The new building defect bond scheme will start on 1 July 2017, allowing time for strata buildings to be inspected and for the industry and stakeholders to prepare for the changes. The reform aims to address the concern amongst apartment owners about poor building quality and problems with construction, by increasing accountability of builders and developers, enabling defects to be identified and repaired early and prolonging the life of strata buildings.
The building bond will apply to the construction of strata buildings exceeding three storeys and require a bond of 2% of the final contract price of the building to be lodged by the developer. The bond will be used as security to repair any defective work, which may be identified under the new requirements for defect inspections.
Under the defect inspection requirements, developers must appoint an independent building inspector to prepare an interim report detailing any defects in the building within a strict period of 15-18 months post completion of the works. A final report must be completed within 21-24 months, outlining any unrectified defects previously identified in the interim report, any defects present in rectification works completed since the interim report and the scope of work for rectification of those defects. If there are no defects or they have been rectified, the bond will be returned to the developer.
Further to this, a maintenance schedule prepared by the developer must be tabled in at the first AGM of the new scheme, informing owners of their maintenance obligations.