Owners of new apartments will now have only two rather than six years to get developers to foot the bill for building defects, once the Home Building Amendment Act takes effect. A spokesman for Fair Trading NSW said the new laws, passed in September last year, were designed to strengthen the consumer protections and address issues in construction industry by changing the licensing system for tradespeople. These will increase penalties for practitioners and companies with a track record of issues, as well as changing payment structures to ensure fewer major defects. Home owners will be able to access the previous six-year warranty only in relation to flaws that put the building or property at risk of falling down or becoming uninhabitable. The definition for "major defect" is new in the act. But the peak body representing strata owners has described the new defect rules as "draconian" and told Fairfax Media the changes would have serious and far-reaching consequences because many issues take years to emerge.

"Apartment owners are in for a nasty shock when they discover problems from Thursday, and learn the government has left them pretty much on their own. Right now, I could not in good conscience recommend buying into a new building," Owners Corporation Network executive officer Karen Stiles said. "Once owners and lenders understand the enormity of these changes, the interest in new properties will plummet and that will impact the construction industry." Building defects are remarkably common. In 2012, the University of NSW City Futures Research Centre found more than 85 per cent of apartment blocks built since 2000 have defects. The most common defects were internal water damage, water penetrating from the outside, and fire safety shortcuts. But these issues will be covered by the six-year warranty only if they are also designated as major defect. Lead UNSW researcher Hazel Easthope said many significant common problems that can cost hundreds of thousands to fix were unlikely to be covered under the new laws.

"These are very serious defects but it can take years before the owner becomes aware of the issue," Dr Easthope said. "What may appear to be a hairline crack in two years can be a major problem in five. When you factor in how long it can take for owners corporations to get organised, two years is not much time at all." Fair Trading deals with about 8000 complaints over residential buildingseach year. A spokesman for the department said the act offered an integrated package of laws for business and consumers by being more specific and flexible. "Importantly, the new laws will provide greater protection for consumers and offer clarity about rights and responsibilities of builders' liabilities, particularly in relation to defects," the spokesman said. Urban Development Institute of Australia NSW chief executive Stephen Albin said the HAA was a series of commonsense changes that was good news for the construction industry and consumers.

"Defects are unavoidable, they'll always happen but these laws will help put more integrity into the system and cut down on major defects by empowering qualified tradespeople," Mr Albin said. More than 3 million Australians live in apartment blocks, and another 1 million are expected to move into apartment blocks within the next 10 years. FACT BOX: Building defects must be identified and compensation sought within two years.

Flaws that make a building uninhabitable or likely to collapse can be classified as a "major defect".

There is a six year warranty for major defects.

Builders and traders face up to a year in prison for repeated unlicensed contracting work.

Minor work worth under $5000 can now be carried out without a licence.

The act was designed in partnership with a strata and home insurance amendment act, which has been delayed.