BUILDING A HOME IN NSW?

6 THINGS TO KNOW

Presented By Owen Hodge Lawyers

WHAT WE’LL COVER

1. Planning for ALL Costs

2. Written Building Contracts

3. Licensing

4. Owner-Builders

5. Disputes, Defects and Statutory Warranties

6. Home Building Compensation Fund and Insurance

Since the introduction of new home grant schemes and the Australian government’s efforts to stimulate the construction sector, more developers and owners have been encouraged to build new homes.

The most recent changes to building laws in NSW commenced in January 2015 through the Home Building Act (“HBA”) which hopes to modernise industry practices, reduce red tape and support consumer confidence and building activity across NSW.  

Here are 6 essential

considerations to take

note of when building

your new home.

1. PLANNING FOR ALL COSTS

• Before embarking on any project to build a home, you must understand clearly all the costs and fees that will be incurred at all stages so that there are no unexpected expenses that come as a surprise.

• Costs may include building fees, lodgment fees, inspection fees as well as government levies that vary in different Council areas. 

• There may be other elements that will impact cost such as unexpected excavation finds and buying in a bushfire-prone area (which will require you to use building materials and construction standards for greater fire-resistance).

2. WRITTEN BUILDING CONTRACT

HBA implies a number of conditions and warranties into any contract for residential building work.

It provides that a contract to which the Act applies must be in writing, contain prescribed information and particulars and be signed and dated by the parties to it.

Where a contract for residential building work is not in writing or does not have a sufficient description of the work, the builder is not entitled to damages or to enforce any other remedy in respect of a breach of the arrangement.

Building contracts must therefore:

•Include carefully crafted clauses setting out the role, rights and responsibilities of you and the builder;

•Specify commencement, completion and number of days it will take, and should outline the process for delays, including compensation if necessary;

•Include a Specifications Document listing the work to be carried out, the items to be supplied/installed by the builder and the manner in which certain work is to be undertaken, including timelines;

•Ensure that drawings/plans stamped and approved and included as part of the contract; and

•Ensure there is a right for you to have reasonable access to the building site.

2. WRITTEN BUILDING CONTRACT

When variations are agreed between you and the builder, you should also put these in writing in the form of “Variation Notices” and ensure that these are signed.

2. WRITTEN BUILDING CONTRACT

At a start, make sure your builder is licensed and registered for the job you need. You can check this through Victorian Building Authority website. On specific works needed for the project, the HBA makes it an offence for a tradesperson to do any of the following work without a Contractor Licence:

• Residential building work where the total cost of labour and materials is more than $5,000

• Electrical wiring work;

• Plumbing, draining and gas fitting work; and

• Air conditioning and refrigeration work.

3. LICENSING

• Stand-alone contracts for internal paintwork as well as work related to tennis courts, ponds and water features no longer need a licence, unless done as part of other home building work.

• New multiple-offence prison-term penalties will apply if you hire unlicensed persons, do any unlicensed work, or offer to do any unlicensed work.

3. LICENSING

4. OWNER-BUILDERS

If you are an “owner-builder” or intend to be one, you should note that the law relating to owner builders has changed and include:

• To prevent occurrences of commercial unlicensed building work, owner-builders are required to name all other owners of the land on an application for an owner-builder permit. Any owners listed will be prevented from applying for another owner-builder permit for a different property for 5 years;

• The threshold for requiring an owner-builder permit has increased to work valued over $10,000 (previously $5,000);

• Owner-builders are prohibited from getting a permit for a dual occupancy except in special circumstances;

• Owner-builders are not able to get statutory insurance although contractors working for the owner-builder still need to provide certificates for work over $20,000. If the property is sold within the warranty period, the contract for sale must clearly state that there is no statutory insurance on the property; and

• Owner-builders must provide evidence of having done basic work health and safety training, and for work over $20,000 (previously $12,000) they will need to do an owner-builder course.

4. OWNER-BUILDERS

5. DISPUTES, DEFECTS AND STATUTORY

WARRANTIES• Under the changes, a “major defect” is

defined and is covered by a 6-year warranty.

• General defects that do not meet the 'major defect test' will continue to be covered by the standard 2-year warranty.

• For disputes relating to defects, tribunals and courts need to consider rectification as the preferred outcome.

• Builders who seek to fix defects cannot be unreasonably refused access to a property by you.

• To prevent rectification work being held up, Fair Trading Inspectors, through a Rectification Order, can “oblige” you to pay the builder any money owed under the contract.

5. DISPUTES, DEFECTS AND STATUTORY WARRANTIES

• Builders will remain responsible for warranties for all work completed on a home, but subcontractors will be responsible for their own statutory warranties.

• If you engage an independent professional who gives written specialist advice to a builder, that builder will now also have a legal defence if the advice contributes to a building defect.

6. HOME BUILDING COMPENSATION FUND AND INSURANCE

• The HBA provides that where Home Building Compensation Fund (“HBCF”) insurance (previously known as Home Warranty Insurance) is required, a builder is not entitled to demand or receive payment of any money or carry out residential building work unless a policy of Insurance is in place and a copy of a Certificate of Currency has been provided to you.

• A new public HBCF register (available at the NSW Home Building Compensation Fund website) will allow you to check your builder's or tradesperson’s HBCF insurance and whether there have been previous claims on that insurance.

HOW CAN WE HELP?

At Owen Hodge Lawyers, our specialised team of building lawyers is able to guide you on the recent changes, help you ensure that your investments are safe, minimise risks and avoid potential litigation. If you are planning to embark on a home building project this year and want to know how the changes impact you, call us today at 1800 770 780 or contact us via email at ohl@owenhodge.com.au to schedule a free consultation with our team of building lawyers. We look forward to assisting you.

www.owenhodge.com.au