Changes to Home Building Laws and how they Affect You and Your Business
Changes to home building laws took effect in early 2015, with the commencement of the Home Building Act 2014.
The changes are in two stages, as follows:
- Changes to licensing, owner-builders, home warranty insurance, defects, statutory warranties and dispute resolution which commenced from 15 January 2015; and
- Changes to contracts which will commence from 1 March 2015 to allow for the changes to be reflected in standard contract documents.
You need to prepare for the changes and be aware of how the changes will affect how your business operates. We provide a brief summary of the major changes below:
Any licence application you make may be revoked or refused if you have had a history of involvement in failed businesses, excessive complaints or disciplinary matters. Further, the threshold for requiring a licence for building and trade work is increasing from $1,000 to $5,000 for general trade work (including labour and materials). Specialist work which includes plumbing, electrical and air conditioning work will retain a nil threshold and therefore require a licence for such work irrespective of the value.
If you are an Owner-Builder, you will no longer be able to purchase Home Building Compensation Insurance (formally Home Warranty Insurance) unless it is provided by a private insurer. Further, it will no longer be mandatory for you to obtain statutory warranty insurance if you intend to sell the property within the six year warranty period. In addition, you will be required to declare the identity of all owners of the land to ensure all owners of the land are unable to obtain another permit for a different property for five years.
Home Warranty Insurance
The Home Warranty Insurance Scheme will now be known as the Home Building Compensation Fund.
Defects, Statutory Warranties and Disputes
The new laws recognise that the most efficient way to resolve a dispute is for the original builder to fix the work. To support this, courts and tribunals will need to consider rectification as the preferred outcome of any dispute. To prevent work being stalled, a home owner will not be able to unreasonably refuse you access to their property. The new laws will also see the introduction of the concept of a ‘major defect’ to replace the current definition of ‘structural defect’. Major defects continue to be covered by the 6 year statutory warranty and all other defects continue to be covered by a 2 year statutory warranty.
Changes to contracts will include the following:
- A more detailed contract is only required for work over $20,000. Contracts between $5,000 and $20,000 will still require a ‘minor works’ contract
- Progress payment schedules and termination clauses must be included in contracts over $20,000
- The maximum deposit for work over $20,000 will increase to 10%.
It is important that you familiarise yourself with the new laws. Should you require any assistance in relation to the changes or want more information, please contact Watkins Tapsell Solicitors.