NSW Member Alert – Changes to the NSW EP&A Act 1979 – Interim Occupation Certificates

Changes to the NSW Environmental Planning & Assessment Act (1979) – Interim Occupation Certificates

This Member Alert is to advise Members of the new Part 6 provisions to the Environmental Planning and Assessment Act (EPAA) 1979 commencing 1 September 2019.  

 “When they commence in 2019, new Part 6 (building and subdivision) provisions will:

  • remove interim occupation certificates. Note, this will not affect the ability to have staged occupation of buildings
  • create a new certificate for subdivision works, separating subdivision from construction works
  • provide powers for principal certifiers to issue directions to quickly act on non-compliant aspects of a development.”

Ref:  https://www.planning.nsw.gov.au/Policy-and-Legislation/Environmental-Planning-and-Assessment-Act-updated/Guide-to-the-updated-Environmental-Planning-and-Assessment-Act-1979/Part-6-Building-and-subdivision [viewed 15/08/2019]

Interim occupation certificates

Interim occupation certificates will cease from 1 September 2019 and issuance of a final occupation certificate will be required before a building can be occupied. 

There are no ‘grandfathering’ provisions.  If an interim occupation certificate has not been issued by 1 September 2019, full completion is required in accordance with development consent before a final occupation certificate can be issued and the building occupied.   

This is significant for the industry as an interim occupancy certificate has allowed occupation and/or use of a building prior to issue of a final building certificate.

The new legislation means that newly constructed buildings with DA consent works incomplete eg landscaping incomplete or no fencing, after 1 September 2019 cannot be legally occupied. 

This legislative change may affect new residential homes, residential developments, commercial construction projects and other developments.  Settlements and project cashflow may be impacted.   

Advice for Members

Members working in this domain should be aware of the changes from 1 September 2019 and familiarise themselves with the updated legislation.   Members should be aware of a potential risk in final occupation certificates being issued and should satisfy themselves in this regard.  Members may wish to inform lenders of risks, and to ensure loan applicants have sufficient funds to fully complete. 

Bannermans Lawyers - Construction Article

The API would like to thank Bannermans Lawyers for preparing the publication below and for granting the API permission to provide this to our Members. 

From 1 September 2019, developers will no longer be able to obtain interim occupation certificates for buildings in NSW. This will likely complicate staged developments, as interim occupation certificates allow use of partially completed buildings.

Developers and builders should be aware of the impending changes and the legal ramifications. 

Background

A new building cannot be legally occupied without some certification that the building complies with the legal requirements and the building is suitable for occupation. 

The Environmental Planning and Assessment Act 1979 (EP&A Act) provided for a process where occupation certificates can be issued by the Principal Certifying Authority

Under the old section 109H(1) of the Act, reference was made to the two kinds of occupation certificates that could be issued by an authority:

  • an interim occupation certificate that authorises a person to commence occupation or use of a partially completed new building, or to commence a new use of part of a building resulting from a change of building use for an existing building,
  • a final occupation certificate that authorises a person to commence occupation or use of a new building, or to commence a new use of a building resulting from a change of building use for an existing building.

The use of interim occupation certificates has been a controversial topic in the past. There was a lot of confusion about how interim occupation certificates could be used and what it means for a part of a building to be “partially complete”.

For instance, under the old regime, developers could “partially complete” one stage of a mixed use project and be issued an interim occupation certificate for occupation of the partially completed stage of the project. The developer could then move on and start work on another stage of the build without needing to comply with all the conditions of consent attached to the first stage.

This has led to scenarios where a staged building may have different statutory warranty periods, to reflect the different dates for the issue of interim and final occupation certificates.

The Reforms

The EP&A Act was amended in 2018 as a part of broad reforms to the state planning laws.  The reforms removed all references to interim occupation certificates. 

Section 6.10(1) of the EP&A Act (formerly section 109H(2)) provides that an occupation certificate must not be issued unless any preconditions to the issue of the certificate that are specified in a development consent have been complied with.

The Government legislated the proposed changes to the EP&A Act under the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017 (Savings Regulation).

Ramifications for Builders and Developers

The removal of the interim occupation certificates will have consequences for builders and developers alike:

  • For developers, the removal of interim occupation certificates means that work on buildings or a part of a building must be wholly complete, and a final occupation certificate must be obtained before occupation can occur.
  • This will likely increase the time for returns and yields, as section 6.10 requires all preconditions to the issue of a final certificate are complied with. Developers can no longer rely on the building works being “partially complete”, and the more relaxed conditions attached to an interim occupation certificate.
  • Many building contracts also have a date of practical completion that is linked to the date of issue of an occupation certificate. The removal of interim occupation certificates, and the need to obtain final occupation certificates could affect milestone dates under the Contract, and trigger clauses relating to progress payments and liquidated damages.
  • The changes to the occupation certificate regime also have ramifications for when residential building works are deemed to be “completed” for the purposes of statutory warranties under the Home Building Act 1989 (NSW).
  • Although the Home Building Act recognises a number of possible scenarios for the completion of residential building works, the date of issue of an occupation certificate is one of the factors that can be used to determine a date of completion for a building.
  • In certain circumstances, this could inadvertently extend the warranty periods owed by builders and developers under the Home Building Act 1989.

Developers are still able to obtain interim occupation certificates under the saving provisions until 1 September 2019.

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.

Contact:

Bannermans Lawyers

T | +61 2 9929 0226

http://www.bannermans.com.au

 

Links

NSW Government | Planning and the Environment | Guide to the updated Environmental Planning and Assessment Act 1979

https://www.planning.nsw.gov.au/Policy-and-Legislation/Environmental-Planning-and-Assessment-Act-updated/Guide-to-the-updated-Environmental-Planning-and-Assessment-Act-1979

New South Wales Government | NSW Legislation | Environmental Planning and Assessment Act 1979

https://www.legislation.nsw.gov.au/~/view/act/1979/203

Environmental Planning and Assessment Regulation 2000

https://www.legislation.nsw.gov.au/#/view/regulation/2000/557/sch4

Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017

https://www.legislation.nsw.gov.au/#/view/regulation/2018/67

 

For enquiries please contact standards@api.org.au