NSW building regulations due to commence on 1 July 2021 have been released

5 minute read  09.04.2021 Carrie Metcalfe, Andrew Hales, Jeanette Barbaro

Here we summarise the key takeaways and what you need to do to prepare.


Key takeouts

  • The final Design and Building Practitioners Regulations 2021 (NSW) (Regulations) have now been released and will operate from 1 July 2021.
  • The Regulations contain the detail for the new registration and declaration regime for building work on buildings that are wholly a Class 2 building, or mixed use buildings that are in part a Class 2 building.
  • All developers, builders, consultants and financiers involved in residential building work in NSW need to understand the new Regulations.

The Design and Building Practitioners Act 2020 (NSW) (Act) received assent on 11 June 2020. The property development and construction industry in NSW has been eagerly awaiting the finalisation of the Regulations, which have now been released after a period of consultation. These contain the detail for the new registration and declaration regime for work on Class 2 buildings, or mixed use buildings that have a Class 2 part, in NSW.

Here we summarise the key takeaways and what you need to do to prepare for the 1 July 2021 commencement.

What you need to do

The table below outlines what you need to do for work on Class 2 buildings, or mixed use buildings with a Class 2 part.

Designers, Builders and Engineers*

  • Be registered from 1 July 2021.
  • Be insured in accordance with the Regulations.
  • Lodge declarations and designs on the NSW Planning Portal from 1 July 2021.
  • Ensure Regulated Designs are integrated with other designs, including designs prepared by others.
  • Ensure Regulated Designs are complete to the extent necessary for the issue of a construction certificate or a complying development certificate.
  • Ensure all Regulated Designs required to be lodged before commencing construction work on site have been lodged.
  • Adjust procurement and contract administration to contemplate the new regime.
  • Train teams to understand the new regime, especially the variations regime and the process when applying for an occupation certificate.
  • Review contracts for consistency with the new regime.

* Note: There are special requirements for Engineers that are not summarised in this article.

Developers

  • Ensure that projects comply with the regime to secure an occupation certificate. Know what notices must be given before applying for an occupation certificate, and when those notices must be given.
  • Ensure Regulated Designs are complete to the extent necessary for the issue of a construction certificate or a complying development certificate.
  • Ensure all Regulated Designs required to be lodged before commencing any work on site have been lodged.
  • Ensure any variations are declared and lodged within 1 day after commencing a variation to building work.
  • Adjust project feasibility to allow for the new regime.
  • Make sure your Superintendent knows how to administer variations and ensure notices are given before applying for an occupation certificate.
  • Review contracts to ensure consistency with new regime.
  • Adjust procurement and contract administration to contemplate the new regime.

Financiers

  • Understand that the new regime must be complied with to ensure that an occupation certificate is secured.
  • Consider implementing processes to check that designers and builders are registered and insured, that Regulated Designs are complete to the extent necessary before applying for a construction certificate or a complying development certificate before construction commences, and that required notices are given.
  • Ensure financing documents contemplate the new regime.
  • Consider whether procurement model is best-for-project.
  • Consider whether quantity surveyor should assess compliance declarations and variations regime.

The new registration and declaration regime under the Act

The Act created a legislative regime for builders and designers of buildings to:

  • be registered and insured;
  • give declarations with respect to Regulated Designs (i.e. designs for key building elements and performance solutions);
  • give declarations with respect to building work; and
  • lodge designs with the Department of Customer Service.

The Regulations now provide further details on how the regime will operate and who will be covered by the new regime.

The Act also introduced a new duty of care, and investigation and enforcement provisions. Those provisions are not summarised in this article. You can read our previous summary of the Act Double Bill! New rules for NSW construction industry.

Key takeaways from the Regulations

Class 2 buildings

The new regime for registration and declaration applies only to the construction, alteration, addition, repair, renovation, or protective treatment of Class 2 buildings and mixed use buildings that contain a Class 2 part. This means that the whole of a mixed use building, if it contains a Class 2 component, will be covered by the regime (including the parts that are not Class 2).

