Since the introduction of new home grant schemes and the Australian government's efforts to stimulate the construction sector, more developers and owners have been encouraged to build new homes. The most recent changes to building laws in NSW commenced in January 2015 through the Home Building Act ("HBA") which hopes to modernise industry practices, reduce red tape and support consumer confident and building activity across NSW. This presentation discusses 6 essential considerations to take note of when building your new home. At Owen Hodge Lawyers, our specialised team of building lawyers is able to guide you on the recent changes, help you ensure that your investments are safe, minimise risks and avoid potential litigation. If you are planning to embark on a home building project this year and want to know how the changes impact you, call us today at 1800 770 780 or contact us via email at ohl@owenhodge.com.au to schedule a consultation with our team of building lawyers. We look forward to assisting you.

1. BUILDING A HOME IN NSW?
6 THINGS TO KNOW
Presented By Owen Hodge Lawyers

2. WHAT WE’LL COVER
1. Planning for ALL Costs
2. Written Building Contracts
3. Licensing
4. Owner-Builders
5. Disputes, Defects and Statutory Warranties
6. Home Building Compensation Fund and Insurance

3. Since the introduction of new home grant schemes and the Australian government’s efforts to
stimulate the construction sector, more developers and owners have been encouraged to
build new homes.
The most recent changes to building laws in NSW commenced in January 2015 through
the Home Building Act (“HBA”) which hopes to modernise industry practices, reduce red
tape and support consumer confidence and building activity across NSW.

4. Here are 6 essential
considerations to take note
of when building your new
home.

5. 1. PLANNING
FOR ALL COSTS
• Before embarking on any project to
build a home, you must understand
clearly all the costs and fees that will
be incurred at all stages so that there
are no unexpected expenses that
come as a surprise.
• Costs may include building fees,
lodgment fees, inspection fees as
well as government levies that vary in
different Council areas.
• There may be other elements that
will impact cost such as unexpected
excavation finds and buying in a
bushfire-prone area (which will
require you to use building materials
and construction standards for
greater fire-resistance).

6. 2. WRITTEN BUILDING CONTRACT
HBA implies a number of conditions and warranties into any contract for
residential building work.
It provides that a contract to which the Act applies must be in writing, contain
prescribed information and particulars and be signed and dated by the parties to
it.
Where a contract for residential building work is not in writing or does not have a
sufficient description of the work, the builder is not entitled to damages or to
enforce any other remedy in respect of a breach of the arrangement.

7. Building contracts must
therefore:
• Include carefully crafted clauses
setting out the role, rights and
responsibilities of you and the builder;
• Specify commencement, completion
and number of days it will take, and
should outline the process for delays,
including compensation if necessary;
• Include a Specifications Document
listing the work to be carried out, the
items to be supplied/installed by the
builder and the manner in which
certain work is to be undertaken,
including timelines;
• Ensure that drawings/plans stamped
and approved and included as part of
the contract; and
• Ensure there is a right for you to have
reasonable access to the building site.
2. WRITTEN
BUILDING CONTRACT

8. When variations are agreed between you and the
builder, you should also put these in writing in the form
of “Variation Notices” and ensure that these are signed.
2. WRITTEN
BUILDING CONTRACT

9. At a start, make sure your builder is
licensed and registered for the job you
need. You can check this through Victorian
Building Authority website. On specific
works needed for the project, the HBA
makes it an offence for a tradesperson to
do any of the following work without a
Contractor Licence:
• Residential building work where the total
cost of labour and materials is more than
$5,000
• Electrical wiring work;
• Plumbing, draining and gas fitting work;
and
• Air conditioning and refrigeration work.
3. LICENSING

10. • Stand-alone contracts for internal paintwork as well as work related to tennis courts,
ponds and water features no longer need a licence, unless done as part of other home
building work.
• New multiple-offence prison-term penalties will apply if you hire unlicensed persons,
do any unlicensed work, or offer to do any unlicensed work.
3. LICENSING

11. 4. OWNER-BUILDERS
If you are an “owner-builder” or intend to be one, you should note that the law relating to owner
builders has changed and include:
• To prevent occurrences of commercial unlicensed building work, owner-builders are required to
name all other owners of the land on an application for an owner-builder permit. Any owners
listed will be prevented from applying for another owner-builder permit for a different property for
5 years;
• The threshold for requiring an owner-builder permit has increased to work valued over $10,000
(previously $5,000);
• Owner-builders are prohibited from getting a permit for a dual occupancy except in special
circumstances;

12. • Owner-builders are not able to get statutory insurance although contractors
working for the owner-builder still need to provide certificates for work over
$20,000. If the property is sold within the warranty period, the contract for sale
must clearly state that there is no statutory insurance on the property; and
• Owner-builders must provide evidence of having done basic work health and
safety training, and for work over $20,000 (previously $12,000) they will need to do
an owner-builder course.
4. OWNER-BUILDERS

13. 5. DISPUTES, DEFECTS AND
STATUTORY WARRANTIES
• Under the changes, a “major defect” is
defined and is covered by a 6-year
warranty.
• General defects that do not meet the
'major defect test' will continue to be
covered by the standard 2-year warranty.
• For disputes relating to defects, tribunals
and courts need to consider rectification
as the preferred outcome.
• Builders who seek to fix defects cannot
be unreasonably refused access to a
property by you.
• To prevent rectification work being held
up, Fair Trading Inspectors, through a
Rectification Order, can “oblige” you to
pay the builder any money owed under
the contract.

14. 5. DISPUTES, DEFECTS AND STATUTORY
WARRANTIES
• Builders will remain responsible for warranties for all
work completed on a home, but subcontractors will
be responsible for their own statutory warranties.
• If you engage an independent professional who gives
written specialist advice to a builder, that builder will
now also have a legal defence if the advice
contributes to a building defect.

15. 6. HOME BUILDING COMPENSATION FUND
AND INSURANCE
• The HBA provides that where Home Building Compensation Fund (“HBCF”) insurance (previously
known as Home Warranty Insurance) is required, a builder is not entitled to demand or receive
payment of any money or carry out residential building work unless a policy of Insurance is in place
and a copy of a Certificate of Currency has been provided to you.
• A new public HBCF register (available at the NSW Home Building Compensation Fund website) will
allow you to check your builder's or tradesperson’s HBCF insurance and whether there have been
previous claims on that insurance.

16. HOW CAN WE HELP?

17. At Owen Hodge Lawyers, our specialised team of building lawyers is
able to guide you on the recent changes, help you ensure that your
investments are safe, minimise risks and avoid potential litigation. If
you are planning to embark on a home building project this year and
want to know how the changes impact you, call us today at 1800 770
780 or contact us via email at ohl@owenhodge.com.au to schedule a
free consultation with our team of building lawyers. We look forward to
assisting you.
www.owenhodge.com.au