The NSW government has recently announced an important update to the Strata Building Bond and Inspections Scheme (SBBIS) under the Strata Schemes Management Regulation 2016. This adjustment impacts developers, strata owners, and prospective buyers, deferring an anticipated bond increase until mid-2025. Here’s everything you need to know about the changes, why they’re happening, and what they mean for strata developments across New South Wales.
What is the Strata Building Bond and Inspections Scheme (SBBIS)?
Key Change: Bond Increase Deferred to July 2025
Initially, the NSW government planned to increase the strata building bond requirement from 2% to 3% of the building contract value. This increase, intended to provide greater financial security for potential defect rectifications, will now be postponed until 1 July 2025. The new percentage will apply to all qualifying buildings, specifically those with new strata plans that lack home building compensation insurance (under Part 6 of the Home Building Act 1989).
Why the Deferment?
This deferment offers developers additional time to adjust to the new requirements, potentially easing the financial strain on new developments. The NSW government is also likely using this period to further assess the effectiveness of the bond increase in maintaining construction quality standards across the sector. For apartment buyers, this delay could offer temporary relief from potential increases in unit costs that may arise from heightened bond requirements.
Lodging the Strata Building Bond
The bond must be lodged on the NSW Planning Portal prior to construction completion. This online process streamlines the submission, allowing developers and regulatory bodies to manage the bond transparently and efficiently. The funds held in this bond act as an essential safety net, ensuring resources are readily available should construction issues arise that the developer does not address before the final inspection.
What This Means for Developers, Buyers, and Owners
• For developers, this deferral allows more time to adjust to the future increase, keeping costs steady at 2% until July 2025.
• For buyers and strata owners, the protections of the SBBIS remain intact, and new apartment prices won’t immediately reflect the bond increase. However, after July 2025, developers may adjust pricing to accommodate the new bond rate.
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