Yesterday, the NSW Government introduced the Building (Approvals and Practitioners) Bill 2026. This is the first legislation in Australia to formally recognise modern methods of construction (MMC) in law and integrate prefabricated buildings into the building approvals system.
Last year, we analysed the Productivity Commission’s recommendations on MMC, supporting innovation, and reducing regulation. This Bill represents a significant step in the broader deregulation agenda and signals how other jurisdictions may move to respond to the Commission’s findings and enable housing supply.
What the Bill does
The Bill establishes, among other things, a comprehensive framework for the approval and oversight of building work, including work involving prefabricated buildings. It aims to provide a framework that is "adaptable to emerging construction trends" and foster "an accountable, innovative and competitive construction industry". Three core reform areas are addressed:
- Recognising and regulating prefabricated buildings:
“Prefabricated buildings” are defined as a substantially complete building or room manufactured away from the building site, a modular building component that will become a building element when installed and cannot be inspected without destructive testing once on-site, or anything prescribed by the regulations. A moveable dwelling is expressly excluded. The Bill creates a dedicated regulatory pathway, requiring manufacturers to provide a prefabricated building declaration confirming BCA compliance and prefabricated building instructions covering transport, erection and design requirements before building work may commence. It is an offence to supply a prefabricated building without providing this documentation. Importantly, the regulations may exempt or impose alternative requirements for prefabricated buildings manufactured outside NSW, addressing the cross-jurisdictional supply chain.
- Streamlining building approvals:
The Bill consolidates the currently fragmented legislative framework. It repeals the Building and Development Certifiers Act 2018, the Design and Building Practitioners Act 2020 and their associated regulations. Key features include a system of staged building approvals, allowing construction to begin on early stages while later stages are still in design. The government estimates these changes will remove the need for duplicative designs for the same building elements, saving approximately $330,000 per apartment block. Minor variations to a building's development consent may be approved within the approval framework without full re-application. The system will operate through the NSW Planning Portal, creating a single digital environment and authoritative source of truth for consumers, regulators and industry.
- Strengthening certifier accountability:
The Bill introduces clearer conflict-of-interest provisions for approval authorities and increases maximum court-imposed penalties from $33,000 to $1.1 million for certifiers who breach conflict-of-interest requirements, with automatic suspension upon conviction. This responds to longstanding concerns about confidence in the certification sector and recommendations of the Legislative Council's Public Accountability and Works Committee.
Why it matters
The Productivity Commission has estimated that MMC can reduce construction costs by up to 20 per cent and cut build times by up to 50 per cent. Inconsistent local council approaches to prefabricated building approvals have long undermined industry and consumer confidence. As the Property Council Australia noted in welcoming the Bill, NSW "cannot meet its housing targets using traditional construction approaches alone", and clearer approval pathways are essential if MMC is to move from niche to mainstream.
The Bill also extends the statutory duty of care to construction work involving prefabricated buildings, with the regulations empowered to address whether the duty continues if a prefabricated building is relocated after completion. Additionally, Schedule 4 redefines "manufactured home" across multiple Acts to provide a definition sperate from the Local Government Act 1993, ensuring manufactured and prefabricated homes are treated consistently across the planning and building framework.
Looking forward
The Bill's operational detail will sit in regulations being developed in parallel. These regulations will be critical, as they will prescribe the specifics of mandatory inspections for prefabricated building work, the requirements for manufacturers outside NSW, and the registration required.
We will continue to monitor the regulation-making process closely and provide further updates as the framework takes shape.
