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New Act compels builders to fix up their own mess
All new houses will have to be enrolled under
a warranty scheme before mortgage loans may
be granted, writes DON ROBERTSON
Opposition, largely from the Building Industries Federation of SA (Bifsa), was vociferous and at times acrimonious. But the Act, promulgated on November 2, now requires all home builders to register with the National Home Builders Registration Council (NHBRC) from June next year and for every new house up to a value of R250 000 to be "enrolled" under the NHBRC's defects warranty scheme. The aim is to purge the industry of sub-standard constructors and give home buyers a guarantee that poor work will be rectified. The new legislation will force builders to adhere to a strict set of standards and abide by quality control measures monitored by the NHBRC. The builder, in turn, will be responsible for design, material and workmanship defects for three months, roof leaks for 12 months and structural integrity for five years. The Act makes it illegal for a bank to advance a mortgage loan for a home if the builder is not registered or the home not enrolled. The enrolment cost to the builder is 1.3% of the value of the house or housing project, although this will not be applicable to subsidised houses costing less than R15 000. Failure to comply with the terms of the Act will be punishable with either one year's imprisonment or a fine of R25 000 for each home built. The NHBRC was established in June 1995 as a Section 21 company, but has now become a statutory body and will retain this status for five years from next June. To date 5 232 applications from builders have been approved, but NHBRC managing director Peter Allsopp says owing to poor economic conditions, about 45 contractors a week are closing down. This is countered by new applications of only 20 a week. Nevertheless, the NHBRC has built up a protection fund worth R50-million, part of which is used for administration and inspection costs. Allsopp says the cost of repairs to homes not undertaken by the original builder between 1995 and February next year is estimated at R1-million. He points out, however, that less than 10% of the homes are two years old and it is normal that any structural deficiencies become noticeable only after four years. During this period, it is possible that some builders will have been forced to close and it will the NHBRC's responsibility, in terms of the Act, to make the repairs. The NHBRC receives about 500 complaints a month, which are pared down to about 120-150 a month. Top of page
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