Building better, smarter and faster: NSW Bill paves the way for prefabricated buildings and streamlines building certification

The Building (Approvals and Practitioners) Bill 2026 is the next step in the NSW Government's commitment to transformational building reforms in NSW.

The Bill seeks to:

• support the NSW Government's commitment to deliver safe, high-quality homes at the scale and pace required to meet NSW's housing needs;

• increase industry and consumer confidence in new housing development;

• streamline building approvals by consolidating the existing, fragmented legislative framework into a single piece of legislation; and

• restore transparency in the certification sector.

The release of the Bill has followed a period of industry consultation, where the NSW Government has taken into account industry feedback to address practical challenges arising from earlier drafts of the Bill.

We highlight some of the key amendments of the Bill and its implications for the NSW building sector below.

New South Wales the first jurisdiction to regulate prefabricated buildings

The Bill establishes a comprehensive regulatory framework for the regulation of prefabricated buildings, making New South Wales the first Australian jurisdiction to recognise modern methods of construction (or MMC) in legislation.

In the Bill's Second Reading Speech, the Minister for Better Regulation and Fair Trading, Mr Anoulack Chantivong noted:

"Prefabricated construction is a key part of solving our current housing challenges... Despite these benefits, prefabricated construction is regulated inconsistently or not at all in building regulation. This creates uncertainty for consumers as to what they are buying, uncertainty to lenders financing these projects, and inconsistency in building quality due to poor regulation."

The Bill results in a prefabricated dwelling receiving the same regulatory treatment as any other dwelling. This is achieved by removing the exemption for "manufactured homes" from the definition of "building" in the Environmental Planning & Assessment Act 1979 (NSW) (Planning Act). This will:

• simplify the permissibility of prefabricated buildings in land use zones, and remove some anomalous outcomes; and

• allow the existing consumer protections in the Home Building Act 1989 (NSW) to apply to prefabricated buildings, where the prefabricated buildings are captured as "residential building works" under that Act.

The Bill defines "prefabricated building" as the following, if manufactured away from the building site:

• a substantially complete building or room;

• a building component that is modular, will become a building element when properly installed and cannot be inspected without destructive testing or opening when installed on site; or

• anything prescribed by the regulations.

"Moveable dwellings", being "any tent, or any caravan or other van or other portable device (whether on wheels or not), used for human habitation", will not be prefabricated buildings.

The Bill requires the manufacturer of a prefabricated building to prepare:

• a prefabricated building declaration stating that the prefabricated building complies with the Building Code of Australia (BCA); and

• a prefabricated building instruction which details:

  • how to transport the prefabricated building to the building site in a way that will ensure the prefabricated building can be erected in compliance with the BCA; and

  • building and design requirements that support the prefabricated building being erected at the building site in compliance with the BCA.

The Bill contemplates that the regulations maybe prescribe further matters to be included in a prefabricated building declaration or a prefabricated building instruction.

It will be an offence for a manufacturer to supply a prefabricated building to another person unless the manufacturer has provided a prefabricated building declaration and a prefabricated building instruction. For class 1 buildings (ie. detached homes and small scale accommodation), the provision of a prefabricated building declaration and a prefabricated building instruction will be conditions of a building approval (previously known as a construction certificate). The existing requirements for class 2, 3 and 9c buildings (adapted from the DBP Act) are considered to provide sufficient protection for other building classes.

In relation to prefabricated buildings manufactured outside of New South Wales, the regulations may impose alternative requirements to the requirements set out in the Bill or exempt such buildings from some or all of the prefabricated building provisions.

The Bill acknowledges the use of prefabricated buildings in Crown building work, recognising the push to use modern methods of construction in social housing and other Crown building projects.

The NSW Government hopes that the regulation of prefabricated buildings will give industry and consumers more confidence in adopting prefabricated buildings in construction projects in New South Wales. While the Bill does not specifically address land lease communities, the NSW Government intends to develop a specific pathway for homes, including prefabricated buildings, in land lease communities.

Streamlining the building approval process

The Bill introduces various measures intended to streamline the building approvals process in New South Wales, including the consolidation of fragmented legislative regimes into a single legislative framework. The Bill repeals the Design and Building Practitioners Act 2020 (NSW) (DBP Act) and the Building and Development Certifiers Act 2018 (NSW) (B+D Certifiers Act), and their associated regulations.

The NSW Government expects that this will remove the need for duplicative designs for the same building elements, saving an estimated $330,000 per apartment block.

The Bill preserves the regulated design and design compliance declaration requirements of the DBP Act. However, the Bill now requires the regulated design and design compliance declarations to form part of the building approval, leading to a single set of designs that can be relied upon for building elements. This is intended to create a single source of truth for consumers, regulators and industry.

