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Building Act changes of limited use

New consumer protection measures for building work came into force this month. They’re intended to ensure your building project goes to plan. But they may only be of limited use if the project goes belly up.

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The new measures contain common sense requirements. You must have a written contract for building work worth $30,000 or more and your builder must provide you with a disclosure statement. The statement must include the builder’s qualifications and licensing status (among other information).

According to Building and Housing Minister Dr Nick Smith, the measures should ensure “clear expectations about what work is to be done, at what price, and in what timeframe”.

We think they’ll help reduce the likelihood of building disputes.

The new measures are also supposed to make it easier for homeowners to take action if implied warranties within the Building Act aren’t met. The warranties state building work must be carried out with reasonable care and skill and completed on time. If the building work isn't up to scratch, you can ask your builder to put things right. If the fault is substantial, you can ask your builder to pay damages. These warranties last up to 10 years.

Typically, the onus is on you to prove the builder is responsible for fixing a defect. But under the new measures, you have a 12-month window where you can raise defects with your builder. They must fix them or prove responsibility lies elsewhere.

Despite the changes, it’ll still be difficult to enforce the implied warranties if your builder won’t play ball. For instance, you can complain to the Building Practitioners Board if a licensed builder has done a poor job on your house. The board can discipline the builder but it can’t award reparation. You’ll still be out of pocket.

Other avenues for redress are also problematic. The Disputes Tribunal is seldom an option because many building disputes involve sums greater than its claims limit ($15,000 or $20,000 with the agreement of both parties). Adjudication and arbitration carry significant costs.

We think a government-backed home warranty scheme and a specialist building-disputes tribunal needs to be investigated. Referees on the tribunal should have the technical capabilities to deal with complex building disputes. Like the New South Wales Civil and Administrative Tribunal, they should also be able to hear building claims up to $500,000.

For a full list of the new consumer protection measures, see the Ministry of Business, Innovation and Employment's Building Performance website.

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