The NSW Government is now implementing a brand new digital tool to provide potential property purchasers with independent data, enabling those purchasers to make more informed decisions. This implementation is backed by the NSW government’s new laws, Design and Building Practitioners Act 2020 (NSW) and Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) and were enacted on 10 June 2020.
The new law aims to protect the purchasers as well as to change the culture and capability of the NSW building industry. The legislation not only gives authority to the NSW Building Commissioner to inspect and order the correction of “serious defects” in residential apartment buildings but also establishes a developer rating system, which ultimately allows the property developers, builders, and designers to be held accountable.
Developer Rating System - iCIRT
Known as iCIRT, the developer rating system is a rating tool created and run by Equifax, which also pulls together all key data endorsed by NSW Fair Trading to reflect each developer’s character, capability, and capital.
The rating tool will assess a property developer by considering its credit rating, the relationships between development counterparties, the entity’s history in corporate dealings, and its nominated directors.
From the rating that scores out of 5 stars, the property purchaser will have a clearer picture of the developers’ trustworthiness (i.e. track record, risk management and ownership structure) and their capabilities to construct a regulation complying and safe building as well as their ability to fix issues and defects if any in the future.
What does it mean for developers?
The developer rating tool will be available to the general public, meaning that the developers who have scored poorly across the NSW Building Commissioner’s outlined criteria will be likely to experience further disruption to their workflow until they are able to demonstrate improved performance.
Further, the developers’ insurer will be likely to use the rating system as a useful resource in identifying the potential risks of construction loans to the developers and then pricing those low rated property developers accordingly.
The rating tool will not only reveal risky developers to the potential property purchasers with a history of leaving purchasers high and dry after the properties are settled, but also prevent the developers and builders from engaging in phoenixing activities.
What does it mean to property buyers?
The prospective purchasers of the apartments will be able to access the rating tool system from around March 2022 and the rating tool system will help the purchasers to decide whether to purchase an apartment built by a particular developer or builder across NSW.
With the market-led contribution in rating the building industry, the data will make the developers more accountable to the quality of their services and products and allow the prospective purchasers to make better informed decisions about construction professionals selling the off-the-plan properties (including new or near new apartments).
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice beforetaking any course of action.*
Senior Associate | Accredited Property Law Specialist NSW | Nationally Accredited Mediator
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