The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) came into effect on the 1st September 2020, giving the NSW Building Commissioner new powers to intervene in the construction of residential apartment projects. 

It is the second piece of legislation to come into effect since the Shergold Weir Report into the broken building industry was released in 2018. 

The first change came into effect on 10 June 2020 (under the Building Designers and Practitioners Act 2020) which granted home owners the benefit of a statutory duty of care that applies to new buildings and existing buildings where a defect became apparent in the previous 10 years. From 1st July 2021, the Design and Building Practitioners Act will also introduce a requirement for engineers, architects and builders to be accredited.

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020

What’s covered?

The Act covers residential apartment buildings, and only those which have been issued a construction certificate or complying development certificate under the Environmental Planning and Assessment Act 1979.

The Act will apply to buildings currently under construction and retrospectively to buildings completed within the previous 10 years.

Who does it affect?

The Act sets down requirements for ‘developers’ which includes the person who arranged the building work to be undertaken, the land owner and the head contractor. 

What must ‘developers’ do?

  • 6-12 months before applying for an occupation certificate, developers must provide a date for which they expect to apply for an occupation certificate. This is referred to as the ‘expected completion notice’.

  • The developer is required to provide notice (within 7 days of becoming aware) of any change to this expected date (where the expected date changes by more than 60 days).

  • Where the duration of the building work is expected to be less than 6 months, the developer must give 30 days notice before commencing work.

What can the Commissioner do?

The new reforms hand down substantial powers to the new Building Commissioner and their officers, including the ability to:

  • Issue prohibition orders, blocking the issue of an occupation certificate and/or registration of a strata plan. This can be issued where:
  1. The developer has failed to provide an ‘expected completion notice’;
  2. It is believed there is a ‘serious building defect’ within the building; or
  3. A building bond under the Strata Schemes Management Act 2015 hasn’t been lodged.

    A developer may appeal against the order to the Land and Environment Court within 30 days of notice of the order being given.
  • Enter premises during work hours with or without a search warrant.

  • Investigate, monitor and enforce compliance with the BCA, AS and designs in carrying out building work and investigate whether buildings have serious defects.

  • Inspect work, take photos, take samples, undertake destructive investigations, create copies of documents, and seize objects or information.

  • Demand information and undertake questioning.

  • Provide directions to the developer to carry out building work at a specified time or in a specified manner.

  • Issue a ‘stop work order’ if the building work is, or is likely to result in significant harm or loss to the public or occupiers

  • Issue a ‘rectification order’ for work that was or is being carried out in a manner that could result in a serious defect.

  • Attend completed developments, investigate defects and issue rectification orders.

What is a ‘serious building defect’?

This refers to any defect:

  • That is attributable to a failure to comply with the performance requirements of the Building Code of Australia, the relevant Australian Standards or the relevant approved plans; or
    That is attributable to defective design, defective or faulty workmanship or defective material and causes (or is likely to cause) the inability to inhabit or use the building or damage, destruction or collapse; or
  • That uses a building product that doesn’t comply with the Building Products (Safety) Act 2017.

What are the legal ramifications?

  • Failure to provide an ‘expected completion notice’ can result in penalties of up to $110,000 for a body corporate or $22,000 in other cases.
  • Failure to comply with a stop work or rectification order can result in penalties of up to $330,000 plus $33,000 for each additional day of non-compliance.
  • The Commissioner will have the power to prevent an occupation certificate being issued and thereby prevent the development being completed.

What will the Commissioner do?

The Commissioner has already started putting developers on notice to undertake occupation certificate inspections and will hire approx. 75 staff to assist with on-site and off-site auditing.

A risk ratings tool is currently under development which will be used to identify the top 20% riskiest developers, certifiers and builders to target them with these new powers. Risk ratings will likely be calculated using a combination of factors such as past construction performance, insurance claims, financial risk and the like.

This forms part 2 of the ‘6 pillars’ of reform outlined by the Commissioner in conjunction with the Minister for Better Regulation, Kevin Anderson, which includes:

  1. A better regulatory framework 
  2. A building ratings system
  3. Building skills and capabilities 
  4. Better procurement methods
  5. Building a digital future; and
  6. Building the reputation for quality research.