The exemptions relate to home building compensation cover (formerly known as home warranty insurance)

Home building compensation cover is a compulsory product that builders and tradespeople must purchase for most residential building work costing over $20,000, such as new home constructions (including multi-unit buildings of three storeys or less) or home renovations. The cover helps homeowners if the builder or tradesperson is unable to complete work or fix defects because of insolvency, death, disappearance or licence suspension for failing to comply with a money order made by a court or the tribunal in favour of the homeowner.

Cover can only be obtained from an insurer or provider that is licensed by the State Insurance Regulatory Authority (SIRA) or from the NSW Self Insurance Corporation (trading as ‘icare’). Cover may be in the form of insurance under Part 6 of the Home Building Act 1989 (‘the Act’) or by means of an alternative indemnity product under Part 6B of the Act.

New exemptions will apply to work done by or on behalf of public sector agencies

Provisions of the Home Building Amendment (Compensation Reform) Act 2017 will commence on 1 September 2018 that will repeal and replace some existing exemptions in section 103E of the Act. An exemption in clause 60 of the Home Building Regulation 2014 (‘the Regulation’) will also be replaced.

The new exemptions will apply to residential building work done by or on behalf of the Crown or a State owned corporation (‘public sector agency’). Where a public sector agency does the residential building work itself, it will automatically be exempt from the requirement to hold home building compensation cover. Where a public sector agency contracts a person such as a builder or tradesperson to do residential building work on its behalf, the public sector agency will be able to decide whether to apply the exemption to the contract for the work. If the exemption is intended to apply to a contract, the contract must specify that the person is relying on the exemption under new section 103E.

New section 103E will also allow for regulations to be made that may in future modify the scope of circumstances where the exemption may apply, or to impose certain conditions or other obligations in connection with exemptions.

The new arrangements replace certain exemptions for named agencies

There are some existing exemptions that will come to an end on 1 September 2018, as they will be replaced by the general exemption in new section 103E. These relate to certain residential building work done for the NSW Government, being:

• residential building work done by or on behalf of, or to sales of land by, the NSW Land and Housing Corporation or the Aboriginal Housing Office (this exemption applies under existing section 103E of the Act that will be omitted from the Act on 1 September 2018);
• residential building work that is funded by the Teacher Housing Authority of NSW (this exemption applies under clause 60 of the Regulation, but only to contracts entered into before 1 September 2018).

The changes do not affect other exemptions under the Home Building Act

There are a range of other prescribed circumstances where exemptions apply to particular residential building work under the Act or the Regulation, and which will continue to operate.