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The New South Wales Parliament has passed the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (Act), which brings in new requirements for obtaining occupation certificates and increased powers for the Secretary of the NSW Department of Customer Service (Secretary). The Act commences on 1 September 2020 and applies to class 2 buildings under the Building Code of Australia (BCA), which are typically multi-unit residential apartment buildings, and any building containing a class 2 component.

The Act introduces new:

  • requirements for developers to provide a notice of expected completion of building work for a residential apartment building (defined by reference to class 2 of the BCA, as described above) to the Secretary at least six months, but no more than 12 months, before applying for an occupation certificate, and
  • powers for the Secretary to:
    • prohibit an occupation certificate being issued, or strata plan being registered, where a notice of expected completion has not been provided, a serious defect exists in the building or a building bond required under the Strata Schemes Management Act 2015 (NSW) has not been given to the Secretary
    • issue a developer with a stop-work order if building work for a residential apartment building is, or is likely to be, carried out, in a manner that could result in significant harm or loss to the public or occupiers or potential occupiers of the building or significant damage to property, and      
    • issue a building work rectification order to a developer if the Secretary has a reasonable belief that building work was or is being carried out in a manner that could result in a serious defect to a residential apartment building.

A serious defect is defined as a defect in a building element that is attributable to a failure to comply with the performance requirements of the BCA, the relevant Australian Standards or the construction certificate/complying development certificate approved plans and specifications, which will extend to the regulated designs when the Design and Building Practitioners Act 2020 (NSW) (Practitioners Act) commences on 1 July 2021. Building element has the meaning given to it in the Practitioners Act, being:

  • fire safety systems
  • waterproofing
  • an internal or external load-bearing component of a building that is essential to the stability of the building
  • a component of a building that is a part of the part of the building that physically separates the interior environment of the building from the exterior environment, and
  • those aspects of the mechanical, plumbing and electrical services that are required to achieve BCA compliance.

A developer will commit an offence if it fails to give the notice of expected completion or an update to such a notice where circumstances have changed. The maximum corporate penalty for those offences is 1,000 penalty units (currently $110,000) for the notice and 500 penalty units (currently $55,000) for the update.

For a transitional period of 6 months from commencement on 1 September 2020, notification to the Secretary of the proposed application for an occupation certificate must be given by 15 September 2020. Accordingly, occupation certificate notification provisions apply where work is underway or completed at 1 September 2020 for which an occupation certificate has not yet been issued at that date.

The powers given to the Secretary apply where the residential apartment building:

  • is or was authorised to commence in accordance with a construction certificate or complying development certificate, and
  • has not been completed or was completed within 10 years before the Secretary exercised the power, such that the powers will apply to buildings completed before 1 September 2020.

The Act also enables the Secretary to recover the reasonable costs and expenses incurred by the Secretary in connection with a building work rectification order.

Key effects

Developers and other participants in the residential apartment building sector need to familiarise themselves with the new provisions before 1 September. The ability for the Secretary to prohibit the issuing of an occupation certificate, along with the new powers for the Secretary relating to building defects, will have wide ranging impacts on the sector. The focus on building quality is a welcome development. Whether the increased regulation of the sector will achieve that without significant time and cost impacts remains to be seen.

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