Security of Payment to Apply to Homeowners
From 1 March 2021, builders will be able to use The Building and Construction Industry Security of Payment Act to recover money owed by homeowners. The Master Builders Association of NSW has been advocating this for many years as non-payment by homeowners causes considerable financial stress and even insolvencies amongst builders.
In September 2020, Minister for Better Regulation, Kevin Anderson, said changes to the existing Security of Payments Act will deliver faster payouts for contractors and subcontractors and quicker and fairer dispute resolution.
“These reforms will raise the level of protection for tradies and subbies so they know they’ll be paid the money they are owed on time,” Mr Anderson said.
Master Builders NSW Executive Director, Brian Seidler, welcomed the changes, saying they were particularly important in helping the sector through the challenges of COVID-19.
“The removal of the owner occupier exemption, in particular, will provide a significant economic stimulus and help many tradies and small businesses,” Mr Seidler said.
The NSW Government is also cutting the red tape. By reducing the costs and removing the need to report annually on the operation of retention money trust accounts. This will allow transparency by allowing subcontractors to inspect retention money trust account records.
The Building and Construction Industry Security of Payment Regulations 2020 commenced on 1 September 2020 and provides that the exemption of owner-occupiers from the SoPA will stop on 1 March 2021.
The new Regulations also provide an obligation that records for the statutory retention account, for head contracts over $20 million, are to be provided to the subcontractors once every 3 months or as per the agreement but not less than once every 6 months as well as removing the annual reporting requirements. The NSW Government decided to not reduce the threshold for the statutory retention trust accounts from $20 million to $10 million head contracts.