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12 Dec 2019

NSW developers beware: new building and subdivision certification provisions now in effect

By Claire Smith, Caitlin McJannett and TAHMYNA KHOSHNOUD-RAD

Significant changes to NSW's building and subdivision certification regime will affect development programming and developers' compliance systems.

On 1 March 2018, the Environment Planning and Assessment Act 1979 was overhauled, but Part 6 of the Act, which made significant amendments to the building and subdivision certification regime, was delayed to allow the sector to adjust to the numerous other regulatory changes that have occurred recently.

Since 1 December 2019, those delayed amendments have been in effect. The key changes include:

  • interim occupation certificate have been abolished. The staged occupation of development is still permitted through a new "Partial Occupation Certificates";
  • a new "Subdivision Works Certificate" is required for subdivision works;
  • greater consistency with the development consent is now required; and  
  • new mandatory orders for non-compliances.  

No more interim occupation certificates

The new Part 6 has removed any references to interim occupation certificates, which had previously authorised the use or occupation of a partially completed building or parts of buildings that had undergone a change in use. In some instances, this had enabled buildings to be occupied indefinitely under an interim occupation certificate. However under Part 6, work on buildings or parts of a building must be wholly complete before occupation can occur.

In addition, the provisions that allowed the occupation and use of a property without an occupation certificate in circumstances where it had been occupied for over 12 months have also been removed.

Despite these changes, it will still be possible to have staged occupation of buildings. This has been affected by a new "partial occupation certificate".

The key features of a partial occupation certificate are that it:

  • permits occupation of the first completed stage of a partially completed building; and
  • is subject to a condition requiring that an occupation certificate be obtained for the whole of the building within 5 years after the partial occupation certificate is issued.

There are still exemptions to the requirement to obtain an occupation certificate where the development is an exempt development, a development not requiring consent, or a development erected on behalf of the Crown.

The new occupation certificate provisions apply exclusively to development consents granted after 1 December 2019. Any consents approved prior to this date are subject to Part 4A of the EP&A Act.

As a result developers will need to revise their development programs and consider whether it affects or triggers any milestones under a project development contract.  

New Subdivision Works Certificate for subdivision works

Developers will now need to obtain from a Certifier a "Subdivision Works Certificate" for any aspect of the development involving "subdivision work" (for example, sewerage works in connection with a development consent). Prior to 1 December 2019, a construction certificate would cover both the building work and the subdivision work. A construction certificate will still be required for buildings works.

For developers, the requirement will only apply to development consents issued from 1 December 2019.

Councils will need to ensure that the conditions of any Notice of Determination includes the process for obtaining the subdivision works certificate.

It is important to note that a Subdivision Works Certificate is entirely distinct from a subdivision certificate.  The former is issued prior to the commencement of any subdivision works, whereas the latter is issued at the end of the construction process and authorises the registration of a plan of subdivision.

Greater consistency with the development consent is now required

For development consents granted from 1 December 2019, the Land and Environment Court has a new power to declare a construction, subdivision work, subdivision or compliance certificate invalid where the plans and specifications are "not consistent" with the development consent for which it was replaced. This changes the previous regime in two respects:

  • the language in the test for consistency has changed from a more-relaxed requirement that the design and construction of the building be "not inconsistent with the development consent"; and
  • certificates can be challenged by third parties and struck down by the Court (previously consistency with the development consent was merely a threshold requirement on the issue of a certificate by a certifier).

New mandatory orders for non-compliances

Part 6 of the Act introduces a new, mandatory compliance regime that applies to principal certifiers (previously known as a principal certifying authorities). The key changes include:

  • principal certifiers can no longer issue a Notice of Intention to Give an Order (although Councils will retain this power);
  • on becoming aware of any non-compliances Principal Certifiers must issue a Written Directions Notice (WDN) within 2 business days and direct the person responsible for the non-compliance to take specific action to prevent or remedy the non-compliance with a prescribed timeframe.

A non-compliance for the purpose of a WDN is any work that does not accord with the relevant approval. The approval includes any approved plans and the development consent.

expect most non-compliances will be brought to the attention of the certifier via neighbour complaints, notifications from councils, or observed on site during an inspection.

If the WDN is not complied within the specified timeframe, the matter is then forwarded to council for further compliance action.

What this means for you

The above amendments will have significant implications for the industry, and current practices will need to be adjusted. In particular, developers should:

  • consider the implications of the removal of interim occupation certificates with respect to development programming, and any contractual, financial or insurance implications this may have for current or proposed projects;
  • for developments involving subdivision works, ensure a subdivision works certificate is obtained prior to carrying out those works;
  • ensure construction plans and specifications are entirely consistent with the development consent (this includes the conditions and the approved plans); and
  • seek to mitigate the risk of a WDN being issued for your development project.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.