Building Regulations

An Upper House Inquiry into Regulation of Building Standards, Building Quality and Building Disputes has taken submission and conducted public hearings. Urbanised submitted a confidential submission to the Office of Fair Trading. The new Building Commissioner has a roving brief and is conducting his own investigations. We understand that there are numerous ideas being floated at the moment. Extending building warranties from 6 years to 10 years and prohibiting the winding up of a special purpose vehicle (SPV) at completion of a development and biometrically logging everyone that has visited a site are some of the ideas that are being floated at the moment. Don’t be confused, measures like these (especially the first two) will change the nature of development in NSW. Extending building warranties will encourage to hold developments longer and move towards a more Los Angeles style of build to rent. Prohibiting the use of SPV’s for development purposes totally realigns project risks and may force institutional apartment developers into build to rent as well. Some may find it easier to leave the sector. 

This issue is not new. The genesis goes back to the collapse of HIH in 2000. When insurers left the market and the Government only covered buildings 4 storeys or less, a flood of builders that couldn’t get insurance moved into the apartment building market. The simple answer is a new compulsory insurance regime for apartment buildings. This provides protection for consumers and allows the market to weed out unscrupulous builders by not giving them access to insurance. This is an obvious answer but don’t expect common sense to prevail too soon as there are too many rent-seeking interests at play here and the consumers will be the ultimate losers.