• Changes to Home Building Laws

    Master Builders advises that changes to the Home Building Regulation have occurred with the making of the Home Building Regulation 2014 and also Proclamation for the commencement of the Home Building Act 2014.

    The Home Building Regulation 2004 will be repealed upon commencement of the new Regulation 2014.

    These legislative changes are the culmination of a long period of lobbying by Master Builders and will introduce measures which provide greater clarity and balance to the legislation.

    The changes will commence in two stages, with changes to licensing, owner-builders, home warranty insurance, defects, statutory warranties and dispute resolution to commence from the 15th January 2015. Changes to contracts will commence from 1 March 2015 to allow for the changes to be reflected in standard form contract documents.

    Some of the major changes commencing on the 15th January are:

    • The threshold for when a licence is required for building and general trade work will be raised from $1000 to $5000 worth of work (including labour and materials). Specialist work which includes plumbing, electrical and air conditioning work will retain a nil threshold and therefore require a licence for such work irrespective of the value.

    • Owner-builders will be required to declare the identity of all owners of the land to ensure all owners of the land are unable to obtain another permit for a different property for five years. It will also not be possible to obtain a permit for a dual occupancy unless special circumstance suggest.

    • Owner – builders will no longer be able to purchase Home Building Compensation Insurance (formally Home Warranty Insurance) unless provided by a private insurer. It will no longer be mandatory for owner –builders to obtain statutory warranty insurance if they intend to sell the property within the six year warranty period. Furthermore, vendors will be required to include a conspicuous note on the contract for sale that there is no compensation insurance on the property. NOTE: contractors working for and owner–builder will still need to provide Home Building Compensation Insurance to an owner-builder for all work over $20,000.

    • The definition of ‘completion’ for strata buildings will be changed so that completion occurs on the issue of and Occupation Certificate that allows for occupation or use of the building.

    • Licensees will be able to reasonably rely on the written advice of an independent professional (architect, engineer, building consultant etc.) engaged by the owner in defence of a breach of statutory warranty.

    • Increased penalties to provide for a custodial sentence of imprisonment for up to 12 months as a sentence option for repeat offenders of unlicensed contracting and not providing a required insurance.

    • Stand–alone contracts for internal paintwork will no longer require a contractor licence, unless done as part of other home building work.

    • Tightening licence eligibility to stamp out the practice of ‘phoenixing’ where a company intentionally enters insolvency to avoid unpaid debts, then re-merges as a new company under a different name.

    • Changing the name of Home Warranty Insurance to the Home Building Compensation Fund.

    The following changes will commence on the 1st March 2015:

    • Increasing the threshold for when the more detailed contract requirements are needed from $5,000 t0 $20,000. Work under $20,000 will still require a written ‘minor works’ contract.

    • A cap on deposits for work over $20,000 will be increased from 5% to 10%. This will mean contractors will only be able to request a maximum of 10% for a deposit for all projects, regardless of the value.

    • Contracts over $20,000 will need to include a progress payment schedule (which only allows authorised payments to be made, as defined by the Act) and a termination clause.

    A full report of the changes made by the amendment Act and Regulations 2014 will be provided in the first 2015 edition of Master Builder magazine.

02 8586 3555

© Master Builder Association of NSW