The NSW Government has introduced the Fair Trading and Building Legislation Amendment Bill 2026, and for practitioners working in property, strata and construction law, the implications are significant.
The Bill modernises property laws, strengthens regulatory powers across the building and conveyancing sectors, and clarifies the legislative framework for Decennial Liability Insurance. With more than 75,000 homes currently under construction in NSW, these reforms arrive at a critical moment for the industry and for the lawyers advising clients within it.
Here to break down what the reforms mean in practice is Ciro Figaro, Partner at Strata Title Lawyers, where he specialises in construction law and building defects. Ciro walks through the key changes to licensing and disciplinary powers, what the proposed Decennial Liability Insurance framework means for apartment owners and developers, and why practitioners advising clients in the building and property sector need to understand this legislation now.
Solving the Building Defect Crisis
What triggered these reforms? “Since the Sydney Olympics in 2000, the trend has been to build more and build fast,” Ciro says. “This shifted substantive public certifications to an almost administrative task with private certifications.”
“The defect crises at Mascot Towers and Opal Towers exposed serious gaps in the regulatory framework governing building professionals and the insurance products available to homeowners,” explained Ciro.
“The Shergold and Weir report, released in 2018, revealed the inadequacy of the compliance and enforcement procedures for the National Construction Code (NCC).”
The 2020 Building Industry Reform was then implemented. This introduced 3 main pieces of legislation:
- the Design and Building Practitioners Act 2020 (establishing a 10-year duty of care for economic loss resulting from defects and a regime for regulated designs),
- the Residential Apartment Building Act 2020 (giving powers to the NSW Building Commissioner to pursue serious defects) and
- the Building and Development Certifiers Act 2018 (regulating strict conflict-of-interest and accreditation authorities for certifiers).
“The Bill impacts 22 Acts, and is particularly focused on the three Acts above,” Ciro says. “This constitutes the Government's legislative response to the defect crises. It’s intended to close loopholes that have allowed misconduct to go unchecked and to give regulators the tools they need to act decisively.”
The Minister for Better Regulation and Fair Trading and Minister for Building, Anoulack Chanthivong, explained: "Consumers deserve to have the utmost confidence in the professionals handling some of the biggest financial decisions of their lives. These reforms tighten the rules for property and building professionals, by ensuring they can be held accountable for their actions before they enter the industry and after they leave."
For Ciro, greater accountability represents a significant shift.
"What the Minister is describing is a shift in regulatory philosophy," he says. "This is not just about punishing bad actors after the fact. It is about rebuilding confidence in the consumers and giving regulators the power to intervene earlier and to follow through even when a professional tries to exit the industry to avoid consequences."
Key Changes: Licensing and Disciplinary Powers
The Bill introduces a suite of changes to licensing and disciplinary frameworks. These are detailed below.
Stronger powers to refuse and cancel licences. NSW Fair Trading and the Building Commission of NSW will have clearer authority to refuse licence applications or cancel licences obtained through misrepresentation, error, or invalid qualifications.
“This is a meaningful expansion of existing powers,” Ciro explains. “It addresses a gap that has allowed some applicants to enter the industry on the basis of credentials that do not withstand scrutiny.”
Closing the revolving door in conveyancing. The Bill strengthens NSW Fair Trading's ability to block unsuitable or irresponsible applicants from the conveyancing sector. It now allows the regulator to stop professionals with a history of misconduct from re-entering the industry under a different guise.
"These much-needed reforms close loopholes and strengthen the integrity of the property and conveyancing sectors,” NSW Fair Trading Commissioner, Natasha Mann, said. “By giving NSW Fair Trading stronger powers to act upfront, we are protecting consumers, lifting professional standards, and ensuring those with a track record of misconduct cannot simply rebrand and re-enter the industry."
Accountability for certifiers who leave the industry. One of the more significant changes is the extension of disciplinary powers to cover private certifiers who have surrendered or allowed their registrations to lapse.
“Under the current framework, a certifier facing misconduct proceedings could effectively escape regulatory action by exiting the industry, surrendering their registration to prevent disciplinary actions,” Ciro explains. “The Bill closes that gap.”
NSW Building Commissioner James Sherrard explains: "Homeowners need to have confidence that certifiers working on their projects cannot provide sub-par services that result in defects and then leave the industry to escape regulatory action. These new laws will give Building Commission NSW the power to impose fines and disqualifications, even if a certifier accused of misconduct has left the industry."
