Legislation to boost investment in NSW home building

David Elliott, Member for Baulkham Hills, and Dominic Perrottet, Member for Castle Hill, said legislation recently introduced by the NSW Government will modernise home building laws and stimulate investment in the state’s home building industry.

Mr Elliott said the Home Building Amendment Bill 2011 signifies the beginning of genuine reform for the NSW home building industry.

“These amendments will cut red tape, close off legislative loopholes and provide benefits to homeowners and builders,” he said.

Mr Elliott said the government is working with industry and other stakeholders, listening to their concerns and getting results.

“The message from stakeholders from across the home building sector is that urgent action is needed to address a wide range of issues with the current legislation,” he said.

“The current laws are hindering investment in NSW and letting builders and homeowners down.”

Mr Perrottet said the NSW Liberals and Nationals Government believes the improvements contained in the legislation will be a first step in re-energising the home building sector.

“These initial changes to the Act will be of particular benefit to small businesses and tradespeople,” he said.

“The legislative amendments proposed put builders and homeowners first and demonstrate that the government is serious about making New South Wales number one again.”

Key amendments include:

•    aligning the time periods for statutory warranties on home building work with those for home warranty insurance (i.e. six years for structural defects; two years for non-structural defects)
•    raising the monetary threshold at which home warranty insurance is required from $12,000 to $20,000;
•    raising the threshold above which a written contract for residential building work is required from $1,000 to $5,000 and introducing a written quote requirement for work between $1,001 and $5000 saving unnecessary paperwork;
•    formally opening up Fair Trading’s effective dispute resolution process to trader-initiated disputes;
•    clarifying the time periods for home warranty insurance to allow for the timely return of builders’ securities held by insurers;
•    halving the excess on home warranty insurance claims;
•    increasing the minimum level of home warranty insurance cover from $300,000 to $340,000;
•    providing a single definition of when work is “complete” in relation to statutory warranties and home warranty insurance to provide greater clarity and reflect the practicalities of building;
•    excluding claims arising from a breach of statutory warranties from the proportionate liability provisions of the Civil Liability Act 2002.  This means that builders and developers, not subcontractors, are fully responsible for compensating home owners for defective residential building work;
•    tightening up the definition of parties “related” to a builder or developer to prevent abuse of the home warranty insurance scheme; and
•    clarifying the definition of “developer” to close off a loophole that may lead to homeowners missing out on fundamental protections provided under the Act.

Mr Perrottet said that an interdepartmental working group is currently examining  options for expanding alternative dispute resolution mechanisms for dealing with home building disputes, so that lengthy and expensive court cases can be avoided.

“The interdepartmental working group is expected to report back next month,” he said.

“Work is also underway to address the broader issues with the legislations and a thorough review of the Act is scheduled for 2012.