Changes to NSW home building laws coming this week

A range of new laws regarding home building will be introduced in New South Wales this week.

From 15 January, owner-builders will only require a permit for works valued over $10,000, not $5,000. The required threshold for owner-builder courses will also be lifted. Currently, owner-builders must complete an approved course for projects valued over $12,000. After 15 January, the course will only be required for projects costing $20,000 or more.

Owner-builders will also need to name all other owners of the land on owner-builder permit applications. According to the NSW government, the new regulation is intended to prevent owner-occupiers from using the application permit to carry out unlicensed commercial building work.

Those named in an owner-builder permit won't be able to apply for another owner-builder permit for five years, potentially affecting any nomadic owner-occupiers who renovate, redevelop and flip their homes frequently.

Owner-occupiers will also be unable to get permits for dual occupancy projects, barring "special circumstances". From 15 January, they will not be able to get statutory insurance (though their contractors will still require it), and will have to disclose that there is no statutory insurance on the property in any sale contract if the property sells within the warranty period.

It's not just owner-builders who will see changes to their regulatory environment.

From Thursday, there will be changes to builder licence requirements to combat phoenix schemes, where collapsed and indebted companies restart with different names.

Simultaneously, licensing rules will be loosened so builders only legally require a license for works valued over $5,000. Currently, builders must have a license for any work that costs $1,000 or more, including labour and materials. Although the threshold for most builders has increased, tradespeople doing specialist jobs like plumbing or electrical work will require a licence.

For standalone jobs like painting or repairs to water features or tennis courts, builders will no longer need a licence.

NSW Fair Trading Minister Matthew Mason-Cox will also introduce changes to the Home Warranty Insurance Scheme, which will be renamed the "Home Building Compensation Fund".

To claim compensation from the government for building faults, a defect must be deemed "major". Until now, a six year warranty was available for any "structural" defects to homes made by builders or developers. A major defect is defined by the NSW government as those that cause "the inability to inhabit or use the building (or part of the building) for its intended purpose," or "the destruction of the building or any part of the building" or "a threat of collapse" of the building or any of its parts.

Some claim the terminology change will degrade consumer rights but the NSW government claims home owners won't lose protections, with "general defects" still covered under the standard two year warranty.

Homeowners hoping to wash their hands of any dodgy builders may run into trouble with the government requiring tribunals and courts to "consider rectification as the preferred outcome". Owners cannot "reasonably refuse" access to builders who want to fix their defective work, and Fair Trading Inspectors will be able to "oblige" owners to pay builders money owed under their contract.

Builders will remain responsible for warranties for all work completed on a home, but subcontractors will be responsible for their own statutory warranties. If an owner engages an independent professional who gives written specialist advice to a builder, that builder will now also have a legal defence if the advice contributes to a building defect.

After Thursday, strata buildings will also be considered complete with the issue of an occupation certificate.