Owner Builder Projects in NSW: Legal Risks and Requirements

When planning to build or renovate your own home in New South Wales, you may be considering acting as an owner builder. While this can offer flexibility and potential cost savings, it also comes with serious legal responsibilities under the Home Building Act 1989 (NSW) (HBA).

In this article, we break down what it means to be an owner builder in NSW, the legal requirements you must meet, the risks involved, and how to stay compliant with state regulations.

What Is an Owner Builder?

An owner builder is someone who holds an owner builder permit issued by the Building Commission NSW. The permit allows them to personally undertake and manage residential building work on land they own, without being a licensed builder.

Owner builders are legally responsible for the work and must ensure it meets NSW building laws and safety standards. If you contract out any work that requires a licence (such as electrical or plumbing), you must use licensed tradespeople.

Learn more: NSW Government – Owner‑builder responsibilities and rules

When Do You Need an Owner Builder Permit?

In NSW you must apply for an owner builder permit if you plan to supervise or carry out building work on your own home where:

the value of labour &  materials (the “reasonable market cost”) exceeds $10,000; and
you have not engaged a licensed builder to supervise the work.

Furthermore, if the value of the project exceeds $20,000, additional requirements apply, such as completing an approved owner builder education course.

Permits are generally valid for five years and only one can be issued within any five‑year period unless it relates to the same land or special circumstances apply.

Apply Here: Apply for an Owner‑Builder Permit – Service NSW
Learn More: When an Owner‑Builder Permit is needed – NSW Government (NSW Government)

Legal Obligations Under the HBA (and Related Laws)

As an owner builder, you take on many of the same legal duties as a licensed builder under the HBA. These include:

Ensuring all contracted tradespeople are appropriately licensed.
Having all required council and certifier approvals for example DA, CDC, construction certificate before work begins.
Supervising the building work (ordering materials, managing the site, overseeing trades).
Complying with Work Health & Safety laws, including being responsible for the site safety.
Keeping accurate documentation, contracts, receipts, and ensuring compliance with licensing, insurance and approvals.
Using appropriately licensed trades for each category of work (especially once the threshold for licensed work applies).

Look up: The Home Building Act 1989 (NSW)

Are Owner Builders Required to Take Out Home Building Compensation Insurance?

If you are acting as an owner builder, you are not required to take out Home Building Compensation (HBC) insurance for the building work you personally carry out. However, if you engage a licensed trades business to perform work valued at more than $20,000 (including GST), the contractor must:

Obtain HBC insurance before work begins or any payment (including a deposit) is made, and
Provide you with a certificate of insurance for that work

This insurance protects you and any future owner of the property in the event the contractor:

Dies
Disappears
Becomes insolvent
Fails to comply with a court or tribunal order to rectify defective or incomplete work

More details: SIRA – Home Building Compensation Scheme

If a contractor fails to comply with these insurance requirements, they are breaching the law and you may be left unprotected if problems arise.

Additionally, you should ensure that you have public liability insurance to protects against claims for personal injury or property damage caused to a third party on you premises. It can cover compensation costs, legal fees, and other expenses if a customer, supplier, or member of the public is injured or their property is damaged due to negligence.

Selling an Owner Builder Constructed Home

If you decide to sell a property that you built or renovated under an owner builder permit and the sale occurs within 7 years and 6 months of the permit being issued, you must comply with specific legal obligations:

The contract for sale must include a Consumer Warning stating:
“An owner builder permit was issued in relation to the land on [insert date].”
Disclose that owner builder work has been undertaken and the relevant permit details.
Acknowledge that any statutory warranties under the Home Building Act continue to apply.

If the consumer warning is not included, the purchaser has the right to void the contract before settlement.

As an owner builder, you are personally guaranteeing the quality and compliance of the work you undertake. The next owner of the home is entitled to the benefit of the statutory warranties under the HBA and may take action including through NSW Civil and Administrative Tribunal (NCAT) if defects are identified.

What Are the Risks of Acting as an Owner Builder?

While taking on the owner builder role may offer autonomy and cost‑savings, it carries significant legal and financial risks:

No HBC insurance coverage for work you do personally, unless you engage a contractor who provides it.
Full legal liability for non‑compliant or unsafe work
Significant burden of organising approvals, managing trades, inspections and site safety
Potential difficulty reselling the property due to buyer concern or required disclosures
Exposure to claims if defects emerge after the sale and statutory warranties apply

Legal Tips for Owner Builders

To protect yourself and your property, consider the following:

Seek legal advice before applying for an owner builder permit or commencing work
Use only licensed trades, obtain contracts, and keep all documentation (receipts, insurance certificates, licences)
Keep a journal of works, take photos and videos as the work progresses.
Ensure you obtain all council approvals and certificates, such as Development Application’s, Complying Development Certificates, construction certificate. before commissioning work
Understand your obligations under Work, Health and Safety laws and site safety requirements
Be transparent when selling, include the required consumer warning and ensure statutory warranty obligations are clear
Consider you insurance options such as public liability, contract works, where appropriate

A construction lawyer can help ensure you comply with the Home Building Act and avoid costly mistakes or disputes.

Becoming an owner builder in NSW may seem like a cost‑saving option, but it brings with it a range of legal obligations, and responsibilities under the HBA. You are not exempt from licensing, approvals, insurance or safety laws and the risks of non‑compliance can be serious.