The Rule Change That Makes Ignoring Sydney's Building Defects More Expensive Than Fixing Them

For the better part of a decade, the practical consequence for a Sydney owners corporation that deferred remedial building work was relatively contained. A strata committee that voted to delay addressing a known defect faced potential NCAT applications from individual lot owners, the ongoing accumulation of building damage, and the moral hazard of knowing the problem was getting worse. But the formal enforcement mechanism was complaint-driven and reactive. Fair Trading could be asked to intervene. It did not routinely go looking for non-compliance on its own initiative. That changed on 27 October 2025.

The NSW Strata Schemes Legislation Amendment Act 2025 gave NSW Fair Trading active investigative and enforcement powers over owners corporations that fail to meet their duty to repair and maintain common property. Fair Trading can now enter premises, require documents and answers, record proceedings, and where a breach is found, issue compliance notices, seek enforceable undertakings, issue penalty infringement notices, and apply to the Tribunal for orders. The agency is no longer waiting to receive complaints. It is actively monitoring and enforcing strata repair obligations across New South Wales.

For strata committees and owners corporations in Sydney that have been deferring remedial building decisions, the regulatory environment has fundamentally changed. And for lot owners and property managers trying to understand what this means for their building, engaging experienced remedial builder Sydney specialists is now a compliance consideration as much as a building maintenance one.

What the 2025 Reforms Actually Require of Owners Corporations

The Strata Schemes Legislation Amendment Act 2025 was the most significant reform to NSW strata law in years, and its implications for remedial building decisions are specific and material.

From 1 July 2025, the legislation introduced stronger obligations for owners corporations regarding common property repair and maintenance. Safety-critical defects, meaning defects that pose a risk to safety or access, must now be addressed immediately regardless of any ongoing legal proceedings. A roof that is actively leaking into occupied areas, facade panels that are unstable, balcony structures showing concrete cancer that presents a structural risk, or fire system defects that compromise evacuation safety all fall within this category. The legal proceedings being conducted against the original builder do not excuse the owners corporation from acting. The duty to repair is separate from the right to recover costs.

The extension of the limitation period for lot owners to take action against an owners corporation that fails to repair and maintain common property is also significant. That period extended from two years to six years under the 2025 reforms, meaning lot owners have a substantially longer window within which to pursue the owners corporation for failing its repair obligations. For a defect that becomes known now, the owners corporation's exposure to action from lot owners extends six years into the future from the point at which the owners corporation knew or should have known of the defect.

The October 2025 enforcement powers build on this by removing the sole reliance on lot owner complaints as the trigger for regulatory action. NSW Fair Trading's Common Property Repairs and Maintenance Compliance and Enforcement Policy, released in October 2025, describes a shift from a complaint-based approach to an active compliance model. The regulator can now intervene directly when it identifies that an owners corporation is not meeting its obligations, without waiting for a lot owner to lodge a formal complaint.

The practical consequence for strata committees is straightforward: a documented defect in common property that has not been addressed is now a compliance risk with enforcement consequences, not simply a maintenance liability that can be managed through deferral.

The Common Property vs Lot Property Distinction That Drives Every Remedial Decision

One of the most persistent sources of delay and dispute in Sydney's strata remedial building market is confusion about where responsibility for a defect actually sits. The 2025 reforms have not changed the underlying responsibility framework, but they have sharpened the stakes of getting it wrong.

In a NSW strata scheme, the owners corporation is responsible for common property, which includes the building's structural elements, external walls and facades, the roof, shared waterproofing membranes, building services that are not exclusively within a lot, and all common areas. Lot owners are responsible for their own lots, which includes internal fixtures, fittings, and services that serve only that lot.

The line between common property and lot property is not always intuitively obvious, and the specific strata plan and registered by-laws of each scheme may alter where that line sits in ways that differ from the general rule. The most common points of confusion in Sydney's residential strata market are:

Waterproofing on balconies. The waterproofing membrane on a balcony that is part of the lot, meaning the lot owner has exclusive use of it, is typically common property because it forms part of the building's envelope. A failure of that waterproofing membrane causes damage to the structure below, which is also common property. The lot owner may be experiencing the symptom of a leaking balcony as a defect inside their apartment, but the cause and the repair responsibility typically sit with the owners corporation.

