The New South Wales Government is set to impose a 2 per cent bond on developers to cover the cost of building defects in new unit blocks.

A report by the University of New South Wales has identified building defects in about 85 per cent of apartment buildings built since 2000.

Common defects include shifting foundations, water leaks, wall cracks and tiling faults.

Under the Government's proposed system, developers of new buildings taller than three storeys will have to pay a bond to cover the remedy of any defects.

Fair Trading Minister Victor Dominello said "there is no protection currently in place to ensure that those defects are remedied, other than taking it to court".

"A defect bond will provide a 2 per cent security to enable most of those defects to be cured," he said.

Mr Dominello said it was all part of the Government's plans to bring more clarity to the industry.

"This is the biggest reform to strata since... 1961," he said.

"There's a lot of significant reforms coming through and the defect bonds is a part of it."

Independent assessors will be appointed to investigate possible defects.

The peak body representing developers, the Urban Taskforce, has welcomed the move.

Urban Taskforce's CEO Chris Johnson said most developers already set aside money for any future repairs.

"It formalises the industry approach to having a retention sum, but it does give a lot more rigour about how this is handled," he said.

"We need, obviously, to give confidence to all those moving into apartments that any defects will be fixed up, and the defects bond covers the cost of that.

"If there are no defects, the bond obviously goes back to the developer... if there are defects, there's funds to fix up the defects themselves."

A bill will be introduced to Parliament in October, with the laws likely to come into effect in the new year.