How a proposed ratings system for builders could protect investors from dodgy developments

How a proposed ratings system for builders could protect investors from dodgy developments
How a proposed ratings system for builders could protect investors from dodgy developments

With construction issues in new developments widespread, it is clear regulations to ensure safe building practices have fallen short of need and expectations. The current state of oversight has left investors, owners, and renters with doubts and growing wariness of the inherent safety of the buildings they are investing in or occupying.

To address the problem, the NSW government is taking steps to put new regulations into place that will increase oversight and accountability of builders. And, while builders may find these new regulations somewhat cumbersome, the need for buildings that comply with safety outweighs the possible inconveniences. In addition, for those builders who are already complying with current regulations and are conscientious about the quality of their work, the new regulations will not force great changes. Instead, the regulations will only raise standards that will ensure everyone’s safety.

What are the proposed reforms?

The proposed reforms would involve a new ratings system for builders and developers to protect buyers from purchasing dodgy developments. The tool will assess the amount of risk attached to a project and the track record of the team behind it - from the builder and designer, through to the developer and the certifier. Under the reforms, the NSW government would be able to block occupancy certificates being issued for buildings deemed unsafe or incomplete. 

Initially, to keep the building industry working and thriving, the regulations will have to allow for builders to rest on the quality of their past work. Those who can show that their projects have been properly built, and are in accordance with current building standards, should receive some form of endorsement as safe developers. This will allow these builders to continue to build and provide safe work and living locations for all.

In the meantime, the drafters can move forward with quantifying some of the changes that are currently being proposed, including but not limited to;

  • Increasing Transparency; by possibly requiring additional pieces of information and/or allowing for additional inspections of work being performed
  • Increasing Accountability; by possibly requiring particular employees to be named as responsible for certain phases of each build
  • Increasing the quality of work; by possibly requiring a particular part of projects to have minimum experience or education hour

The proposed reforms are part of the Government's Design and Building Practitioners Bill, which is currently being held up in the Upper House. As such the reforms are yet to be formally decided upon and may be amended. 

To implement any of the proposed changes, a great deal of work must still be done. It will be important for those drafting the reforms to take the time to assess and research the following areas of need;

  • Where are building standards falling short?
  • What types of checks and balances would need to be implemented to catch the areas that present the greatest dangers
  • When during the process of building would inspectors need access to the construction to ensure that the new regulations were being followed
  • Who would be responsible for determining a building that is out of compliance with new standards i.e. city, council, state officials

Lastly, there are many professionals who are already available to help monitor and implement the proposed new regulations. It will be important for local and state governments to share or combine their resources so that monies are not wasted and available resources are adequately tapped for their services and expertise. By doing so, the changes can be both safe and cost-effective for all involved.

Rolf Howard

Rolf Howard

Rolf is Managing Partner of Owen Hodge Lawyers. He has been in the legal practice since 1986 and a partner of Owen Hodge Lawyers since 1992. Rolf focuses on assisting clients to proactively manage legal responsibilities and opportunities to achieve competitive advantage. Rolf concentrates on business planning and formation, directors’ duties, corporate governance, fund raising and business succession. His major interest is to assist business owners and their financial advisers plan and implement strategies to build and exit from successful businesses.

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