Strata Building Bond Scheme
Most reforms to strata laws in New South Wales commenced on 30 November 2016. The strata building bonds and inspection scheme is the second part of these reforms and will commence on 1 January 2018.
The scheme applies to building work to construct residential or partially-residential strata properties that do not require coverage under the Home Building Compensation Fund (those over three storeys in height).
This reform introduces a building bond and mandatory defect inspection reports. It is intended to provide a structured, proactive process that resolves building issues quickly and cost effectively.
Developers will be required to lodge a bond with NSW Fair Trading equal to 2 per cent of the contract price for residential and mixed use high rise strata buildings. The building bond will secure funds (up to the amount of the bond). This money can then be used to pay the costs of rectifying any defective building work identified in a final inspection report.
The government says that the scheme will only apply to construction contracts signed (or where there is no contract and building work commences) from 1 January 2018.