide page on the Fair Trading website. Some contracts sold commercially or available through industry associations already include the Guide – check to make sure you are using up-to-date versions of those contracts that include the latest Guide.
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Download updated home building contracts
Did you know that Fair Trading has FREE home building contracts you can download from our website?
These contracts have just been updated to reflect the new laws that commenced on 1 March 2015, so make sure you replace any older versions you may have downloaded previously.
The small jobs contract is for work over $5,000 and up to $20,000. For larger building work over $20,000, such as new homes and large additions, there is a major works contract to use. The contracts are available as fillable and saveable pdfs.
To download the contracts visit the Home Building contracts page.
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Compliance update – promoting a fair marketplace
Fake plumber caught and fined
In late January this year, a 39-year-old Canley Vale man, Van Trungh Dinh, was found guilty of providing a fake work history and referee statement to obtain a plumber’s licence. He was fined $7,700 for using a false document; specifically falsifying a Fair Trading licence application and providing a fabricated referee statement.
Mr Dinh held a building contractor’s licence and applied to Fair Trading for a plumbing licence. He provided Fair Trading with false statements about his plumbing work, including nominating companies where he had not worked as a plumber or been employed at all. After a number of anonymous complaints, Fair Trading contacted the alleged employers of Mr Dinh and found his work history to be false.
The recent boom in construction activity has led to more licensing applications but unfortunately this can also mean increased fraudulent activity. Fair Trading is continuing to ensure that only properly qualified and suitably experienced people are undertaking work that requires a licence.
Serial fraudster banned
Serial fraudster, 28 year old Charbel Khoury of Concord, has been banned from being associated with any home building works until 2018. Khoury pleaded guilty on 11 February 2015 and was fined $20,000. Fair Trading will continue to watch him closely and if he is found breaching the ban, he will be subject to fines of $15,000 for each instance.
In 2012, Mr Khoury and his company Switchworx Electrical were convicted of offences against the Australian Consumer Law and Electrical (Consumer Safety) Act and Regulations. He founded another company in 2013, Switchiton Electrical Services that he effectively controlled from behind the scenes, despite not being listed as a director. NSW Fair Trading received a number of complaints about Switchiton Electrical, including one from a customer in Haberfield who had been convinced her house would burn down if she did not pay $1,600 for the installation of an alleged piece of ‘necessary’ equipment. When a Fair Trading inspector visited the customer’s property they found not only was the work not required to be carried out, but what was done was not compliant.
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National Construction Code now free for NSW Builders
NSW builders will be pleased to learn that they now have free access to the National Construction Code (NCC) through an online service, which commenced on 1 February 2015. The NCC comprises the Building Code of Australia and the Plumbing Code of Australia. Previously, businesses were required to pay up to $500 each year to get access to the Code on-line and in book form.
Making the Code freely accessible should lead to increased compliance and best practice standards across the industry, from sole-traders right through to large companies. Access to the Code is expected to increase right across the building and plumbing industries. All builders, plumbers, and trades should now know what the expected standards are, as well as their responsibilities.
The NSW and Federal Governments worked together on this reform, making the NCC easier to access to increase its reach and help create a more efficient and effective building sector.
For more information or to access the National Construction Code, builders and industry participants can visit The Australian Building Codes Board website.
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Behind-the-scenes with our Building Inspectors
Ever wondered what is involved as a NSW Fair Trading Building Inspector? Here, we profile what they deliver as part of our home building services.
About the role
Building Inspectors are Fair Trading’s frontline when it comes to resolving building disputes. They give information and advice to all parties, while mediating disputes.
Our inspectors work across NSW conducting on-site inspections of residential building work. Where appropriate, an inspector can also issue rectification orders and carry out compliance duties in relation to the Home Building Act 1989.
The inspectors also investigate, compile and complete detailed building inspection reports for the prosecution of breaches.
What skills does it take?
The work of a Building Inspector is varied and challenging. They need extensive practical experience to determine the cause of an alleged defect. They must also be equipped with an understanding of the relevant legislation and contract law to deal with complex contractual disputes. To perform their work, an inspector will draw on their technical and investigative expertise plus well developed communication and interpersonal skills.
What are their backgrounds?
A number of our Building Inspectors come from a practitioner background, having extensive practical building experience with trade qualifications and experience.
Many of them were previously self-employed builders, operating as sole traders, with several also having the tertiary qualifications needed to obtain a NSW Builder's Licence.
Most inspectors came from a building background. First, they completed an apprenticeship in carpentry. They then worked through the industry to leading hand and foreman on various construction sites; gaining extensive practical building experience either in project management or construction management positions, or both. Many also have extensive experience as a building contractor, estimator and consultant.
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Sydney Home Show: 28-31 May 2015
Mark the date in your diary! Sydney’s largest and most popular home show will be at Sydney Olympic Park from 28-31 May and NSW Fair Trading will have a presence at both the consumer and trade parts of the show. If you have an issue to discuss, a question or just want to say hello, we would love to meet you, so pop on over to our stand.
To find out more about the show visit The Sydney Home Show website.
Your questions answered
I normally work as a builder but have been asked by a client to do some project management work for them. Are there any risks or potential problems with me doing this?
If you enter into a contract with a developer or home owner to do project management, be aware that you may be considered to be the responsible party for any statutory warranty claims or insurance claims under the Home Building Compensation Fund.
You could be considered responsible in cases where you have:
- provided your licence number for construction approval (eg. to obtain a Development Approval or Construction Certificate Approval)
- provided insurance for the project under the Home Building Compensation Fund
- been supervising trades and sub-contractors, even if you were not directly involved in engaging the trades or materials for the project.
Certain exclusions apply. To avoid confusion and prevent costly litigation in the future, you may consider seeking independent legal advice. This can help highlight what you could be liable for before you commit to these types of contracts.
If you have a question you would like us to address in the next issue of Foundations, please send it through to email@example.com.
FREE Fair Trading Home Building seminars
Coming up this month, NSW Fair Trading will be conducting free home building information seminars in various locations.
Thursday 5 March Penrith, Sydney
Thursday 12 March Five Dock, Sydney
Thursday 19 March Randwick, Sydney
Thursday 26 March Leumeah
Builders, swimming pool builders and tradespeople will come away with a greater understanding of the new home building laws and how they affect their business.
Licensed builders and swimming pool builders will earn 2 CPD points for their full attendance and their partner or associate can also receive 2 CPD points for attending (up to a maximum of 4 points per annum).
For details and to book go to the Fair Trading events register or call 13 32 20 and select option 1.
Keep checking out the events page on our website as events are coming up in Coffs Harbour (April), Charlestown and Hunter (May).
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