NSW’s ICIRT Hands Lifeline to Off-the-Plan

Quality is king for off-the-plan sales after it took a battering from high interest rates, well-publicised defects and a cautious market. But measures, including the NSW Government’s support of initiatives such as iCIRT ratings, have proved a reputation-booster for builders and developers in the space. Adding to that was last month’s announcement of a $1-billion presale finance guarantee . A spokesperson from Building Commission NSW says that the iCIRT rating is a “key tool in restoring consumer confidence and improving transparency in the construction industry”. As of June 27, 2025, the spokesperson says, more than 650 industry players had engaged with the rating process, and more than 430 of those achieved the highest possible Gold rating. But while the rating is getting cut-through with off-the-plan developers, there are hurdles in the market that only supportive lending and a streamlined planning environment can alleviate. What iCIRT brings Finance broker Stamford Capital started tracking iCIRT in its Debt Capital Markets Survey 12 months ago, managing director Peter O’Connor tells The Urban Developer . “It was brought in to protect the consumer, or the buyer of the stock, and we’ve seen a big takeup in NSW of the iCIRT ratings,” O’Connor says. “Last year, 33 per cent of lenders in NSW relied on the iCIRT rating system as part of their due diligence process. This year, it’s 50 per cent.” In fact, Stamford Capital found that 40 per cent of lenders had turned down a loan application on the basis of a project builder’s poor iCIRT rating or lack of one. ▲ Ellipse Property has launched East + Cowper to market, a 264-unit project at Granville. Ellipse Property head of development Nigel Farquhar says that being able to leverage its partner company Decode’s iCIRT rating—both were founded by Sam El Rihani—meant the focus could remain on quality. “It’s on our horizon to look at the iCIRT rating for ourselves, but it’s about the quality of the product ... so it’s all about the builder,” Farquhar says. “And it’s great for the purchaser and for that development finance aspect too.” On the consumer side of the equation, the Building Commissioner’s office says that as of May, nearly one in three NSW consumers were aware of iCIRT. ▲ Ellipse Property ’ s Nigel Farquhar: iCIRT is great from a development finance aspect. And 69 per cent of those people reported increased confidence in construction when they know a home builder, property developer or other building professional has a rating. But return on investment is important because iCIRT itself can be an onerous rating to achieve. More than 80 per cent of iCIRT-rated businesses maintain their rating status through annual reviews, the Building Commissioner spokesperson says, on top of ongoing building costs and quality audits. “There’s a cost in preparing for iCIRT and constantly being audited, so it would be nice to see some advantage, for example 10-year Latent Defects Insurance costs which sway towards a builder or builder-developer with an iCIRT rating,” Farquhar says. Lenders and iCIRT There are increasingly benefits to iCIRT, not just from a reputational angle but also financially. “Off the back of Covid there was a huge increase in build cost so lenders naturally increased their focus on builder contractors, to the point where due diligence of those builders became a metric in finance,” O’Connor says. “We know a bank that set up a full team to do builder due diligence. “Nothing was getting approved without a significant level of diligence for the builder, so it makes sense that lenders in that environment would adopt something that will give them a bit more comfort, another external who has done that diligence.” ▲ Stamford Capital managing director Peter O’Connor: iCIRT plays a part in due diligence. The iCIRT ratings are looked on favourably, O’Connor says, especially as elevated builder due diligence is unlikely to be reined in any time soon. “If costs come down there might be a pathway to decrease the intensity of diligence, but while costs have slowed in terms of velocity of increase, they have definitely not gone down,” O’Connor says. “So unless there becomes a gap between revenue and cost, due diligence is likely to continue at this rate.” However, because of that extra due diligence, iCIRT is a “nice-to-have” but not quite yet a “must-have” for lenders. Therefore, off-the-plan developers still need to consider the individual requirements of lenders. Presales and lender types Stamford Capital works with a range of lenders including banks, non-bank and private lenders, the latter of which tend to be family offices and syndicated funds, and all have a different approach to due diligence. “Banks are generally more in-depth, although larger non-bank lenders are effectively institutions anyway and have a similar level,” O’Connor says. “Where it drops down a little bit in terms of intensity is private lenders; they might not be as sophisticated with due diligence processes, but they also have more willingness to take on a bit of risk.” This drops iCIRT into an evolving lending landscape, where banks are eyeing a return to the commercial development space and requiring that extra level of diligence. ▲ Ellipse’s Carrington Place is being built by iCIRT-rated Decode Group. Stamford Capital’s survey also found that 86 per cent of bank respondents encouraged additional regulation in the private market. “Banks have realised that the non-banks and private lenders are starting to eat their lunch,” O’Connor says. “It’s clear that banks are starting to respond, given that they’ve had little to no growth in their own loan books; the private market is exploding and they don’t think they’re getting their fair share.” This means that banks have started to change their approach, even reducing their thresholds relating to presales. ▲ Render of the 19-level East + Cowper building at Granville. “Previously, you wouldn’t have been able to get bank funding less than 65 per cent presold, but now we’re seeing 30 to 35 per cent from banks. They are super keen to get money to work and they’re keen to get market share back.” Farquhar says that unlocking presales is crucial and that the new presale commitment from the NSW Government potentially means that banks will take on more risk. “Banks are so risk averse but that might see funding flow through,” Farquhar says. “My concern is that this should be geared towards 100 to 300-unit sized projects, which can be delivered in under a four-year period—if you have bank guarantees for larger projects, you will be funding the big boys as opposed to ones that can turnover quite quickly.” ▲ Carrington Place will comprise 800 homes and stage one is due to complete in 2026. If the Government wanted to support iCIRT ratings, it would be worth prioritising those for the scheme who had an iCIRT-rated builder, he says. But where the money comes from and the quality of the builder, while important, still come second to a major factor hindering housing delivery, O’Connor says. “We see a lot of development feasibilities and it’s not interest cost that is the burden and it’s not the differential between bank and non-bank that is making them feasible or not. “It’s the still-inflated building costs and time delays due to planning. Creating more planning certainty is the main way to decrease risk and holding costs for developers,” he says.

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