The Bill formalises industry practice, and restores a previous regulatory position, by allowing the staged issue of building approvals (formerly construction certificates) and completion approvals (formerly occupation certificates) to allow for the faster commencement and occupation of buildings that are safe to occupy. It clarifies that the applicable version of the BCA will be the version of the BCA in force at the time of the first application.

The Bill also introduces a mechanism to allow retrospective approval to be obtained in relation to building work that has already commenced without approval, but this will require authorisation by the Secretary of the Department of Customer Service. It is intended to allow building work to continue so end users are not penalised, but appropriate action may still be taken against industry participants carrying out unauthorised work.

The NSW Government seeks to address stifled construction productivity, particularly in relation to variations, by empowering an approval authority to consent to minor variations to building work without requiring the applicant to also obtain a separate modification of the applicable development consent. An approval authority may consent to a variation where the approval authority is satisfied that the approval would still have been issued if the variation had been included as part of the application. This streamlined consent process will be recorded in the NSW planning portal, reinforcing the concept of a single source of truth for building authorisation.

In relation to the approval process for Crown building work, the Bill preserves the current self-certification approval process set out in the Planning Act. However, the Bill also allows the Crown proponent to elect to apply the new approval process framework for specific work, which would put Crown building work on the same footing as other work. The should deliver more consistency and clarity for Crown building work.

Preserving the existing statutory duty of care

The Bill re-establishes the existing statutory duty of care under the DBP Act, preserving the existing operation, application and interpretation of the statutory duty of care.

Consistent with the DBP Act, the Bill imposes a duty on a person who carries out construction work to exercise reasonable care to avoid economic loss caused by defects in or related to a building arising from the construction work.

While the NSW Government considered extensive submissions made by industry to clarify the application of the statutory duty of care, it decided not to make any material changes at this stage. We have previously considered the broad application of the statutory duty of care. The NSW Government and the NSW Building Commissioner have flagged that they are open to continuing this discussion with industry going forward.

The regulations may prescribe how the statutory duty of care extends to construction work involving prefabricated buildings, including whether the duty of care continues if a prefabricated building is relocated after the construction work is completed and in circumstances where the building owner differs from the land owner.

Approval authorities

The Bill gives effect to the NSW Government's commitment to restoring transparency in the certification sector through the introduction of clearer, objective conflict of interest provisions.

Under the Bill, a person carrying out approvals work will have a conflict of interest in the approvals work if the person:

• obtains the benefit of the approvals work;

• is involved in the construction or design of an aspect of the development or building;

• is a close associate of the person for whom the approvals work is being carried out;

• for approvals work carried out in the local government area of a local council other than for the local council, is a councillor or employee of the relevant local council;

• has a pecuniary interest in the development or building;

• has prepared a strata plan of subdivision or notice of conversion in relation to the approvals work; or

• has a relationship, whether family, personal, employment or business with any of the above.

The maximum penalty for a conflict of interest offence is $1,100,000, significantly higher than the previous maximum penalty of $33,000 under the B+D Certifiers Act.

Where an approval authority is convicted of a conflict of interest offence, the registration authorising the approval authority to carry out the approvals work is automatically suspended for 120 days, or a longer period specified by the Secretary.

The Bill also recognises that approval authorities are not "certifying" work. Approval authorities are entitled to rely on documentation provided by designers and builders and are not responsible themselves for certifying compliance. This may alleviate challenges for approval authorities in obtaining professional indemnity insurance.

Disciplinary proceedings and investigations

The Bill introduces a single, consolidated disciplinary regime covering all "registered persons", including a former registered person. The registration scheme will be detailed in the regulations but is expected to extend to approval authorities, designers and builders (consolidating the previous DBP Act and B+D Certifiers Act registration regimes).

The Bill authorises the Secretary to take disciplinary action against a registered person and sets out the types of disciplinary action that the Secretary may take. The Bill sets out 11 objective grounds for which the Secretary may take disciplinary action against a registered person. The Bill empowers the Secretary to give a written notice, called a show cause notice, if, in the Secretary's opinion, there are grounds for taking disciplinary action against the registered person. The Secretary has the power to suspend the registration of a registered person following issue of a show cause notice.

The Bill authorises the Secretary to appoint persons to investigate, monitor and enforce compliance with the requirements of the Bill. The Bill sets out comprehensive information gathering powers, including a broad power which allows authorised persons to enter premises.

Dispute resolution

The Bill amends the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) to allow the Secretary to establish a dispute resolution scheme in relation to building work and related work. The operational detail of the dispute resolution scheme will be prescribed by the regulations.

This reflects the NSW Government's recognition that building disputes result in protracted, expensive legal proceedings. Following the passing of the legislation, it is intended that Building Commission NSW will work with industry and the justice system to develop a reformed system for resolving building disputes.

Regulations

The Bill leaves a significant degree of operational detail to be prescribed by the regulations that have not yet been developed. The Bill's Second Reading Speech states that the key elements of the Bill will not commence until the regulations are developed and approved.