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Strata bond assessments, what are they? And how can we help.



New South Wales has recently released a new legislation that requires developers who are constructing new apartment buildings of four stories or higher to pay a 'strata bond' to NSW Fair Trading whilst construction is taking place. This regulation requires the involvement of a certified quantity surveyor who must prepare a report on the strata bond costs to ensure compliance. A certified quantity surveyor is crucial in assessing construction expenses, ensuring strata bond requirements are adhered to and to create a seamless process for developers. Through enlisting the services of a reputable quantity surveyor in Sydney, developers can overcome the often complex and difficult nature of strata bond regulations and to confidently carry out their responsibilities.


Strata Bonds? What are they?

In the strata and apartment sectors, strata bonds commonly referred to as maintenance or building bonds, are financial tools. Strata bonds acts as a safeguard to ensure building projects are completed and defects rectified. In New South Wales, strata bonds are compulsory for developers engaged in strata developments. Strata bonds are calculated as 2% of the building cost, which is to be retained by NSW Fair Trading. In the event that the developer fails to fulfil the construction works or to rectify any outstanding defects, the strata corporation can lodge a claim against the bond to cover the expenses of rectification. The purpose of the strata bonds is to reinsure property owners and to encourage quality and on schedule strata development completions, safeguarding all stakeholder interests.


Strata Building Bond & Inspections Scheme

The introduction of the Strata Building Bond & Inspections Scheme or SBBIS for short, aims to maintain standards and to guarantee development excellence in NSW. The initiative aims to provide protective measures against developers who prioritise cost saving measures over quality construction. A notable action of this scheme involves the appointment an independent inspector by the developer. The inspector will conduct comprehensive assessments to ensure that the building remains defect-free for three years following completed construction.

The scheme comprises of the following stages:

  • Stage 1: Building lodgement

  • Stage 2: Inspector appointment

  • Stage 3: Interim inspection and report

  • Stage 4: Rectifying defective building work

  • Stage 5: Final inspection and report

  • Stage 6: Determining the cost to rectify defective building work

  • Stage 7: Paying the building bond

  • Stage 8: Completion

Note: The stages listed were sourced from the NSW Fair Trading website. Please click on the link for more information.


The strata bond, uses and workings

Strata Building Bond & Inspections Scheme inspection phases must address and rectify any defective workmanship with the associated expenses being funded by the strata bond. This measure forces developers to be responsible for construction quality within the three-year period following project completion, whilst also noting that it is common for a building to experience gradual deterioration from everyday wear in the following years. Following the conclusion of the SBBIS period, the developer will have any remaining funds returned.


Why Quantity Surveyors like us can help

The engagement of a certified Quantity Surveyor is mandatory to ensure strict adherence to the scheme's requirements through the creation of a strata bond cost report. Throughout the process the quantity surveyor must remain completely independent from any developer, investors or financial institutions associated with the project. Furthermore, they must be registered with either the Australian Institute of Quantity Surveyors or the Royal Institution of Chartered Surveyors.

The strata bond cost report should house a detailed breakdown of all appropriate work carried out under the contract. A certificate should also be included with the report confirming that the quantity surveyor has conducted a thorough examination of the as-built drawings and specifications outlined in the strata plans. To ensure all cost estimates accurately reflect the costs of the construction phase, the report should be submitted prior to Stage 1 of the SBBIS.

The involvement of an independent quantity surveyor preparing the report guarantees precise calculation of costs. This ensures that the bond is not underpaid by unscrupulous developers, whilst ethical developers do not pay overs.


Need a Quantity Surveyor to assist in the creation of a strata bond report?

To successfully navigate the intricacies of the Strata Building Bond & Inspections Scheme, it is essential to seek a well-established quantity surveyor for guidance and expertise. By utilising the services of a qualified quantity surveyor, it can guarantee precise cost reporting and strict compliance to the scheme's stipulations. Here at Meller, our team comprises of qualified and experienced quantity surveyors in Sydney who are ready to assist you in compiling strata bond cost reports, and to ensure compliance at every phase of the process. Our trusted and friendly team can also provide support for various other aspects of the building development process. Get in touch to gain professional assistance.




I'm Jack Meller

I have been in the construction industry since I was 18 years old and have consulted on projects in every imaginable sector across the globe. 

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