The ACT government has introduced changes to its property developer licensing scheme that would remove individual directors’ liability for serious building defects where developers take out compliant Latent Defect Insurance.

The amendments to the Property Developers Act 2024 come ahead of the licensing scheme becoming mandatory from October 1 for residential developments involving three or more dwellings.

The government says Latent Defect Insurance, also known as decennial liability insurance, is relatively new in Australia but is commonly used overseas.

Under the proposed changes, individual directors would not be liable for serious defects where a compliant policy has been taken out by the developer on behalf of future building owners.

The bill would also streamline licensing by allowing a single licence to be attached to a project, which the government says will assist with “missing middle” housing developments.

The broader scheme includes a public register of licensed developers, a code of practice and regulatory powers intended to hold developers accountable for the buildings they deliver.

The Property Council has welcomed the amendments, saying they address concerns it has raised about the scheme’s impact on housing delivery.

ACT and Capital Region executive director Ashlee Berry says the recognition of decennial liability insurance and changes to licensing requirements are significant improvements.

“We’re pleased the Government has listened to us, but let’s be clear – when you’ve pushed an industry off the edge of a cliff, providing a parachute is better than nothing, but it would have been far better not to push it off in the first place,” Ms Berry says.

The Property Council says it supports stronger consumer protections and accountability but had argued elements of the original framework risked making housing more difficult and expensive to deliver without improving outcomes.

Ms Berry says the amendments recognise that where appropriate insurance protections are in place, there is no justification for treating directors as the ultimate “insurer of last resort”.

“The industry has always supported measures that improve quality and protect consumers,” she says. “What we opposed was a framework that risked making housing delivery harder and more expensive without improving outcomes.”

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