Pipes and services within walls. Pipes and conduits that pass through common property walls serve multiple lots or common areas and are common property. Pipes and conduits that are within the wall of a specific lot and serve only that lot are lot property. The distinction matters when a pipe failure causes water damage to multiple apartments, and the question of who pays for both the pipe repair and the consequential damage to the affected lots depends entirely on where the pipe sits in the strata plan.

Windows and glazing. In many older Sydney apartment buildings, windows and glazing units are common property because they form part of the building envelope. In some newer buildings and some specific strata schemes, windows may have been assigned to lot owners by registered by-law. The condition of the windows, the specification for replacement or remediation, and who pays for it depends on how each specific scheme is configured.

Structural cracking that appears inside a lot. Cracking that appears on internal walls within a lot may originate in the common property structural system. Whether it represents a structural defect that is the owners corporation's responsibility, or a cosmetic issue within the lot that is the owner's responsibility, depends on the cause and extent of the cracking and often requires professional assessment to determine.

Getting this determination wrong in either direction creates problems. An owners corporation that takes responsibility for a lot-property item that should be the lot owner's obligation creates a precedent and a precedent-based expectation for future situations. An owners corporation that refuses responsibility for a defect that is genuinely its obligation now does so in a regulatory environment where that refusal is enforceable rather than merely contentious.

The Building Bond and What It Means for Defect Recovery

The 3% building bond for new residential strata buildings in NSW, which came into effect in July 2025 as an increase from the previous 2% rate, is worth understanding in the context of remedial building decisions on relatively new Sydney apartment buildings.

The NSW building bond scheme requires developers of new residential strata buildings to lodge a bond with NSW Fair Trading before an occupation certificate is issued. The bond is held for approximately two years after the building is completed, during which time an independent building inspector conducts inspections and identifies any building defects. If defects are found, the bond funds are available to contribute to the cost of rectification.

For owners corporations in buildings that are within the bond period or have recently exited it, the building bond creates a specific framework for defect identification and remediation that has its own process requirements. Defects identified through the statutory inspection process under the scheme are documented by the independent inspector, and the bond funds are available for rectification of those defects if the developer does not rectify them within the required timeframe.

The practical implication for an owners corporation in a building within the bond period is that engaging a remedial builder directly to fix defects without first establishing whether those defects fall within the building bond scheme may mean foregoing access to the bond funds that are available to contribute to the rectification cost. The correct sequence is to ensure the defect has been assessed and documented through the statutory inspection process before committing to remediation at the owners corporation's own cost.

What Remedial Building Work Requires From a Licensed Builder in NSW

The regulatory requirements that apply to remedial building work in NSW create specific obligations for both the owners corporation commissioning the work and the builder carrying it out. Understanding these requirements protects the owners corporation from compliance exposure and ensures the work has the legal standing it needs.

Under the Home Building Act 1989, residential building work above the statutory threshold of $5,000 must be carried out by or under the supervision of a holder of a contractor licence. For remedial work on strata buildings, this means any remediation of common property elements including structural repairs, waterproofing replacement, facade remediation, and associated building work must be performed by a licensed contractor. The licensed contractor takes legal responsibility for the work and is covered by the statutory warranty provisions of the Act.

The Design and Building Practitioners Act 2020 adds a further layer for Class 2 buildings, which are multi-storey residential apartment buildings. Regulated designs for specified building work, including waterproofing that forms part of the building enclosure, must be prepared by a registered design practitioner before construction begins. The declared design must be lodged on the NSW Planning Portal before the work commences. This is not an administrative formality. It is a legal prerequisite for the work to be lawfully carried out, and the owners corporation that commences remedial work without the required regulated design in place is exposed to the same compliance risk as the builder performing the work without it.

The 2025 NSW strata reforms intersect with the DBP Act requirements at a specific and important point. The legislation provides that safety-critical defects must be addressed immediately, even where legal proceedings are ongoing. This urgency requirement does not displace the DBP Act's design registration requirements. It means the regulated design must be prepared and lodged as quickly as possible, not that the requirement can be bypassed in an emergency. A remedial builder who understands both frameworks, and who has the relationships with registered design practitioners to move through the design lodgement process quickly for urgent work, is substantially more capable of responding to an emergency remediation requirement than one who is unfamiliar with the DBP Act process.

The Tendering Process That Protects Owners Corporations

NSW law requires owners corporations to obtain at least two independent quotes for any work valued at $30,000 or more. This is a minimum requirement, not a best practice recommendation, and for significant remedial work programs the process of obtaining and evaluating quotes deserves considerably more attention than simply collecting two numbers and choosing the lower one.

