The NSW Government has announced an important change to the Strata Building Bond and Inspections Scheme (SBBIS). From 1 July 2026, the building bond percentage will increase, impacting developers’ upfront costs and providing stronger financial protection for owners corporations.
This update is designed to support good building outcomes in new strata developments. It provides a structured process for identifying and addressing building issues in the early years after a building is completed, helping all parties manage risk more effectively.
This article explains what’s changing, why it matters, and how both developers and owners corporations can prepare for this reform.
Defects in new strata buildings can lead to costly repairs, disputes, and stress for owners. In an effort to enhance consumer protections and boost confidence in the industry, the NSW Government introduced the Strata Building Bond and Inspections Scheme (SBBIS). This was designed to help:
This system is designed to safeguard owners in new strata buildings by holding developers accountable for remedial costs and requiring them to pay a strata building bond. This acts as a safety deposit and is held for a defined period to help fund any rectification costs for defective building work during the first years after completion.
Under the SBBIS:
The SBBIS provides a structured, independent inspection process to help owners and developers identify, fund, and rectify defects early in new strata developments.
| Stage 1: Lodging the bond | Before an occupation certificate can be issued, the developer must register the project and lodge the building bond through the NSW Planning Portal. |
| Stage 2: Appointing an inspector | Within 12 months of completing construction, the developer must appoint an independent building inspector approved by NSW Fair Trading. |
| Stage 3: Interim inspection | Between 15 and 18 months after completion, the inspector conducts an interim inspection and prepares a detailed report highlighting any defects. |
| Stage 4: Rectifying defects | Defects can be fixed at any time, but they must be addressed before the final inspection. Most rectification work occurs between 18 and 21 months after completion. |
| Stage 5: Final inspection | Between 21 and 24 months after the building work is completed, the inspector conducts a final inspection and issues a report confirming whether the defects have been resolved. |
| Stage 6: Agreeing on costs | If defects identified earlier remain unresolved, the final report will confirm them. At this point, the cost to rectify these defects must be agreed upon or formally determined. |
| Stage 7: Applying the bond | The building bond is then used to cover the cost of any outstanding rectification work. This process typically takes place between two and three years after the building was completed. |
| Stage 8: Completion and Bond Release | Once the owners corporation completes the rectification work, any unused bond funds are returned to the developer. |
Since its introduction in 2018, the SBBIS has continued to evolve to strengthen accountability and consumer protections, improve defect management, and increase confidence in the property sector.
Originally, developers were required to lodge a building bond of 2% of the contract price for residential building work in strata schemes. However, this percentage will increase to 3% from 1 July 2026.
This change was initially scheduled for 2024. However, following industry feedback and economic considerations, the increase has now been deferred until 1 July 2026 to strike a balance between consumer protection and industry sustainability.
A higher bond means there's sufficient funds available if major defects need fixing.
Owners are less likely to face unexpected costs for rectification work.
Developers have a greater incentive to maintain high construction standards when money is at stake.
The deferral gives developers more breathing room in a high-cost construction environment.
Developers can continue pricing projects at the 2% bond rate for the next 9 months.
The delay allows more time to educate stakeholders and prepare for the higher bond amount.
Developers should start factoring the 3% bond into financial plans and update cost estimates and agreements for projects completing after July 2026. The increase may affect project financing, so it is essential to review and adjust cash flow and budgets.
If defects are fixed before final inspection and the inspectors report no outstanding issues, the bond can be returned. Developers can engage NSW-approved inspectors early and work proactively to fix defects before the final inspection, helping speed up bond release.
Compliance timings, including bond submission and inspection arrangements, must be planned well in advance to align with the occupation certificate and inspection program requirements. Developers can start engaging experienced inspectors early to understand expected outcomes well before inspection windows.
Developers will need to register the project and lodge the building bond via the NSW Planning Portal, complete stages 2-8 to appoint an inspector, upload the interim and final inspection reports, confirm defect rectification, and manage bond release on the Strata Hub. Learn more about how to do this here.
A higher bond means more funds are available to cover defect repairs if the developer fails to fix issues during the warranty period. It is essential to understand the bond process and know how it can be accessed for remedial works.
The SBBIS provides a structured process backed by a higher bond, which creates a stronger incentive for developers to resolve and deliver defect-free projects. Owners corporations should monitor inspections and collaborate with developers to ensure issues are addressed promptly.
Mandatory inspections and reports provide owners corporations with independent information on building quality, helping inform maintenance planning and capital works foresight. It is best practice to stay informed about the two-year defect inspection reports and follow up on rectification work.
The owners corporations are required to approve the appointment of the building inspector and authorise the cost of rectifying any defects identified during inspections on StrataHub. Learn more about how to do this here.
At PICA Group, our developer services go beyond legislative compliance. Each quarter, we support new communities through practical, on‑the‑ground engagement, including:
These touchpoints help reduce early confusion, improve owner confidence, and support smoother transitions from development to community living.
With more than 185,000 lots under management, PICA Group’s specialist property developer services team provide practical guidance based on best practice expertise.
This article is edited by Lauren Shaw Regional General Manager and Licensee-in-Charge on February 2026.
