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Home Warranty Scheme Notional Premium no longer applies to painting

By on December 20th, 2016 in News, QLD

Home Warranty Scheme Notional Premium no longer applies to painting

SCA (Qld) initiated change to unfair multiplier 

Upon the release of the amendments to the Home Warranty Scheme (HWS) on 28 October, SCA (Qld) instigated an urgent meeting with Housing and Public Works Minister Mick de Brenni to discuss the unfair additional cost imposed on owners in strata properties.

As of 2 December 2016, notional pricing no longer applies when certain types of building work are carried out for common property in or on a multiple dwelling or duplex.

The types of common property work to which notional pricing will no longer apply are those types of work which, when performed on their own, were not covered by the Scheme prior to 28 October 2016. This means that the types of work in or on common property for a multiple dwelling or duplex that will no longer attract notional pricing include:

  • painting
  • solid plastering
  • rendering
  • fire protection work
  • physical termite management work.

Notional pricing also does not apply if your clients are:

  • performing work on the roof of a multiple dwelling where insurable value is less than $5,000, or
  • performing work on the common area (other than footings) of multiple dwellings where the insurable value is less than $20,000, or
  • performing work on the common area which is not in or on the multiple dwellings, or
  • constructing or performing work on a related roofed building (e.g. a shed) or a swimming pool which is not in or on the multiple dwelling.

Where notional pricing does not apply, the maximum claim available for the building work will be limited to $200,000.

Other types of work such as internal wall and floor tiling, replacing flooring, replacing a roof and drywall plastering, which have been covered by the Scheme for more than a decade, will continue to attract notional pricing where the value of the work exceeds the relevant monetary threshold under the current Scheme. (The monetary thresholds are found in Part 5 of the Queensland Building and Construction Commission Regulation 2003 and are set at zero dollars, $5,000 or $20,000 depending on the nature of the work.)

SCA (Qld) has been successful in leading the change to a more fair premium for strata owners, initiating the partial scrapping of the notional premium for building works in multi-residential dwellings as described.

While the Home Warranty Scheme (HWS) is meant to provide a remedy to consumers for building work that is defective or is not completed by the contractor, it only comes into effect for buildings up to three storeys above car park and often excludes coverage where there is insurance already in place.

SCA (Qld) expects that further amendments may be made to ensure the potential double insurance issue we have discussed with the Department is eliminated. Currently, more often than not strata insurance policies cover ‘consequential loss’ arising from an ‘unknown defect’ which makes the HWS redundant and effectively a simple tax rather than an insurance (please check with your insurance provider).

The Minister indicated consideration will be given to SCA (Qld)’s further suggestions that premiums under the HWS should in fact be cheaper for bodies corporate and that the additional cover that can now be purchased is set higher than the maximum $300,000 in place. SCA (Qld)’s advocacy success is a reflection of the position SCA (Qld)’s Board and Executive have worked to achieve in the past few years. We encourage members to advise clients of this win that will save them thousands on future building works.

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This article was contributed by Strata Community Australia (QLD). Click here to visit their website.

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