Welcome to the final edition of Foundations for the year, with all of the usual interesting updates and tips to keep you informed of what's happening within the NSW residential building industry. 

As always please email your comments and ideas for future stories to foundations@finance.nsw.gov.au

Merry Christmas and a happy New Year

Please note Fair Trading's Christmas operating hours. From the 24th-31st December, our Contact Centre (13 32 20) will be open from 9am-1pm (except for public holidays). Our regular operating hours will resume on Monday 4th January 2016.

Service NSW centres will be closed from 25th-29th December and on New Year's Day. All other days will operate regular trading hours, except for Christmas Eve and New Year's Eve, with sites closing at 5pm.

We'd like to wish you all a very Merry Christmas and a happy New Year. Keep an eye out for the new-look next issue of Foundations in early 2016.

Back to top

Have your say on the future of home building insurance

Builder and homeowners looking at plansIf you work in the home building industry, you've probably had to buy or apply for insurance under the Home Building Compensation Fund (HBCF, formerly known as Home Warranty Insurance). The NSW Government is considering reforms to the HBCF, and we want your feedback to help us decide what changes to make.

Please complete our online survey to let us know what you think. The survey includes a summary of the changes we are considering. You can also read more about the possible reform options in our Discussion Paper, on the Fair Trading website.  These include changing what sort of building work is insured, how long work is insured for, whether the insurance should be voluntary, operational and administrative changes to the HBCF, as well as changes to the builder licensing system.

Key facts about the HBCF:

  • The HBCF provides a safety net for consumers if their builder or contractor cannot complete residential building work or fix defective work due to insolvency, death, disappearance or licence suspension for failure to comply with a court or tribunal money order.
  • The NSW Governent is currently the sole provider of HBCF insurance. We manage the insurance through private insurers and brokers. The insurance is marketed under the name 'icare™ hbcf.' Some people may also call it 'home owners warranty insurance', 'builders warranty insurance' or 'builders indemnity insurance.'
  • By law, contractors must buy insurance for any residential building work project valued at over $20,000, except for construction of multi-unit buildings more than three storeys high and some other exceptions.

Our online survey will be open until Friday, 12 February 2016. You can comment on all of the questions or issues in the survey, or just those parts which are of importance to you. You can also make additional comments or submissions by emailing us at: HBCFreform@finance.nsw.gov.au

Back to top

NSW strata laws are changing

Strata laws are being modernised to meet the needs of living in a strata community in the 21st century. Over 90 reforms to the strata development and management legislation have been passed by the NSW Parliament and are expected to commence in the second half of 2016.

Comprehensive changes to how strata schemes operate include:

  • New responsibilities for agents and building managers, such as disclosure requirements, to strengthen transparency and accountability
  • A new collective sale and renewal process (for owners to jointly end a strata scheme so the site can be sold or developed)
  • Making it easier for schemes to enforce community rules (called ‘by-laws’) and making new model by-laws for pets and smoke drift
  • Changes to proxy voting to help stop a minority of owners controlling decision-making in a scheme
  • Requirements for developers to set realistic levies.

One of the major changes is the introduction of a building bond and mandatory defect inspection reports. The defect bond and inspection regime will enhance consumer protection if a new building has unresolved defective work and will help get defects fixed early in the life of the building.

There is currently no requirement for HBCF insurance for residential high rise strata buildings (those over three stories in height). Under the new laws developers will be required to lodge a bond with NSW Fair Trading in the form of a financial security equal to two per cent of the contract price for residential and mixed use high rise strata buildings. An occupation certificate will not be issued until the bond has been lodged with NSW Fair Trading. The bond will provide the funds necessary to fix defective work that has not been rectified within the necessary timeframes.

The new requirements will only apply to building work commenced, or contracts entered into, after the commencement of the reforms. The bond is not payable until it is time to get an occupation certificate.

Developers will be required to engage and pay for an independent building inspector to carry out an interim and final inspection report. There will be a standard report to guide the inspection and rectification process and the original builder will be given at least three months to rectify any identified defects. The bond will be held for two years and the cost of fixing any unrectified defects will be taken out of the bond at that time, any remaining amount will be returned to the developer. If there are no defects, or they have all been rectified, the whole amount of the bond will be returned to the developer.

More information is available on the Major changes to strata laws and Reforms to strata laws pages on the Fair Trading website.

Back to top

Should pool certifiers make minor repairs?

young girl looking through pool fenceThe Building Professionals Board is seeking feedback on proposals to:

  • Allow E1 swimming pool certifiers to carry out minor repairs to pool barriers to make pools safer, more quickly.
  • Reduce the accreditation fee for E1 applicants.
  • Require E1 certifiers to undertake six hours of continuing professional development each year.

The proposals are being exhibited until Wednesday 27 January 2016 at www.bpb.nsw.gov.au

The Board is accepting submissions on the proposal via email: policy@bpb.nsw.gov.au or post: E1 Minor Works Exhibition, Building Professionals Board, PO Box 3720 Parramatta NSW 2124.

For more information about this proposal, or to enquire about becoming an E1 swimming pool certifier, visit the Building Professionals Board website at: http://bpb.nsw.gov.au

Back to top

Review of the security of payment laws

Security of payment laws are designed to ensure that any person who carries out construction work or who supplies related goods and services under a construction contract can receive progress payments for their work.

NSW Fair Trading has released a paper to discuss whether the laws are working well and outlines potential options for improving them.

We encourage anyone involved in the NSW construction industry to put their ideas forward by 27 February 2015. Read the paper and find out how to comment here.

Back to top

Changes to sunset clauses for off-the-plan contracts

Purchasers now have added protection when buying off-the-plan thanks to recent law changes.

The changes under the Conveyancing Amendment (Sunset Clauses) Act 2015 aim to prevent developers from unreasonably terminating off-the-plan contracts for residential property, under a sunset clause.

A developer, who is the vendor under the contract, will be required to give notice to the purchaser before ending a contract. This notice must state why they propose to terminate and give reasons for the project's delay.

For the contract to be terminated, the purchaser would need to agree.

If the purchaser does not consent to ending the contract, and a lot has not been created before the sunset date, then the developer will need to obtain an order from the Supreme Court permitting the contract to be rescinded.

This change concerns any contract where the developer has ended or has sought to end the contract using a sunset clause on or after 2 November 2015.

More information is available at www.lpi.nsw.gov.au

Back to top

Elimination of fax numbers

As of 1st January 2016, fax numbers will no longer be in use throughout NSW Fair Trading. However, there are still a number of easy ways to lodge forms and get in touch:

Online: Vist the Service NSW website to renew your licence.
By phone: Call Fair Trading on 13 32 20.
Service NSW: In person at your nearest Service NSW branch.

Back to top