The Minns Labor Government has proposed a new suite of productivity reforms to NSW building laws, including laying the foundation for a nation-leading adoption of prefabricated homes and modular buildings to help accelerate the state's housing delivery.
These changes are focused on speeding up new home builds and modernising the building approvals system, while maintaining construction quality.
As NSW works towards its Housing Accord targets, it is essential that an increase in development applications results in an increase in housing completions - and without compromising quality.
Removing barriers to prefabricated homes in nation-leading reforms
The Commonwealth Productivity Commission estimates modular and prefabricated building can reduce construction costs by up to 20 per cent. These homes can also be up to 50 per cent faster to construct.
The Minns Labor Government is already leading the way using modern methods of construction (MMC) to build social housing in New South Wales.
This investment has kickstarted innovation and investment in the industry, but prefabricated building is currently treated differently under the state's building laws.
Approvals for the installation of prefabricated homes fall on local councils, which too often take an inconsistent and slow approach to their regulation.
Combined, the current system reduces the availability of construction loans, limits consumer protections available, and hurts consumer confidence in these types of homes.
The proposed reforms will create a statewide approach which will provide a single pathway for prefabricated building approvals, increase industry certainty, and encourage more builders to take advantage of innovative methods of construction.
To further increase consumer confidence in modular building, the proposed reforms will also set clear rules for the manufacture, supply, transport, delivery and installation of prefabricated buildings.
These reforms seek to position NSW as the first Australian jurisdiction to integrate prefabricated homes into the building approval system, aligning the regulation with traditional building work, and requiring compliance with the Building Code of Australia.
Simplifying building approvals and removing duplication
Beyond prefabricated homes, the reforms aim to simplify complex building approvals processes to accelerate all forms of housing.
The building approvals process makes sure construction follows all building codes and consent conditions through checks during the build, by issuance of key approvals before work starts, and at occupation stage when it's ready to use.
The Government is proposing to amend legislation to:
- Remove duplication between building and planning legislation
- Enhance certifier accountability
- Streamline building and occupation approvals
- Modernise the building regulatory system.
These proposed reforms will do away with duplicate designs for apartment buildings. Requiring just one set of designs for apartment buildings to gain building approval, rather than the duplicate detailed designs mandated under the current planning and building legislation, is expected to save an average of $327,000 in design costs per apartment block alone.
They will also allow minor variations to be made during construction without needing to send the project back to local councils for re-approval.
Increasing maximum penalties to $1 million for breaching conflict-of-interest rules
Subject to consultation, the proposed reforms will also introduce stronger conflict-of-interest laws for certifiers and a huge increase in penalties for breaches of these laws.
While most certifiers do the right thing and comply with their public interest obligations, conflicts-of-interest need to be managed to ensure impartiality when it comes to the approval of building work.
The proposed changes will introduce a clearer statutory conflict of interest test for certifiers - to clarify when a conflict arises and when a certifier cannot be involved in the development.
The Government would also increase maximum court-imposed penalties from $33,000 to $1.1m for certifiers who breach conflict of interest requirements, while giving the regulator the power to immediately suspend a certifier's registration when breaches are found.
These changes deliver on the Government's election commitment to lift consumer confidence and restore transparency for certifiers in the building sector. The reforms will also establish a clear chain of responsibility, so certifiers are not incorrectly held accountable across the whole building approvals process.
The Building Productivity Reforms are set to be brought to NSW Parliament in 2026.
Minister for Housing Rose Jackson said:
"For too long, NSW has been let down by building approvals systems that are slow, outdated and have not kept pace with the need for housing across our state.
"These reforms will remove barriers to prefabricated and modular housing without compromising building quality, allowing more people to take advantage of the benefits of modern methods of construction.
"These are no longer fringe options - they are central to how we build the homes of tomorrow and the Minns Labor Government is proud to be leading the way in Australia."
Minister for Building Anoulack Chanthivong said:
"NSW is facing a once-in-a-generation housing supply challenge, and the NSW Government is committed to boosting construction productivity in the state to meet our Housing Accord targets.
"To achieve this, we are progressing with sweeping planning reforms, but we also need to make sure we remove barriers to having homes approved and built.
"At a time when NSW needs to build 377,000 homes by 2029 to meet housing demand, these reforms are critical to delivering the high-quality homes around the state."
NSW Building Commissioner James Sherrard said:
"These reforms will ensure all types of homes, whether they are built using traditional methods or modern methods of construction, are compliant with the Building Code of Australia.
"The Building Productivity Reforms are the next step in the state's journey to modernise and simplify legislation that governs the way homes are approved and built in NSW."
UDIA NSW CEO Stuart Ayres said:
"Manufactured homes and Land Lease communities must play an increasingly important role in tacking the housing crisis.
"These proposed reforms will make NSW a more attractive place to invest capital in these growth-oriented housing types."
HIA Executive Director Brad Armitage said:
"HIA thanks the Minns Government for listening to industry and taking a targeted approach to building law reform that focuses on areas where change is needed, such as smoothing out the approval and compliance pathway for MMC.
"We need to build more homes than ever before, so it is critical that productivity and reduction of unnecessary red tape is front and centre of any policy discussion and we can see that here.
"We look forward to working closely with the NSW Building Commission on implementing these reforms in a pragmatic way so that everyone in the housing industry can get on with building the homes we need in NSW."
Executive Director of Master Builders NSW Matthew Pollock said:
"These are nation-leading reforms bringing prefabricated construction into the approval system and by doing so giving home builders and buyers an accelerated build time.
"This can reduce build times by 20% to get families into new homes faster.
"The planning reforms show that the Minns Government is responding to the key challenges for apartment construction where completion times have blown out to over three years. Simplifying approvals will speed completions and cut costs.
"This announcement clearly shows the Minns Government's laser focus on removing the barriers to housing construction and not adding to regulatory red tape."
