Australia: New rating tool for developers

In brief - the NSW Government and Building Commissioner David Chandler OAM have created a new rating tool for developers

The tool has been created and will be managed by data company Equifax and will use a wide range of publicly available data to create a risk profile for any planned project, based on the behaviour of the companies behind it.

This tool stands to supplement the recently passed legislation, namely the Design and Building Practitioners Act, and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act.

These mechanisms seek to improve upon the dwindling consumer sentiment towards the building and design industry, particularly in light of the unsatisfactory construction work at Opal and Mascot Towers.

Statutory basis

The ratings tool is authorised specifically by the Design and Building Practitioners Act, which passed State Parliament on 11 June 2020.

While the tool has yet to be formally released, it is expected to be made available in the coming months.

Considerations towards a developer's rating

A wide variety of data will be considered in the assessment of a developer's rating.

The Building Commissioner has directed that this is likely to include:

• the developer's financial history;
• whether the developer is known to have conducted illegal phoenix activities;
• the specific records of individual directors and owners;
• the incidence of disputes and complaints made against the developer; and
• the developer's track record in the media.

This tool will be publically available, meaning developers who have scored poorly across these criterion are likely to experience further disruption to their workflow until they can demonstrate improved performance.

As the exact form of the rating system is yet to be announced, Colin Biggers & Paisley will provide a further update once the exact details are confirmed.

A cause for concern for developers?

The Commissioner has declared to industry that the tool will not affect the reputation of the majority of developers. With 20% of developers accounting for 80% of building defects in NSW, most will satisfy the requisite standards.

For developers who do not fall within this category, the rating system stands to greatly improve consumer sentiment towards the broader construction and design industry. The Building Commissioner has also indicated that the ratings tool will assist his team in identifying high-risk developments, to which the strict regulatory regime will be applied.

Developers who are concerned about how their rating may affect their business should seek advice where appropriate.

Part of a broader regulatory approach

This rating tool is one of many parts of the puzzle implemented by the Building Commissioner to hold the building and construction industry to account.

Other measures imposed by legislation include:

• a retrospective duty of care for builders;
• a mandatory register of building and design practitioners; and
• greatly enhanced powers to the Building Commissioner to modify, halt and altogether cancel work on major development sites across the state.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.