This is a big week for the NSW construction industry. 

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (RAB Act) comes into effect from today (1 September 2020). It applies to residential apartment building work and is retrospective for buildings up to six years old, and in extreme circumstances up to 10 years old.

The new laws are designed to address issues of non-compliance and serious defects identified in residential apartment buildings in a bid to boost community confidence in the construction industry. Minister for Better Regulation Kevin Anderson said the new laws work to prevent buildings with serious defects going on the market, and give clear recourse in the event of a defect.

“The Office of the NSW Building Commissioner will have the power to stop defective apartment blocks from being built and sold. Developers who have done the wrong thing can also face huge fines” said the minister.

The changes include:

• a compulsory six-month notification that a developer will be applying for an occupation certificate
• powers to withhold an occupation certificate where the building is not up to scratch
• the ability to order rectification of any serious defect and recover costs associated with that rectification
• on-the-spot inspections of buildings up to 10 years old.

The Commissioners team of 15 auditors will commence work from the 1st September. These teams are made up of builders, certifiers and architects and whilst they will be looking at the entire industry, they will be specifically targeting “high risk” players in the building game. The auditors will be assessing work by developers, builders and certifiers that have been identified using a powerful data tool developed for the Commissioners team.

Developers must provide advance notice of class 2 building completion

• Building developers must provide an expected date that they will apply for an occupation certificate. This notice must be provided at least 6 months in advance and no later than 12 months. 
• If notice is not provided, fines may apply and/or a prohibition order may be made that stops or delays an occupation certificate being issued. Notice can be given through the NSW Planning Portal or online via nsw.gov.au/construct-nsw.
• A transitional period applies to developers with residential apartment buildings due for completion within the first six months of the Act starting 1 September 2020. In these cases, notice must be given within two weeks of the new legislation coming into effect. 

Inspectors have more powers

The NSW Building Commissioner now has unprecedented powers to regulate and raise the standard of residential buildings in NSW. These powers are part of the OBC’s Construct NSW strategy to protect apartment owners and residents from poor construction. 

A number of class 2 buildings will be selected for an Occupation Certificate Audit. 

The audit involves a review of designs and documents (including contracts) and a physical inspection of the building construction. If inspectors find a serious defect, they can enforce action to stop work, order defects to be rectified, and delay the occupation certificate being issued.

Without an occupation certificate, the building can’t be occupied, and the sale of apartments can’t be settled, protecting buyers and residents from poor construction.

• Authorised officers can:
  • enter building construction sites to do in-depth inspections without notice or permission 
  • investigate, monitor and enforce compliance, determine if the building has serious defects, take and remove samples, and require records to be produced for inspection
  • demolish or open part of the building work if they have grounds to believe there is a serious defect.
• While construction sites will be selected for audits based on regulatory insights that identify the most risky buildings, random selections will also be made. 

Reporting a defect

• All building defects and building-related complaints should always be reported in the first instance to NSW Fair Trading. Individual strata and community lot owners can report their issues with the Office of Fair Trade.
• Each complaint will be reviewed and assessed to identify the appropriate response. It is important to note that not every compliant will result in an investigation. 
• Caretakers and others who control access to areas of the common property will be obligated to cooperate with inspectors to enable the inspection to be carried out.

Developers to lodge strata bonds through the NSW Planning Portal

• Starting 1 September is the requirement for developers to lodge the 2% strata bond and associated documents via the NSW Planning Portal. This replaces the Strata building bond and inspections scheme (SBBIS) e-Portal, which will remain available for existing projects. 
• The bond provides a fund for the owners corporation for post-construction repairs. Compliance checks will ensure the correct bond is lodged.

If members have any inquiries, please call the Master Builders legal team on 02 8586 3517.