Property Council ACT & Capital Region Executive Director Ashlee Berry told the Committee that the introduction of mandatory latent defects insurance, flagged under the Property Developers Act 2024, could increase the cost of new homes by 3 to 5 per cent - adding between $15,000 and $35,000 to the price of a typical Canberra home.
"In principle, we support strong consumer protections - but these must be balanced with affordability," Ms Berry said.
"We're concerned the Government is adopting policies that sound good but risk becoming a hidden housing tax at the worst possible time."
Latent defects insurance covers structural issues after construction. It is a 'first resort' product that remains uncommon in Australia, with developers facing significant cost and complexity in securing cover.
"The ACT is in danger of navigating a housing crisis with one hand tied behind its back. Regulatory changes like this, introduced without a ready market or complementary reforms to liability, could make things worse," Ms Berry said.
The Property Council also urged the ACT Government to introduce proportionate liability laws - already in place in other jurisdictions - to fairly apportion legal and insurance responsibility across the construction supply chain.
"The current 'last person standing' model puts all the burden on the final party - typically the developer - regardless of where responsibility lies," Ms Berry said.
"It's outdated, it's unfair, and it drives up costs for everyone involved - especially homebuyers."
With ambitious housing targets, ongoing building reform, and increasing construction costs, the Property Council said it was essential for the ACT to modernise its insurance and liability settings.
"If we're serious about delivering more homes, we need a regulatory system that supports investment and shared responsibility - not one that adds cost and uncertainty," Ms Berry said.
