Update on the Building Bond Inspections and should you need to obtain one if you are planning to not sell your building

Defects in multi-storey buildings can cause long-standing issues for owners and builders alike. The costs and delays associated with litigation and rectification can flow down the contract supply chain and have serious impacts on subcontractors and suppliers. Builders and developers of new multi-storey buildings (defined as two or more separate dwellings which exceed three storeys in height) are exempt from having to obtain insurance under the Home Building Compensation Fund (Home Owners Warranty Insurance) under the Home Building Act 1989 (NSW). 

Division 3 (sections 207-211) of the Strata Schemes Management Act 2015 (NSW) (SSM Act 2015) introduces a building bond scheme for new multi-storey buildings from 1 January 2018. The building bond scheme applies to:

• Contracts for building works in the construction of new residential or part-residential (mix used) strata buildings.
• Where there is no contract, building works in the construction of new strata buildings commenced on or after 1 January 2018.

If you are planning on not selling the property, a building bond inspection will still be required as this is a requirement for majority of the banks in Australia.

The amount secured by a building bond is to be 2% of the contract price for the building work. In accordance with section 207 of the Act, the developer (not the builder) of a strata scheme must give the Secretary, a building bond for building work before an application is made for an occupation certificate under the Environmental Planning and Assessment Act 1979 for any part of a building for which the building work was done.

We at Effective Building & Consultancy will inspect the premises and prepare an interim report no earlier than 15 months and no later than 18 months after the completion of the building works. A final report will be issued no earlier than 21 months and no later than 2 years after the completion of the completion of the building work. We are a member of the strata inspector panel (SIP) which is established by the Regulation therefore we are able to perform the role of a building inspector to conduct interim and final inspections and provide the reports as mandated in the Act. The developer is responsible for the appointment of the building inspectors.

For more details of Strata Building Bond & Inspections Scheme, visit our latest blog on: https://www.effectiveconsultancy.com.au/bond-scheme/