Can a New Levy Prevent Future Building Problems?

There are building defects in approximately 85 percent of apartment buildings constructed since 2000, according to a report released by the University of New South Wales. A new state levy hopes to remedy the situation. But will it really make a difference, and what are the implications for the rest of Australia?

The Proposed Levy

The New South Wales government plans to enforce a 2 percent levy on developers to cover the cost of potential building defects in all buildings of more than three storeys. This levy will be used to repair any building defects. Independent assessors will identify any defects and ensure these are remedied from the levy, thus helping to solve disputes quickly and keep them out of court. If no defects are found, the levy will be returned to developers.

Reception to the Levy

Chris Johnson, the chief executive officer of property development lobby group Urban Taskforce, has welcomed the levy. He said most developers already keep a retention sum for repairs but the levy will formalise the practice. However, Andrew Ferguson, a commercial construction expert, feels the levy will place additional pressure on subcontractors, who may face additional administrative tasks and cost and compliance concerns. “A new levy will impose an additional burden on business,” he wrote in Sourceable. “Will it really deliver or will it be yet another convoluted scheme with sketchy outcomes for the consumer?”

What About the Rest of Australia?

This is a state-based levy, so it won’t directly affect construction in the rest of Australia. This makes it crucial that commercial developers in other states and territories carefully research construction companies to ensure they’re choosing one with a proven track record. At TPM Builders, we take our commitment to our clients seriously. Read through their comments on our testimonials page before deciding who to trust with your new commercial construction project. With the levy expected to come into effect in the New Year, Australia’s construction industry will be carefully watching New South Wales to assess its impact. Image via Flickr by RaeAllen