Punishments for 'dodgy developments' become law, but industry warns Act will choke housing investment

All property developers building in Canberra will need to be licensed before they lay a single brick under new Territory law.

The Property Developers Bill 2023 passed the Legislative Assembly, introducing a scheme the ACT Government said would hold dodgy developers to account.

It will allow developers to be pursued for building defects, even if they have gone bust.

Sustainable Building and Construction Minister Rebecca Vassarotti said the establishment of a Property Developers Act, plus changes to residential building work insurance settings, would improve customer protections and confidence in the residential building sector.

“Way too often over recent years, high-profile cases of poor development have undermined the trust of Canberrans in the home building industry and defined the anxieties of an entire generation of homeowners and renters alike,” she said.

“Dodgy development choices by big businesses are estimated to have cost Canberrans more than $50 million each year.

“It’s time this is put to an end.”

The scheme will see property developers held personally liable if they don’t fix defects in the homes they’ve built.

Ms Vassarotti said this would keep developers accountable and remove any “incentive” to put pressure on builders, tradies or certifiers to undertake or sign off on “dodgy work”.

“Put plain and simple, this bill will protect Canberrans when they make the most significant purchase of their life,” she said.

“It will give Canberrans greater control and confidence that the property developer behind their new home has capability to deliver a quality product.”

Some changes were made to the bill in the detailed debate stage at the August sitting week, with the ACT Government to bring amendments.

It now won’t characterise builders of single detached dwellings as developers. But if they choose to embark on a ground-level four-level townhouse complex, they’ll need a developer licence.

Additional carve outs have also been included.

The Canberra Liberals had hoped to bring their own amendments, but had thought the bill was going to be debated in the August sitting week, and so missed the chance to prepare them.

Shadow Housing Minister Mark Parton said while the government’s changes were solid, a lot of industry concerns still hadn’t been addressed.

“[This] sets out to provide significant public benefits, but it could well have several unintended consequences, the biggest being reduced investment in new dwellings in the ACT at a time when new homes are desperately needed,” he said.

“A lot of work has gone into [this bill], and a lot of it is very good, solid work – there are many things to be commended about the bill … [but] we think it’s far from perfect and we continue to have some concerns.”

An independent cost benefits analysis of the scheme found if it resulted in improved defect mitigation practices in more than 15 per cent of new multi-unit residential developments in the ACT, “the benefits of the proposed reforms will outweigh the costs”.

It also found the rating process could lift industry capability and improve business practices.

The report noted the scheme could make some developments unviable, but this impact was expected to be marginal.

“We consider it unlikely that the proposed reforms will have a material impact on the level of residential development activity in the ACT,” the analysis noted.

Some in the property industry beg to differ.

Property Council of Australia ACT interim executive director Gino Luglietti again warned the scheme would stifle investment and result in fewer homes for Canberra.

“It’s a dog’s breakfast, a bill that will kill off national and international investment, create uncertainty, drive more construction insolvencies, and reduce housing affordability,” he said.

“This legislation will create multiple casualties from a catastrophic plan to make property developers responsible for building defects that are outside of their control.”

He said while the property sector backed the legislation’s intention – to protect consumers – the direct personal liability component on developers for rectifying defects wasn’t fair.

“It makes property developers liable for work completely outside of their control and, even worse, it means directors in property development companies could be personally liable for work undertaken 10 years before they even became a director,” Mr Luglietti said.

“The [bill’s] finer details – that the government seems to hope will go unnoticed – are at best ill-considered and will serve only to create further significant burdens on an already beleaguered property sector.

“As passed, this bill is 10 per cent commonsense and 90 per cent over-reach – and our sector is unanimous in calling for an urgent review before it brings an axe down on the already stretched potential for housing and construction growth in the ACT.”