Do-it-yourself renovators and home builders got a shock late last year with the publication of yet another dose of red tape — the Housing Consumers Protection Measures Act Amendment Bill. The bill seeks to redress certain "implementation problems" since the promulgation of the Housing Consumers Protection Act of 1998.

At the heart of it is dissatisfaction with the protection offered consumers by the National Home Builders Registration Council (NHBRC) against fly-by-night builders and shoddy workmanship.

Unsatisfactory performance

In the preamble to the bill, one of the objectives was to clarify the scope and application of the proposed act and to clearly identify those to whom it applied. Persons who renovated or built their own homes for their own use have long considered themselves outside of the act of ’98.

Most importantly, they have happily considered themselves outside the jurisdiction of the NHBRC — which does not have the best of reputations. Many home builders object to having to become members and pay membership fees to a body that they consider does not give value for money or even perform a satisfactory job.

However, the bill’s new section 1a defines the scope of the act to apply to:

  • Any person who carries on the business of a home builder;
  • An 'owner builder' as defined in the act who has not been exempted and who is accordingly deemed to be a home builder.

The welcome news is that the act does not apply to a person who physically uses his or her own labour to build a home for his or her occupation, provided the house is not part of an approved PHP (people’s housing project). But here’s the rub: that person must now apply to the NHBRC for exemption — an administrative and financial (the actual cost has not yet been established) obstacle which did not previously exist.

In the act, the business of home building is defined as follows:

  • To construct or undertake to construct a home for anyone else and/or to sell/otherwise dispose of such a home as a principal;
  • To construct a home for purposes of sale or other disposal.

It excludes the bona fide building of a home for occupation by the builder him- or herself and the act does not curtail the right of the home builder to sell or dispose of the property. As a bona fide home builder you can get assistance from anyone — as long as they are not a registered builder (with the NHBRC).

The Amendment Bill extends the ranks of business home builders to include persons who construct homes not only for the purpose of selling it, but also to lease or rent it.

Power to the council

The bill also gives more powers to the council. In the act, the authority to grant exemptions lies with the minister; under the Amendment Bill these powers are handed to the council.

The council’s watchdog role is also widened. Under the act, the council must pay out funds in situations where, among others, major structural defects have manifested and have been notified to the builder within five years of the date of occupation. The council is only liable where the defects result from non-compliance with NHBRC technical requirements.

In the Amendment Bill, these provisions remain, with the addition of a provision that the council is further liable to make payment where, within 12 months of occupation, the roof of a home leaks and such leaking is attributable to workmanship, design or materials.

Failure to pay

The builder must be notified of these defects within this time period.

A common complaint alleged against the NHBRC is failure to pay claims — usually explained by the council as "lack of funds". Under the act, the council may reduce any amount of damages it is liable for, or refuse claims, or make a once-off settlement if money is not available, or is expected not to be available for that purpose due to future demands on its funds. The Amendment Bill further empowers the council, when it has insufficient funds to meet demands, to increase builders’ enrollment fees.

In terms of section 14 of the act, no home builder shall commence construction of a home without having submitted the required documents and paying the prescribed enrolment fee.

Does the bill help?

In the Amendment Bill, a new section 14a is included which provides for late enrolment and non-declared non-enrolment. However, once again the council is empowered to take "disciplinary measures" for late enrolment and non-declared non-enrolment as it deems fit.

The Amendment Bill does provide further statutory regulation of the home building industry. But whether it provides more adequate protection to consumers is arguable.

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