New Laws Expanding the Scope of the Queensland Home Warranty Scheme Commence on 28 October 2016

In case you haven’t heard there have been various changes to the home warranty scheme as a result of an inquiry by a Parliamentary Committee into the former Building Services Authority.

What is the Queensland Home Warranty Scheme?

As part of the regulation of Queensland’s building industry, the Queensland Building and Construction Commission (QBCC) administers a home warranty scheme to provide insurance cover for loss where a building contractor fails to complete residential construction work or to rectify it. The Scheme applies to work for detached houses, unit buildings (up to three stories) and duplexes.

In the past, the QBCC premium was calculated based on the contract price or the value of the work. Now the premium is based on the “insurable value” of the work.

“Insurable value” is the amount which represents the reasonable cost of having the work executed by a licensed contractor on the basis that all materials are to be supplied by the contractor.

What are the expansions to the Scheme?

Various regulatory reforms have been made to the home warranty scheme effective as of 28 October 2016. The Scheme will be expanded to work that is carried out by a licensed contractor who contracts with a consumer to do residential construction work valued at more than $3,300. The contractor must now pay a premium on behalf of the consumer to the QBCC.

A brief summary of the amendments, additional works now covered by the scheme:

  • The installation of a manufactured home fixed to land in a residential park.
  • The erection, construction or installation of a standalone residential swimming pool.
  • For a residence or related roofed building:
  • All building work performed within the building envelope (which applies to both the internal or external parts of the building).
  • Anything attached to the building if it requires building approval or plumbing approval.
  • Any structure attached to the external part of the building where there is no other supporting structure.
  • Stairs or access ramps which are permanently attached to the building.
  • In relation to plumbing and drainage for a residence or related roofed building:
  • Building work for the primary water supply.
  • Building work for sewerage or drainage.
  • Stormwater drainage.

(Source: http://www.qbcc.qld.gov.au/contractor-insurance-requirements/queensland-home-warranty-scheme-reforms-effective-28-october-2016)

Payment of Insurance Premium

Prior to the recent amendments, the QBCC Act required that the appropriate premium is paid “as soon as practicable after the contract is entered into with the consumer.”  Now the premium must be paid within 10 business days after the date the contract was entered or before the work starts (whichever is earlier). The payment of the premium now requires a licensed contractor to collect the insurance premium from the consumer and pay it to the QBCC on behalf of the consumer.

Benefits to Both: Consumers and Contractors

The reform will give the consumers access to the Scheme for particular work. The Scheme will now allow consumers to make a claim where the work proves to be defective or wasn’t completed. The changes also introduce a new premium structure which minimises cross-subsidization and charges premiums in line with the risk of a specific project. This means, that many building policies will receive a material reduction in premiums, whilst a small proportion will get a large increase.

The amendments mean, that licensed contractors performing such work newly included in the Scheme, can promote the fact that the work will be covered by the Scheme.

By |2017-10-18T18:20:06+00:00December 14th, 2016|Categories: News, Residential|Tags: , , , |