New laws to protect homeowners when they renovate, build or buy their home will start on 15 January 2015, NSW Minister for Fair Trading, Matthew Mason-Cox said today.

“It’s essential that consumers are protected from shoddy or incomplete work on their homes, and builders and tradespeople working in the industry are appropriately regulated,” Mr Mason-Cox said.

“The decision to commence the new laws on 15 January followed extensive consultation with industry and consumer groups.

“The changes are part of the NSW Government’s plan to ensure NSW’s important building sector remains healthy and continues to grow, while making sure consumers remain appropriately protected.’’

Mr Mason-Cox said a cornerstone of the new the Home Building reforms was the new ‘major defect’ definition, which came after extensive consultation.

“For the first time, the law recognises fire safety and waterproofing issues as major elements in a building’s structure,” he said.

“By including fire safety systems and waterproofing as major elements of the building, the new definition broadens the scope of what may be considered a ‘major defect,’ and provides access to the six year warranty period, offering consumers greater protection in these two very important areas.

“The new laws clearly define statutory warranties to avoid costly litigation over defective work. The warranty period for major defects continues to be six years and two years for all other defects.’’

Mr Mason-Cox said NSW Fair Trading would be given greater powers to crack down on illegal ‘phoenixing,’ where a building company collapses and starts up again under a new name to avoid debts and scrutiny by the regulator.

“Changes to the licensing system will allow NSW Fair Trading to refuse a licence application or revoke a licence if a builder has a history or involvement in a failed company or an unreasonable number of complaints or disciplinary matters against them,” he said.

“This change will help keep dishonest companies out of the industry.”

Mr Mason-Cox said the new laws were also designed to create a strong and vibrant building sector.

“Many builders in the industry simply don’t have the cash flow to start working on new projects,” Mr Mason-Cox said.

“We are amending home building contracts to increase the cap on deposits for work over $20,000 from five per cent to ten percent to ensure builders don’t incur unreasonable startup costs for building materials and equipment.

“To ensure consumers are protected, the new laws also require builders to include a progress payment schedule in the contract which accurately reflects the work that has been done. “This will help ensure that consumers do not end up paying the builder more than the work that has been completed.

“This change strikes a fair balance to protect the interests of consumers and industry.”

Changes starting on 15 January 2015 mark an important step in improving regulation of the industry. Some parts of the Act that require changes to contract requirements will come into effect on 1 March 2015, giving builders and industry time to make the transition to new requirements.