The Regulations provide a useful example: the Act and the Regulations apply to the whole of a mixed use building that is comprised of Class 2, Class 3 and Class 6 parts, including the Class 3 and Class 6 parts.

Registration

Practitioners who want to work on Class 2 buildings, or mixed use buildings with a Class 2 part, must register from 1 July 2021 through the NSW Planning Portal. To accommodate the anticipated influx of applications for registration, the Regulations provide that applications lodged between 1 July to 31 December 2021 will receive deemed approval in certain circumstances.

The Regulations provide for various categories of registration (e.g. architectural, structural engineering, general building). Individuals and bodies corporate can be registered, subject to certain conditions.

Builders must hold a contractor licence under the Home Building Act 1989 (NSW), and have 5 years' recent practical and relevant experience, before qualifying for registration.

Design quality

Regulated Designs must be at 'construction issue' standard before work commences on-site. This is a significant departure from the typical design and construct (D&C) model that is popular among property developers and builders. This change is intended to minimise the risk of design defects.

Builders may still be engaged under a D&C contract, and therefore bear the risk for design development. However, the Regulatory Impact Statement clearly states: 'designs for all the building works that require a regulated design must be lodged prior to any building work commencing'. Therefore, project programs will need to be adjusted to allow for all design work for critical elements of the building to be completed before construction commences.

Declarations

The time for lodging declarations and Regulated Designs in the NSW Planning Portal is confirmed in the Regulations:

  • Lodgment #1: Before building work commences
  • Lodgment #2: 1 day after commencing any variation to building work
  • Lodgment #3: Before issue of occupation certificate
  • Lodgment #4: 90 days after the occupation certificate is issued

Note that in addition, the Act requires declarations to be provided to clients and certifiers.

Construction Certificates and Complying Development Certificates

For applications for certificates made on or after 1 July 2021, a construction certificate or a complying development certificate for building work cannot be issued unless the person who issues the certificate has received:

  • each design compliance declaration to which the building work relates that is required by the person in order to issue the certificate; and
  • for each design compliance declaration, each Regulated Design in relation to which the design compliance declaration is made.

Variations

Variations to Regulated Designs must be re-declared and lodged in the NSW Planning Portal no later than 1 day after the building work in respect of that variation is commenced by the builder. This ensures that builders must build in accordance with the designs that have been declared and lodged in the NSW Planning Portal.

Certain variations must be recorded in a 'variation statement'.

Code of Practice

Designers and builders must comply with a Code of Practice. The code is set out at Schedule 4 of the Regulations and includes obligations to act in good faith and to avoid conflicts of interest.

Insurance

Engineers and designers who want to work on Class 2 buildings (or buildings with a Class 2 part) must be insured in accordance with the Regulations, but there are deferred dates for application of the insurance provisions up to 1 July 2023. The Regulations do not stipulate a minimum dollar amount for professional indemnity insurance.

Existing projects

The draft Regulations issued for public consultation in November 2020 provided for a hard commencement date on 1 July 2021. The final Regulations now amend Schedule 1 of the Act to provide a more nuanced transitional period for existing projects depending on when work is commenced.

Next steps

It is important that developers, builders, engineers and designers working on Class 2 buildings, or mixed use buildings containing a Class 2 part, comply with the new regime. Failure to comply can result in an occupation certificate being withheld, or fines being imposed.

You should act now to get your business ready for 1 July 2021. If you have an existing project, review the transitional provisions in Schedule 6 of the Regulations to determine how the Regulations apply and seek any necessary advice.

For more information, you can read the Regulations and the Regulatory Impact Statement, or access the NSW Planning Portal.

For advice on this matter, please reach out to a member of our National Building Regulation and Compliance team.

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https://www.minterellison.com/articles/nsw-building-regulations-due-to-commence-on-1-july-2021-have-been-released

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