Regulation of the building industry in NSW has always been a topic of much dispute, however it has increasingly attracted attention since cases such as Opal Tower and Mascot Towers shone a spotlight on questionable building practices, mass defects and devastating financial fallouts for owners.

In response, the NSW Government moved to overhaul the building industry and rebuild public confidence with the introduction of the Design and Building Practitioners Act 2020 (NSW) (DBP Act).

 

What is the Design and Building Practitioners Act 2020 ?

The DBP Act brings a more structured and disciplined approach to the design and construction of multi-storey and multi-unit residential buildings, and mixed-use buildings that include a residential apartment component.

It introduces numerous statutory obligations on the various parties involved throughout the life of a building such as builders, designers and engineers.

In line with the recommendations of the Shergold-Weir Report released in April 2018, the DBP Act aims to ensure quality design documentation compliant with the Building Code of Australia (BCA). It also deems that all ‘building practitioners’ owe a duty of care at common law to subsequent owners of the property, in addition to the statutory warranties under the Home Building Act.

 

A closer look at the Design and Building Practitioners Act

As of today, not all the regulations outlined by DBP Act are applicable with a number of obligations coming into effect from the 1st of July 2021.

Currently, the following statutory obligations apply:

AN EXTENDED DUTY OF CARE
This is a retrospective duty to exercise reasonable care in order to avoid economic loss caused by defects in or related to a building for which the work is done.

An extended duty of care gives apartment owners and the owners’ corporation a right to sue to recover rectification and temporary relocation costs arising from the discovery of a significant defect in their apartment building even where the building and the defects pre-date the Act.

The establishment of an extended statutory duty of care to avoid economic loss caused by defects brings an unprecedented level of liability to parties such as builders, designers, manufacturers and project managers.

This duty of care applies retrospectively for a ten-year period to the benefit of the owner and any subsequent owners of the land, including owners’ corporations.

This means that an owner may use this Act to claim for economic loss arising from the breach of the duty of care where the loss first becomes apparent within the 10 years immediately before the commencement or from commencement of the Act (11 June 2020).

This results in an extended period of potential liability for any party involved in the building process that far surpasses the project completion date.

REGULATED DESIGNS AND BUILDING WORK

The DBP Act introduced the notion of regulated designs. These are designs prepared for building work that is considered a critical element in the safety and quality of a building or is classified as a performance solution under the Building Code of Australia (BCA) e.g. fire safety, waterproofing, electrical services, structural elements and more.

Effective 1 July 2021, designers will need to provide a declaration that the design complies with the BCA.

Plus, both designers and builders will need to be registered with the Department of Customer Service and have adequate insurance.

The DBP Act also aims to ensure that each step of construction is well documented and compliant. To achieve this, it outlines the required process (outlined below) for lodging these regulated designs (and any variations) throughout the design and construction process.

These administrative demands have the potential to increase consumer confidence in the building industry and process, but will also slow down building work progress, as well as create additional costs associated with the preparation, lodgement and follow up of the required declarations in order to reach the stage where an occupation certificate can be issued.

What regulations will apply from 1 July 2021?

From 1 July 2021, the following statutory obligations will also apply:

  • Registration requirements
  • Compulsory design compliance declarations
  • Building compliance declarations
  • Adequate reporting of variations
  • Occupation and other building certificates
  • Stop work orders
  • Indemnification and Insurance

Will the Design and Building Practitioners Act achieve its goals?

Whilst consumers and owners corporations will undoubtedly welcome these new legislative measures, there is concern about the potential time and cost impact of this Act on the building industry and property prices.

Increased regulation inevitably results in raising the cost of doing business. However how significant the financial fallout will be cannot be ascertained until the reforms have been embedded into the operations of a business, and some insurance claims have been made against the industry. Only then will the reverberations of these reforms be fully understood by the building industry.

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