David Andrews
23 December 2015

Update: Home Building Compensation Fund Reforms

David Andrews


Tel: 02 9233 9023

Mob : 0425 208 915


Building and Construction

Corporate and Commercial

Dispute Resolution


NSW Fair Trading has released a discussion paper on “Reform of the Home Building Compensation Fund”. A link to the discussion paper can be found here.

The discussion paper identifies options for reform of the Fund (formerly known as the Home Warranty Insurance Scheme).  The Fund suffered a $33 million loss in 2014, and received more than 4,800 claims (not including owner builder claims) between 1 July 2002 and 30 June 2014.

The Fund provides insurance for residential building work in NSW. Where a builder does not complete building work, or does defective building work, and the home owner cannot recover compensation or have the builder rectify because of the insolvency; death; disappearance of the builder, or the licence suspension of the builder arising from non-compliance with an order, the insurance provides access to compensation.

The options for reform should raise concerns for home owners. Whilst the Government suggests that they wish to make the current system more efficient, it is clear that the real intent is to reduce the extent of losses being suffered. It can either do this by increasing premiums, or reducing the availability of the Fund and the extent of coverage provided. The discussion paper sets out a number of proposed reform models. 4 out of the 5 proposed models would see a reduction in the extent of coverage or the availability of the insurance.  

Anyone wanting to make a submission in relation to the discussions paper must do so by 5pm on 12 February 2016. 

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