As part of its update of various strata laws, the NSW Government is proposing a 2 per cent defects bond on all new strata buildings, as a way to protect owners and to guarantee that building defects which might appear in the first two years, can be re-mediated.
This new measure is expected to be implemented in 2016 and would see the 2% of the building contract value be held in a trust account. The funds can be used in cases where developers refuse to remedy defects, or delay fixing defects past the legal time limit.
Many of the state’s largest developers support this bond proposal, as they see it as creating a level playing field for all developers, including the less reliable developers who declare bankruptcy as soon as defects appear.
According to a UNSW survey, approximately 85% of strata buildings in NSW report building defects.