Changes to the Home Building Act

21 October 2011

The NSW Parliament has passed legislation to amend the Home Building Act. This Act imposes a statutory warranty on residential builders, and, for builders of housing of three levels or less, requires the builder to take out home warranty insurance.

 

The Urban Taskforce has been making representations seeking the reform of the Home Building Act for some time. Our involvement has focused on the scope of the statutory warranties, which we think are far too broad, and discourage quality contractors for bidding for high density residential construction work.

 

The bill makes a number of changes to the status-quo. However, despite media reports that suggest otherwise, as far as the statutory warranties go, the bill is a net negative for the industry.

 

The bill seeks to make two major changes: the abolition of proportionate liability and the introduction of a new six year/two year statutory warranty.

 

The first measure will have a harsh impact on contractors. The second measure has the potential to be positive, if it were revised, but, without revision, it is unlikely to offer sufficient benefits to offset the abolition of proportionate liability. Its worth explaining this in a bit more detail.