The headlines have been filled with horror stories stemming from the construction standards within the NEW apartment market.
Having been criticised for moving too slowly, mid July 2019 saw the federal government advise it had brokered an agreement from the states and territories to create a ‘nationally consistent approach to reforming the building industry’. This ‘nationally consistent approach’ centres on the Shergold-Weir report, which was released in April 2018, a copy of which is available via the link below.
Whilst the report makes a total of 24 recommendations, there are four key reforms:
- Introduce a new registration scheme for “building designers”;
- “building designers” being required to meet certain education, skill and experience competencies, and, as a condition of registration, to hold insurance to a prescribed level and standard; and
- the regulator responsible for administration of the building designer register having various investigatory, monitoring and enforcement powers in relation to registration and registered practitioners.
- Require building designers to declare that plans and performance solutions are compliant with the Building Code of Australia (BCA) and require builders to declare that buildings are constructed according to these declared plans; Further that builders be required to declare that the building was constructed in line with the certified, compliant building plans.
- Ensure an industry-wide duty of care is owed to building owners; and
- Appoint a building commissioner to act as the consolidated regulator for building in NSW.
Whilst the report encourages further education, qualification monitoring and accountability measures, I believe there is one key measure we should all be encouraging – visible demonstrations of the ethical behaviour encompassed by the term ‘Duty of Care’. This goes to the heart of the matter.
- #3 – Duty of care to owners and the requirement for all owners to be able to access compensation.
The report acknowledges that the existing legal framework provides certain owners a degree of protection against building defects, for example through the statutory warranties in the Home Building Act 1989 (NSW). However, it proceeds on the premise that this framework has gaps that should be filled. The report expresses particular concern about recent high court decisions and argues that “owners should have clear rights to pursue compensation where a building practitioner has been negligent”.
The proposed reform has the potential to widely broaden the classes of building practitioners who will have direct liability to building owners and increase the categories of building owners to whom building practitioners will be liable. It seeks feedback not on whether a duty of care should be imposed to plug these gaps, but on the form and extent of that duty, in particular:
- the form the duty should take
- which practitioners should owe the duty
- who the duty should be owed to
Whilst these proposals won’t assist those owners already within defective complexes at present, they do point to a commonly desired result, which is the protection of Australians and their assets. The key to the future is the collaboration by the states and territories on the issue and that the implementation of the proposals additionally provides scope for the insurance industry to return to the sector.
An industry with additional checks and balances in place to plug the planning, design and installation gaps resulting in an empowered insurance sector which would view the planning, design and installation changes as robust risk mitigators would be a major step in removing unscrupulous persons and entities from the industry, effectively shoring up the retirement plans of the mum and dad investors and homeowners who see property in Australia as a wealth and retirement planning tool.
About the Author:
Steve Purcell is located at our head office and is the licensee of Launch Properties. He holds a PSBA License, is a licensed Auctioneer and holds a Masters Degree in Business. Steve brings an extraordinary depth of hands on experience to the role including twenty years in commercial and residential construction, followed by ten years in residential Real Estate sales and property development. This unique blend enables Steve to advise his clients on selected developers, to ensure they are providing functional, quality assets with high quality finishes to mitigate potential sector risks to our clients. Become a client of Stevens and get access to RP Data suburb reports, market valuations and advocacy options.
Steve Purcell can be contacted on 1300 925 081 or by email on email@example.com
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