As we move into 2025, a series of significant developments and reforms are unfolding in the construction industry. It is crucial for stakeholders in construction to be aware of these changes, and to put in place appropriate measures.

There are numerous reforms taking place across Australia as legislators strive to ensure public confidence and accountability in the construction sector.

Below are four key changes happening in 2025 that you should be aware of:

Changes stemming from the Design and Building Practitioners Act (NSW) 2020

In 2024, the Design and Building Practitioners Act (NSW) 2020 (DBP Act) was amended to mandate professional indemnity insurance for all registered practitioners under that Act. The mandatory insurance policy will commence from 1 July 2025.

Those working in the construction industry on projects that fall within the DBP Act (i.e. residential, boarding houses, hostels, backpacker accommodations, detention centres and aged care buildings) need to be aware of these changes to ensure compliance once they are in force.

Landmark decision by the High Court: builders and developers can no longer rely on a proportionate liability defence in building defect cases

The DBP Act, among other provisions, introduced a statutory duty of care on anyone who carries out construction work to exercise “reasonable care” to avoid economic loss caused by defects in or related to a building.

On 11 December 2024, a recent High Court decision (Pafburn Pty Ltd & Anor v The Owners – Strata Plan No 84674 [2024] HCA 49 (Pafburn)) made it clear that this duty of care cannot be shared by multiple parties. That means builders and contractors cannot avoid liability by arguing that subcontractors or other parties were responsible for mistakes. Simply hiring others to do the job correctly and carefully is not enough.

The Act is likely to be subject to further judicial consideration and businesses should stay updated with any further changes regarding the liability of those involved in construction work.

As we enter 2025, it is important to note that these principles will apply, and builders cannot shift blame onto others for defects. Instead, they may need to take legal action against other responsible parties to recover costs.

National Construction Code update

The National Construction Code (NCC) is set to be updated in 2025, with a focus on changes to energy efficiency requirements.

These proposed amendments primarily target standalone single dwellings of a domestic or residential nature, and professional buildings, shops, restaurants, storage buildings, hotels, trade and public buildings such as hospitals.

The updates will address a range of issues primarily focusing on commercial and mixed-use residential buildings. In particular, the new NCC changes will concentrate on:

• Energy efficiency in commercial buildings, including on-site energy generation and thermal performance requirements
• Water damage and leaks, including additional obligations based on climate zone to reduce mould growth and prevent health risks.

Changes ahead for the regulation of building products in NSW

Stakeholders in the construction industry need to be aware of the extensive changes to laws regulating building products.

The Building Legislation Amendment Bill 2023 inserted Part 2A into the Building Products (Safety) Act 2017 (BPA) to create accountability in the supply chain for building products. It also gives regulators more power to spot and stop the use of unsafe building materials.

These amendments are set to take place in early 2025 and will impact anyone who designs or deals with a building product, prepares a building design or uses particular products in the building process.

The amended obligations implied by Part 2A of the Act will require those impacted to ensure that:

1. The product complies with the NCC s8E;
2. The product is suitable for its purpose;
3. Information regarding the product is provided to the next person in the chain of responsibility;
4. The secretary of the department is notified of any risk or non-compliance;
5. Certain products are recalled.

Significant penalties are imposed for non-compliance with this part of the Act.

Looking ahead

We are likely to continue seeing regulatory changes and further court interpretations on matters impacting the construction sector over the next year.

Those in the construction industry should consider any potential challenges these developments might create and seek legal advice to develop solutions that mitigate these risks while aiming to harness positive developments in sustainability and technology.

Much of what happens this year will also be dictated by the outcome of the federal election, which could lead to further reform and changes.

About the author

Chloe Ellis is a partner in Hicksons’ commercial dispute resolution team and provides services to a variety of clients, including, developers, contractors, consultants, government agencies, public authorities, insurers, insolvency practitioners, directors, shareholders and individuals.

She provides advice on a broad range of disputes including those relating to construction, property, consumer law, contracts, corporations law, joint ventures, partnerships, defamation and insolvency.

Chloe has conducted litigation for both plaintiffs and defendants in a range of jurisdictions in New South Wales and the Commonwealth.