New levy, penalties and prohibitions to the RAB Act and the DBP Act.

On 8 June 2021, the NSW Parliament passed the Building Legislation Amendment Act 2021 (Amending Act) which made several key amendments to the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020(NSW) (RAB Act), and the Design and Building Practitioners Act 2020 (NSW) (DBP Act).

The Amending Act focuses on enhancing the compliance and enforcement powers of the regulator as well as introducing a levy to assist in administering the DBP Act and will be in force from 1 July 2021.

The key amendments include:

New levy on developers

    1. A new levy to the Home Building Administration Fund will be imposed on developers to assist in administering the DBP Act. The levy will operate on a sliding scale, with a higher levy on larger developments, whilst smaller developments being eligible for an exemption.
    2. The exact quantum and timing of the levy will be dealt with in the upcoming Residential Apartment Buildings (Compliance and Enforcement Powers) Regulation 2020 (NSW) (RAB Regulations), upon further industry consultation.

Requirements to notify and additional penalties for developers

    1. The current RAB Act requires that developers notify the Secretary of the Department of Customer Service (Secretary) the intended completion date or a change in the expected completion date, so that regulators can better plan and execute OC audits.
    2. The Amending Act introduces the following additional penalties;
      • For each day a developer fails to notify the intended completion date:
        • Maximum of 100 penalty units ($11,000) for a body corporate; and
        • Maximum of 20 penalty units ($2,200) otherwise.
      • For each day a developer fails to notify a change in the expected completion date:
        • Maximum of 50 penalty units ($5,500) for a body corporate; and
        • Maximum of 10 penalty units ($1,100) otherwise.
    3. The Amending Act also introduces daily penalties for the failure to comply with a direction from an authorised officer under the RAB Act of:
        • 1,000 penalty units ($11,000) per day for a body corporate; and
        • 200 penalty units ($2,200) per day otherwise.

Additional grounds for a prohibition order

    1. The Amending Act introduces new grounds to issue prohibition orders to prevent the issuing of Occupation Certificates or Strata Plan Registrations. Such grounds include when a developer fails to comply with a direction. For example:
      • Failure to provide additional information which is necessary to rectify defects;
      • Failure to answer questions regarding matters which they are suspected on reasonable grounds to have knowledge of; or
      • Any other circumstances prescribed by the Regulations, a prohibition order can be issued by the regulators.

Court orders for non-compliance

    1. Where there has been a failure to comply with an order or direction under the RAB Act or the RAB Regulations, the Amending Act allows for the regulator to apply for a Court Order requiring compliance.
    2. The failure to comply with the above court orders will constitute an offence carrying maximum penalties of:
      • 3,000 penalty units ($330,000) and 300 penalty units ($33,000) for each day the offence continues for a body corporate; and
      • 1,000 penalty units ($110,000) and 100 penalty units ($11,000) for each day otherwise.

Clarification of design compliance declarations 

    1. The Amending Act will require design practitioners to take reasonable steps to lodge variations to regulated design on the NSW Planning Portal and obtain design compliance declarations before works on the variations can commence, instead of the previous position which allowed variations to be lodged after the work commenced.

Further regulation-making powers 

    1. The Amending Act will also allow for further provisions to enable and create additional regulatory measures to:
      • Recognise professional bodies and engineers by the Secretary;
      • Allow Administrative review of the Secretary’s decision relating to the recognition of a professional body of engineers; and
      • Create regulations to be made to exempt person from operation of the Act.

The consequences and effect on developers by this Amending Act is startling. If you need to understand more about the Amending Act, or the effect this may have on existing or future contracts, please contact Brett Vincent on 9261 5900 and he will be happy to discuss with you what can be done.

The contents of this publication do not constitute legal advice and are for general information purposes only. You should seek legal advice regarding your particular circumstances.