A remedial building quote for significant work should be based on a clearly defined scope of work that all tenderers are pricing against. Without a consistent scope, quotes cannot be meaningfully compared and the lowest price may simply reflect the most optimistic assumptions about site conditions, the narrowest interpretation of what the scope includes, or the lowest-specification materials.

The scope document should be based on an independent technical assessment that identifies the defect, its extent, its cause, and the repair methodology required to address it durably. This independent assessment is a separate step from obtaining quotes, and it serves two purposes: it provides the owners corporation with an honest picture of what the remediation requires, and it provides tenderers with a consistent specification against which to price.

For significant remediation programs, particularly those involving concrete cancer treatment, waterproofing replacement across multiple balconies or a large roof area, or facade work on multi-storey buildings, the cost of an independent assessment is a small fraction of the remediation cost and almost always reduces the total project cost by producing a tighter, more accurate scope. Owners corporations that proceed directly from visible symptom to builder quote, without the intermediate assessment step, frequently receive quotes that are not comparable and that address the visible symptom without the diagnostic depth needed to ensure the underlying cause is also resolved.

Special Levies, Capital Works Funds, and the Financial Mechanics of Remediation

The financial management of a remedial building program is one of the most practically challenging aspects of strata governance in Sydney, and it is an area where poor planning reliably produces worse outcomes than good planning for the same underlying building defect.

Owners corporations are required to maintain a capital works fund, previously called the sinking fund, that is sized to meet anticipated major repair and maintenance expenditure over a 10-year period. The capital works fund plan must be reviewed annually and updated at each annual general meeting. In practice, many Sydney strata schemes have capital works funds that are underfunded relative to the maintenance needs of the building, either because the original fund plan was conservative, because levy increases needed to build the fund have been resisted by lot owners, or because unexpected defects have consumed reserves that were intended for other purposes.

When a significant remedial building requirement arises and the capital works fund is insufficient to cover it, the owners corporation must raise a special levy. A special levy requires a general meeting resolution and imposes an additional cost on all lot owners that is separate from their regular levies. For a large remediation program on a building with many lots, a special levy can represent a material financial imposition on individual lot owners, particularly those who are on fixed incomes or who have recently purchased their lot and were not anticipating a capital call.

The financial disruption of a special levy is significantly larger when the remediation has been deferred. A defect addressed at the early visible stage costs less than the same defect addressed after it has progressed, and the difference in cost between early and late intervention often exceeds the cost of maintaining an adequately funded capital works reserve over the same period. The owners corporations that manage this best are the ones whose capital works fund plans incorporate realistic assessments of the building's age-related maintenance trajectory, including the specific deterioration mechanisms relevant to the building's construction and location, rather than optimistic projections that minimise the levy impact in the short term at the cost of a larger disruption later.

The Inspection Program That Changes the Financial Trajectory

The most effective risk management approach available to Sydney owners corporations in aged residential buildings is a proactive inspection program that identifies deterioration before it becomes a defect and identifies defects before they become structural failures.

The distinction between these stages carries specific financial implications. A concrete cancer indicator identified at the early surface staining and fine cracking stage, before the reinforcement corrosion has progressed beyond the initially affected bars, is a defect that can be addressed with localised repair at a cost of thousands to tens of thousands of dollars depending on area. The same defect identified after the corrosion has spread to surrounding reinforcement, after the slab has delaminated in areas, and after access scaffolding is required to reach deteriorating elements at height is a remediation program that costs hundreds of thousands of dollars.

The difference between those two cost outcomes is not the quality of the remediation contractor. It is the timing of the initial identification and intervention. An inspection program that creates a documented record of the building's condition at regular intervals, identifies deterioration trends early, and triggers intervention at the point where the cost-benefit of acting is most strongly positive, produces a fundamentally different financial trajectory for the same building compared to one that reacts to visible problems when they can no longer be ignored.

In Sydney's current regulatory environment, this proactive approach has an additional benefit. An owners corporation that can demonstrate to NSW Fair Trading, if contacted, that it has a documented inspection program, a current schedule of identified defects, and a remediation plan with funding commitments is in a substantially better position than one that cannot. The regulator's compliance and enforcement policy describes a shift to active monitoring. An owners corporation that is demonstrably on top of its building's condition presents a different compliance profile from one that is not.