This newsletter is about :

1. About Home Building Service
2. Building Consultants
3. Continuing Professional Development
4. Residential high-rise constructions
5. Off The Plan Sales Prior To 31 December 2003
6. Home Building Contracts
7. New requirements
8. Building Disputes

HOME BUILDING SERVICE
WHAT’S HAPPENING IN 2004

By Office of Fair Trading

About Home Building Service
The Home Building Service (HBS) was established in response to the 2002 report of the Joint Select Committee on the Quality of Buildings (Campbell Committee).

The HBS has responsibility for the licensing and regulation of builders and tradespeople in the home building industry and specialist contracts across all industries.

Building Consultants
Effective 1 January 2004, building consultants who carry out pre-purchase inspections of residential properties are required, under the Home Building Act 1989 to be licensed.  A licence card will be issued to successful applicants. 

Continuing Professional Development
The continuing professional development program (CPD) for the building and construction industry comes into effect on 1 March 2004.  The program introduces new requirements for holders of building and trade licences and nominated qualified supervisors to undertaking continuing professional development on an ongoing basis. 

Residential high-rise constructions
Exemption from home warranty insurance

From 31 December 2003, construction commencing on multi-storey buildings is not required to be covered by home warranty insurance. 

Under the exemption:

• A building contractor who commences residential building work in relation to the construction of multi-storey building on or after 31 December 2003 is not required not take out a certificate of home warranty insurance in respect of the work.

• A developer who enters into a contract for the sale of land on which exempted work has been done or is to be done, is not required to attach to the sale contract a certificate of insurance in respect of the work.

For the purposes of the exemption, a multi-storey building is a building that:

• has a rise in storeys of more than 3,  and

• contains 2 or more separate dwellings.

A storey does not include a space within a building that is only intended to accommodate vehicles.

OFF THE PLAN SALES PRIOR TO 31 DECEMBER 2003
Developers who have entered into a contract for the sale of land prior to 31 December 2003, but the residential building work is not commenced until on or after 31 December 2003, and who have complied with their responsibility to include in the contract information on home warranty insurance, are required to notify purchasers in writing of the following :

• that the work is exempt from the home warranty insurance requirements, and
• developers selling property where the construction commenced prior to 31 December 2003 will still be required to provide a certificate of home warranty insurance to purchasers.

HOME BUILDING CONTRACTS
All residential building work worth over $1,000 requires a written contract. 

The Home Building Act 1989 states all residential building work worth over $1,000 requires a written contract that contains certain provisions so both parties know exactly where they stand.  This helps prevent problems that often arise with verbal agreements.

By law, the written contact must contain the following :

• the date it was signed by both the contractor and the home owner

• the name on the contractors licence card and licence number

• the home owners name

• a sufficient description of the work to be carried out

• any plans and specifications attached

• relevant warranties required by the Home Building Act 1989

• the contract price which must be prominently displayed on the front page

• a warning if the contract price is subject to change

New requirements
From 16 February 2004 a number of additional requirements will come into force for residential building contracts, which will assist both consumers and builders to ensure that areas for dispute or misunderstanding are reduced.

Contracts will be required to contain:

• a checklist of questions which a consumer will ask to read with the aim of ensuring they understand a number of issues such as the contract price, home warranty insurance, deposits and who is required to obtain council and other approvals

• a clause which requires the builder to carry out the work in accordance with the requirements of the Building Code of Australia

• a clause which requires that all variations must be in writing

• a clause which requires the builder to provide a consumer with a guide which explains procedures for the resolution of contract and insurance disputes.  

Home building contracts will also be subject to a cooling off period of five clear business days.  Consumers will also have the right to rescind where notification of the cooling-off period has not been included in the contract.

Building Disputes
The Home Building Services have reverted back to a similar system of the old Building Services Corporation during the 1980’s.  This involves where a complaint is lodged against a building contractor and is referred to an inspector from the Home Building Services.  This inspector will attempt to mediate the dispute at a site meeting.  Should a resolution, or satisfactory outcome, not be achieved then it can be referred to a hearing which is run by the Home Building Services. The Home Building Services employ people with various building expertise.  At this early stage we are unaware of the conclusions to many of these cases, however the hearings would be run along the lines of the evidence given by the building inspector that attended the site meeting and compiled notes.

There have been some attempts by the Home Building Services to regain quicker resolutions and be more involved with site meetings so that a more accurate settlement of the defects, or problems, can be obtained at the earlier stages. 

Copyright © 2004 David Hall Building Appraisals. All rights reserved.