The Victorian Labour Government has introduced significant proposed amendments to the building and construction industry. If the Building Legislation Amendment (Buyer Protections) Bill 2025 (the Bill) is passed, the industry can expect stricter regulations, broader powers for the Victorian Building Authority (VBA), and reforms to domestic building insurance and registration.
Need to know:
- The Victorian Government is in the process of overhauling the Victorian Building Authority and replacing it with a more powerful watchdog, the Building and Plumbing Commission (the Commission).
- The first step to the Commission’s establishment is the passing of the Building Legislation Amendment (Buyer Protections) Bill 2025 (the Bill).
- This Bill is set to drastically reform the building and construction industry.
- If passed, the industry will see significant changes to domestic disputes, insurance, rectification orders, and government agency bodies.
Toward the end of 2024, the government announced that the VBA was to be overhauled and replaced by a more powerful building and plumbing watchdog, the Building and Plumbing Commission (the Commission). The purpose of the Commission is to combine and streamline the functions of multiple agency bodies into one single agency.
This Bill is said to be the first step towards the Commission’s creation. Though the proposed Bill does not provide details on the Commission, it does however, provide the VBA with new and broadened powers in the interim.
Below is a summary of some of the key changes and amendments the Bill proposes.
Notably, the Bill proposes to amend the Building Act 1993 (Vic) (Building Act) and the Domestic Building Contracts Act 1995 (Vic) (DBC Act). This is alongside amendments to other legislation including the Sale of Land Act 1962 (Vic), the Subdivision Act 1988 (Vic), and the Victorian Civil and Administrative Tribunal Act 1998 (Vic).
The Victorian Building Authority
Domestic building work disputes
Currently, the Director of Consumer Affairs Victoria (CAV) administers domestic building work disputes under the DBC Act. These disputes arise between a building owner and a builder, an engineer, a sub-contractor or an architect in relation to domestic building work.
The Bill proposes to confer this role from the CAV to the VBA. Currently, the VBA has the power to hear complaints regarding breaches and offences under legislation including the Building Act, DBC Act, and Plumbing Regulations 2018 (Vic).
If passed, this Bill will grant the VBA much broader powers and capabilities when resolving domestic building work disputes.
Insurance
The Bill proposes to amend the definition of ‘insurer’ under the Building Act. This amendment involves substituting the ‘Victorian Managed Insurance Authority’ (VMIA) with the ‘VBA’. This change would transfer the current building insurance regime from the responsibility of the VMIA to the VBA.
In essence, this means the VBA will oversee all domestic building insurance with all prior existing contracts being assigned to the VBA.
Rectification orders
Currently, the VBA has certain limited powers that allow it to order directions to fix building work. The Bill proposes to expand that power. If passed, the VBA will be able to order incomplete, non-compliant or defective work to be rectified up to 10 years after the work has been completed. This order can be issued to a builder, developer, or both.
An order can be issued in relation to domestic building work whether the work was carried out under a contract or meets the requirements of the Domestic Building Contracts Act 1995 (Vic). This can require the builder or developer to complete the building work, rectify the non-compliant or defective work, or rectify any damage caused during the building work.
The Bill also proposes a review pathway in relation to the rectification orders and costs. The Victorian Civil and Administrative Tribunal (VCAT) can review a decision if the application is made by the building practitioner within 28 days of the order being made. This can relate to a decision to either issue or deny issuing a rectification order.
Developer bonds
The Bill proposes a new developer bond scheme in relation to residential apartment buildings above three storeys. The bond, set at 3% of the total build cost for the residential apartment building, would be held as security for defect rectification purposes. The bond is to be paid by the developer of the residential apartment building. Owners of the residential apartment building can make a claim to the VBA for the rectification of defects, using this security.
This amendment will require the developer to pay the bond before obtaining an occupancy permit. Under the Bill, it will be an offence to apply for an occupancy permit before paying the bond or to make false representations that the bond has been paid by the developer.
Additionally, within 28 days after the first meeting of the owners corporation, the developer must appoint a qualified person as a building assessor. The building assessor will be responsible for undertaking inspections, identifying defects, and writing reports.
The Bill outlines certain criteria that must be met for there to be a valid appointment of the building assessor, excluding individuals who have been involved in the design, construction, or certification of the residential apartment building. The developer will be responsible for any remuneration to the building assessor.
Introduction of minimum financial requirements
The Bill has introduced minimal financial requirements for builder registration. If the builder does not meet these financial requirements, they risk disciplinary action, or having their registration suspended or cancelled.
The details of the minimal financial requirements are not outlined in the Bill.
Next steps
The government has pledged its support to Victorian homeowners and its commitment to building consumer confidence. The government has stated that it will engage with stakeholders and keep the public informed regarding the Bill’s process through Parliament.
This Bill is likely to introduce significant reforms to the building and construction industry, impacting the rights and responsibilities of owners, developers, contractors and consumers.
If you require construction or infrastructure legal advice, Hamilton Locke can help. We draw on decades of experience to help bring market leading projects to fruition.
For more information, please contact Elena Stojcevski.
