Home Building Amendment Act 2014 (NSW)
Friday 16 January 2015 @ 10.14 a.m. | Legal Research
The Home Building Amendment Act 2014 (No. 24) of NSW (The amendment Act) came into effect on the 15 January 2015 by proclamation in Regulation 810 of 2014. and has introduced a series of changes to building defect laws. The law sets out to redefine which defects in buildings may be classified as serious and which may be minor. It subsequently reduces the rights of apartment owners to make reasonable claims on defects that they had previously been entitled to.
The Changes in Defect Law
The amendment Act introduces a slew of major changes to existing building defect laws. Firstly, it puts the onus on apartment owners to discover and identify the defect and seek compensation within two years. Secondly, the major focus of the change is the definition of a major defect. For a building defect to be considered ‘major’, it would need to be uninhabitable or under threat of collapse. Thirdly, the law introduces a six year warranty for major defects of this nature. However, it effectively excludes serious structural problems like fire safety or waterproofing issues, which would otherwise only be covered for two years.
Community Reaction
The law has been met with fervent disapproval as a consumer advocacy group warns that home owners will soon be left paying the price for shoddy apartments. Peak bodies representing strata owners, including the Owners Corporation Network, have described the new defect rules as "draconian" and warned the changes would have serious and far-reaching consequences because many issues take years to emerge.
Researchers have shown that building defects are surprisingly common and of all the buildings constructed since 2000, 85 per cent have defects. The most common defects were internal water damage, water penetrating from the outside, and fire safety shortcuts. But these issues will be covered by the six-year warranty only if they are also designated as major defect. Lead UNSW researcher Hazel Easthope said many significant common problems that can cost hundreds of thousands to fix were unlikely to be covered under the new laws.
Defending the Amendment
The amendment Act is part of the State Government’s attempt to promote apartment living throughout New South Wales. A spokesman of Fair Trading NSW defended the act by claiming it offered an integrated package of laws for business and consumers by being more specific and flexible. The spokesman went on to specify that the laws offer clarity about rights and responsibilities and builder’s liabilities, particularly in relation to defects.
Urban Development Institute of Australia NSW chief executive Stephen Albin said the HAA was a series of commonsense changes that was good news for the construction industry and consumers. Mr. Albin stresses that defects in buildings are unavoidable but the new laws will help put more integrity into the system and cut down on major defects by effectively empowering qualified tradespeople.
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