For developers in the Australian property market, it is crucial to understand the Strata Building Bond and Inspections Scheme (SBBIS) to ensure projects are completed successfully. The New South Wales (NSW) Government introduced this scheme to protect strata owners by addressing defects in newly constructed buildings in a timely and effective manner. Developers who familiarize themselves with the scheme can streamline processes, reduce risks, and safeguard their reputations.
This guide outlines each stage of the Strata Building Bond and Inspections Scheme and highlights the important role Quantity Surveyors (QS) play in ensuring compliance and efficiency.
Understanding the SBBIS
The SBBIS took effect on July 1, 2018, and applies to developers of new residential strata buildings that are four storeys or higher. Under this scheme, developers must lodge a building bond equal to 2% of the building contract price with Building Commission NSW. This bond acts as a financial safeguard, ensuring funds are available to fix any defects identified during inspections.
8 Stages of SBBIS
Stage 1: Building Bond Lodgement
As a developer, your first step is to register your project in the NSW Planning Portal and lodge the building bond before applying for the occupation certificate. This is where the expertise of a Quantity Surveyor becomes invaluable.
Stage 2: Inspector Appointment
Within 12 months after the completion of building work, developers must appoint a qualified building inspection from a NSW Fair Trading approved panel, of which Archi-QS is a leading figure of.
Stage 3: Interim Inspection and Report
Between 15 to 18 months post-completion, the appointed inspector conducts a non-invasive inspection of common property and private areas to identify defects. An interim report is prepared and shared with relevant parties.
Stage 4: Rectification of Defective Building Work
Between 18–21 months post-construction, developers must rectify defects identified in the interim inspection.
Stage 5: Final Inspection and Report
Between 21–24 months post-construction, the same inspector conducts a final inspection to verify whether defects have been rectified. A comprehensive final report is issued.
Stage 6: Determining the Cost to Rectify Defective Building Work
Should defects remain unresolved after the final inspection, a cost determination process begins. This involves calculating expenses required for rectification.
Stage 7: Paying the Building Bond
The building bond is used to cover rectification costs should defects remain unresolved. If no defects are identified in the final report, the bond is returned to the developer.
Stage 8: Completion
The process should be completed within 2 to 3 years after the initial completion of building work.
How Archi-QS Can Support Developers
At Archi-QS, we offer comprehensive Quantity Surveying services tailored to developers’ needs in the Strata Building Bond and Inspections Scheme. Our experienced QS team works closely with you to navigate each stage of the process, ensuring efficient and professional handling of everything from bond determination to defect rectification.
Our services include:
- Accurate bond calculation and determination (Stage 1)
- Pre-completion and defects inspections (Stage 3 and Stage 5)
- Detailed cost rectification reporting (Stage 6)
- Assistance with bond release and final documentation
By partnering with Archi-QS, you can confidently navigate the Strata Building Bond and Inspections Scheme, knowing that industry experts manage every aspect of the process.
Frequently Asked Questions
Q: Who appoints the building inspector?
A: The developer is responsible for appointing a qualified building inspector, such as Archi-QS, from a NSW Fair Trading-approved panel. This must be done within 12 months after the completion of building work.
Q: How long does the entire SBBIS process take?
A: The SBBIS process typically takes 2 to 3 years to complete after the initial completion of building work.
Q: How can Archi-QS help developers with the SBBIS?
A: Developers of new residential strata buildings that are four storeys or higher, and do not have home building compensation insurance, must lodge the building bond. This bond is equal to 2% of the total contract price.
Q: Who is required to lodge the building bond?
A: Developers of new residential strata buildings that are four storeys or higher, and do not have home building compensation insurance, must lodge the building bond. This bond is equal to 2% of the total contract price.
Q: When will the strata building bond increase from 2% to 3%?
A: The NSW Government planned increase of the strata building from 2% to 3% is planned to be actioned on July 1, 2025.