The ACT government says it wants to “incentivise” latent defect insurance take-up with the introduction of amendments to a property developer licensing scheme that starts next month. 

Last week it introduced changes to the Property Developers Act 2024 that would mean an individual director’s liability for serious defects will not apply if a compliant LDI policy has been taken out by the developer on behalf of future residential apartment owners. 

“The amendments … will provide a strong incentive for developers to take up latent defects insurance, which provides 10 years of protection for an owner's corporation if defects are identified after a building is completed,” Minister for Planning and Sustainable Development Chris Steel said. 

“This is a first resort scheme, making it easier for defects to be addressed without delay and costly legal action that is often required by owners’ corporations. 

“Importantly LDI also helps to prevent defects in the first place, through a rigorous inspection regime throughout the build. 

“The ACT government will now undertake further work to consider mandating the insurance for class 2, multi-unit residential buildings.” 

The Property Council of Australia has welcomed the amendments. 

“We have consistently supported strong consumer protections, accountability for your role and what you have control of in the building supply chain, and we support the development of decennial liability insurance as an important additional protection,” ACT and Capital Region executive director Ashlee Berry said. 

“Importantly, the government has now recognised that where appropriate insurance protections are in place, there is no public policy justification for treating directors as the ultimate ‘insurer of last resort’.”