NSW passes building reforms to embed modern methods of construction in law

The New South Wales Parliament has passed the Building (Approvals and Practitioners) Bill 2026, establishing Australia’s first legislative framework recognising prefabricated buildings within the state’s building approvals system. (main image: AUSTRUSS supplied the light gauge steel DfMA system for Growthbuilt’s 183-townhouse development at Edmondson Park, Sydney. The NSW Government’s building reforms formally recognise prefabricated buildings within the state’s building approvals framework. Credit: AUSTRUSS.)

The legislation follows the Bill’s introduction earlier this year and formally integrates modern methods of construction (MMC) into the building approvals process. It defines prefabricated buildings in law and establishes a regulatory framework covering their manufacture, supply, transport, delivery and installation.

The Minns Government said the reforms are intended to provide greater certainty for industry and consumers while supporting wider adoption of MMC to improve housing supply and construction productivity.

According to the Government, MMC has the potential to reduce overall building costs by up to 20 per cent and shorten construction time by as much as 50 per cent. Until now, however, approval pathways for prefabricated buildings have relied on existing legislation that was not developed specifically for manufacturing-led construction.

Approval reforms backed by implementation funding
Alongside the new MMC framework, the legislation consolidates multiple building approval processes into a single legislative system. The reforms remove duplication between planning and building legislation, introduce staged approvals to enable projects to progress more efficiently, simplify completion approvals and allow certain minor design changes to proceed without requiring a new planning consent where they remain within an approved framework.

Implementation will be supported by $32.3 million in the 2026–27 NSW Budget. The funding will modernise the building approvals system through integration with the NSW Planning Portal and support trials of artificial intelligence tools to accelerate licence application processing.

The Government estimates that requiring a single set of designs for apartment buildings to obtain building approval could save an average of $327,000 in design costs per project.

The legislation also establishes a new dispute resolution framework through Building Commission NSW to reduce reliance on court proceedings and strengthens integrity measures for certifiers. Maximum penalties for breaches of conflict-of-interest provisions will increase from $33,000 to $1.1 million.

The reforms build on a broader package of NSW Government initiatives supporting industrialised construction, including plans to establish a large-scale manufacturing facility for prefabricated building components and modular housing, together with the Housing Innovation in Construction Fund and Housing Innovation Network Grants Program.

Industry organisations including Master Builders NSW and the Urban Development Institute of Australia (NSW) welcomed the legislation, saying it would reduce duplication, improve approval pathways and support broader adoption of prefabricated and manufactured housing.

With the legislation now passed, New South Wales becomes the first Australian jurisdiction to establish a statutory framework that specifically recognises prefabricated buildings within its building approvals system. The reforms are intended to provide a consistent regulatory pathway for the delivery of modular and prefabricated construction.