The Bill also introduces a more surgical approach to license cancellation. Rather than requiring the Building Commission to cancel an entire home building license when a specific authority is found to be based on an invalid qualification, the Commission will now be able to cancel only the relevant authority, such as joinery or painting, while leaving the remainder of the license intact.
Ciro sees this as a balancing exercise that will benefit both regulators and license holders. "The all-or-nothing approach to license cancellation was always a blunt instrument," he says. "Being able to cancel a specific authority is a more proportionate response, and it gives the Commission more flexibility to act without causing unnecessary collateral damage to a licensee's broader business."
Decennial Liability Insurance (DLI): A New Framework for Defect Protection
"DLI is a long-term insurance covering ‘relevant’ defects in critical building elements, including structure, fire safety systems and waterproofing, for up to ten years from the date a building is first occupied," Ciro explains.
"Crucially, it attaches to the building, not the owner. A purchaser who buys a unit five years after completion is still protected for the remainder of the ten-year period. That is a significant improvement on the current position. However more could have been done to align the definition of ‘major defect’ under the Home Building Act, ‘serious’ defect under the Residential Apartment Building Act and now ‘relevant’ defect. At the moment, the definition of “relevant defect seems more in line with the one of “major defect.”
Unlike the Home Building Compensation Fund Insurance, which only applies to residential building of up 3 storeys and once the builder has disappeared, became insolvent, died, or lost their license, the DLI operates as an insurance of first resort, meaning a building owner can claim as soon as a defect is identified, without first pursuing the builder or developer.
"That matters enormously in insolvency situations," Ciro says. "Under the current framework, apartment owners with a developer who has ‘gone under’ often have very limited recourse. DLI could offer a solution. However, it is expected that it will come with an initial cost. This may be passed by the builder and developer to consumers."
The Ministerial Advisory Panel proposed two models.
The preferred option is mandatory DLI, replacing the strata building bond for all new class 2 buildings. This will occur after a transition period, with a policy taken out between development approval and the first construction certificate.
The alternative is a voluntary model, under which the strata building bond would increase from 2% to 5% and extend from two to six years, with developers who secure DLI exempt from both the bond and the Home Building Compensation scheme.
"The Bill does not mandate DLI," Ciro notes. "It clarifies the required scope of coverage to bring products to market. But the legislative architecture is being put in place, and the question of when the mandatory scheme will be triggered is something practitioners should be watching closely."
What does this mean for you?
For conveyancing practitioners, the strengthened entry requirements mean professionals with a history of misconduct face a more robust barrier to re-entry. Lawyers advising conveyancing firms should review their clients' regulatory history and ensure prior disciplinary findings are properly disclosed.
For lawyers advising building professionals, the expanded powers to refuse or cancel licences create new compliance risks. "Advise your building clients to audit their qualifications now," Ciro says. "Make sure the basis for each authority on their licence is sound before the regulator comes looking."
For lawyers advising certifiers, the extension of disciplinary jurisdiction to former registrants is critical. "Do not assume that surrendering a registration ends the matter," Ciro warns. "The Building Commission's reach now extends beyond the point of exit. Whether the department will have the resources to continue to use enforcement powers in the context of appeals and review it yet to be seen."
For strata and property lawyers, the DLI framework will fundamentally change the insurance landscape once operational. Practitioners advising developers need to understand the timing requirements for DLI policies and the interaction with the Home Building Compensation scheme during the transition period.
"Do not wait for the Bill to pass before you start having these conversations with your clients," Ciro says. "It’s clear where we’re going. Regulators are getting stronger powers, the insurance framework is changing, and the lawyers who add the most value right now are the ones who can help their clients get ahead of these changes, not just react to them.
“It is also important that we, as lawyers, embrace, rather than oppose, these changes and explore new ways and paths to run disputes in parallel," Ciro continues. “At the moment, we believe the ultimate weapon for owners remains the filing of a building claim under the Home Building Act 1989 for breach of statutory warranties. However, the new powers and rights have created new ways to resolve these matters outside legal proceedings.”
That means monitoring the Bill's progress, reviewing client licence portfolios, briefing developer clients on the DLI models under consideration, and updating contract advice for off-the-plan purchases to address the proposed DLI scheme.
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