New Levy for Residential Apartment Construction Works to Commence 4 July 2022

Posted 29 June 2022

Category: Strata, Levy Recovery

The Residential Apartment Buildings (Compliance and Enforcement Powers) Amendment (Building Work Levy) Regulation 2022 has been notified on the NSW Legislation Website and is due to commence on 4 July 2022.

The amendments detail the process for the Secretary for Fair Trading to establish a regime for the levying of “Developers” in relation to new class 2 residential buildings, as well as renovations over $150,000 in value.

The stated intention for the levy is to cover the costs of administering the Design and Building Practitioners Act 2020 and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020.

Fair Trading has recently uploaded a page providing details of the new levy, which can be accessed here.

Key aspects in relation to the levy are:

Who is responsible for the levy?

Fair Trading has indicated that the developer is responsible for paying the levy.

The developer is noted as the person who provides the expected completion notice (ECN). In the case of remedial or repair work, if a consultant is engaged to carry out work and they submit an expected completion notice (ECN) on the NSW Planning Portal, they are responsible for paying the levy.

What does it cover?

Building work:

1. in class 2 buildings, or that contain part class 2;
2. that requires an occupation certificate; and
3. where the expected completion notice is issued after 3 July 2022.

Building work includes:

• completely new builds;
• construction of additional storeys to an existing building; and
• renovation/remediation but only where the cost of the works exceeds $150,000 inclusive of GST.

If a new build is being completed in stages, there will be multiple triggers for the levy relating to each expected completion date for a construction certificate.

Key exceptions include:

1. Where no occupation certificate is required;
2. Exempt work under the Design and Building Practitioners Act 2020
3. Where there is or will be fewer than 5 residential premises
4. Work by the NSW Land and Housing Corporation, or work done on their behalf;
5. Repairing, replacing or rectifying external cladding;
6. Repair, renovation or remediation work under $150,000 inclusive of GST.

How much is payable?

This depends on whether it is a new build or a renovation:

For new builds it is based on the number of storeys:

• 1-3 storeys (gross floor area less than 6000m²) = $7000
• 1-3 storeys (gross floor area is greater than 6000m²) = $8400
• 4-8 storeys = $8400
• 9-19 storeys = $11,000
• 20-30 storeys = $15,500
• 31 storeys or more = $21,200

Fair Trading provides the following example:

As an example, for an 18-storey mixed use building, if the first stage of work has eleven storeys being released for occupation, it will be $11,000 for that stage and another $8,400 for the next stage with seven storeys. However, if the work was not staged and one occupation certificate for the whole 18 storeys was applied for, the levy will be $11,000.

Noting the above example, the staging of works will result in additional costs under the levy regime.

A more modest amount is payable for repair, renovation of protective treatment of a class 2 building, or part of a class 2 building.

The figure is based on the cost of the work:

• up to $150,000 = $0
• more than $150,000 but not more than $500,000 = $700
• more than $500,000 but not more than $1m = $1300
• more than $1,000,000 but not more than $5m = $2000
• more than $5m but not more than $10m = $2700
• more than $10m = $4000.
• Building work amounts above are quoted inclusive of GST.

If works involve both repair and the addition of storeys the higher levy will apply.

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.