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Developers of strata schemes in New South Wales were expecting the prescribed percentage of the building bond payable before the issuing of an occupation certificate, which is currently 2% of the contract price, to increase to 3% of the contract price as and from 1 July 2024.

However, on 21 June 2024, the Building, Development and Strata Legislation Amendment Regulation 2024 (BDSL Regulation) was passed, which delays the increase of the building bond to 3% of the contract price until 2 November 2024. This is the second time the increase to the building bond has been delayed.

This delay supports the existing view that the building bond should not be increased until there are at least two decennial liability insurance (DLI) products available on the market. DLI is the NSW Government’s preferred protection measure for newly constructed strata schemes. As at the date of this insight, only one DLI product exists.

Developers undertaking building works, particularly those with buildings nearing completion, should consider how the increase to the building bond percentage on 2 November 2024 will impact them. Developers should not assume a further delay to the building bond increase will be granted by the NSW Government. 

Note: this insight is an update to our insight published on 14 May 2024 titled Building bond to increase from 1 July 2024.

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