In August 2024, Building Commission NSW released the Building Bill 2024 (Bill) proposing the largest overhaul of building and construction industry regulation in 40 years. The Bill is part of an effort by the NSW Government to restore consumer confidence in the sector in the wake of the issues with the Mascot and Opal Tower developments in 2018-2019, which at the time received widespread media scrutiny.

The Bill seeks to streamline sector regulation by consolidating the following acts into one:

• Design and Building Practitioners Act 2020;

• Architects Act 2003;

• Home Building Act 1989;

• Building & Development Certifiers Act 2018;

• Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020;

• Gas & Electricity Act (Consumer Safety) 2017;

• Strata Building Insurance Bond Scheme and Decennial Liability Insurance Scheme from Strata Schemes Management Act 2015;

• Building Quality Certificates from Environmental Planning and Assessment Act 1979; and

• Plumbing and Drainage Act 2011.

Over five articles, we will focus on the following impacts of this major legislative change:

• licensing and registration requirements for builders and construction professionals;

• changes to insurance requirements;

• overhaul of the certification and design process;

• extension of statutory liability and introduction of new statutory claims process; and

• increased regulator powers.

The licensing and registration scheme is the largest overhaul proposed, promising greater quality assurance with the implementation of new classes of licence and prescription of eligibility requirements before a licence can be obtained.

Some of the key changes are as follows:

• Chapter 3 of the Bill makes it a requirement for a person to hold a current licence in order to perform 'licensed work'. 'Licensed work' will be defined by the regulations which (currently) include five main types of work:

  • building work;

  • fire safety work;

  • general building design work;

  • professional engineering work; and

  • specialist work. 

• These categories will extend to work in the commercial and residential construction space. The Bill proposes heavy penalties of up to $330,000 for performance of 'licensed work' without the appropriate licence in place.

• Licences for 'general building design work', which capture the development of design documentation and reports relating to 'design' (a term that is not defined), will be split into the following classes

• The Bill will also implement a 'tiered' licence system for builders which are subject to minimum qualifications and experience. The scheme currently proposed is as follows:

• The Bill will also greatly expand upon the recognised types of specialist work under the Home Building Regulation 2014 with the inclusion of waterproofing work, bricklaying and carpentry, among various others. This signals growing acknowledgement of the different types of building work and the requirements relevant to each.

• Building Commission NSW will be responsible for the granting of licences and may publish minimum requirements for each class, including relevant skills, qualifications, registration or assessment by industry bodies, insurance and continuing professional development requirements. The Bill also foreshadows the publication of yet‑to‑be‑announced practice standards and codes of conduct relevant to each class, as well as proposes to carry over the newly imposed 'Engineer's Practice Standard' under the Design and Building Practitioners Act 2020. This may make it more onerous for licence holders to renew their licences each year and may also have a consequential impact on insurance premiums.

• Architects will also be caught up by the Bill, however the Architects Registration Board will remain a separate entity and will remain responsible for governance of architects. All other licence classes will be regulated by Building Commission NSW.

The Bill is part of a broader package of reforms. The last update provided by the NSW Government indicated that the Bill and other associated changes will be introduced to Parliament in 2026 with a view to the legislation, if passed, coming into effect in 2026‑27.

It is clear that consultants and builders will need to stay abreast of developments such as the publication of minimum requirements and practice standards, which will affect their ability to maintain and renew their licences. Whilst the changes are a step in the right direction for consumers, the additional regulation is likely to have an upward effect on insurance premiums, further increasing pressure on industry professionals.

The swing toward consumer protection is a running theme for the Bill and is something that will be explored later in our series.

If you would like to understand more about the potential insurance implications of these changes, please contact our Construction Risk Insurance team