Property developers will have to pay money to NSW Fair Trading under a scheme designed to protect home buyers from builders that walk out on “dodgy or unfinished work”.
The Strata Building Bond and Inspections Scheme is designed to provide a process to rectify defects during the early phases of construction.
The NSW Minister for Better Regulation, Matt Kean, said the defect bond scheme was intended to reduce costs for both developers and buyers, cut time delays in rectifying issues and minimise expensive, time-consuming legal action.
“Developers will now be required to lodge a building bond, which is equal to 2 per cent of the contract price with NSW Fair Trading,” Mr Kean said in a statement.
“The building bond can then be provided to owners’ corporations to rectify any defects – protecting consumers from developers walking out on dodgy or unfinished work.”
The announcement of the defect bond scheme follows concerns about shonky developers cutting corners during construction, which has led to strata owners being landed with multi-million dollar bills to rectify defects.
Ross Taylor, a waterproofing consultant with more than 40 years’ experience, cast doubt on the proposed new laws.
“It is common for large-scale apartments of 100 units or more to have defects costing $5 million to $15 million to fix,” Mr Taylor wrote in an opinion piece for the Herald in September.
“Many strata owners end up paying for the repairs themselves after protracted efforts to get the developer, architect, engineer or builder to fess up.”
Mr Kean said the scheme will also improve Fair Trading’s ability to verify the contract price provided by a developer via an independent assessor.
“There will also be a mandated independent building inspector so everyone involved can have confidence that they’re getting a fair go,” he said.
Fair Trading has also released the requirements for the strata specific building inspections.
“The inspections and reports document will ensure a consistent approach to the identification and rectification of defects across NSW,” Mr Kean said.