The Victorian Labor Government has introduced the Building Legislation Amendment (Buyers Protections) Bill 2025 which, if passed, will come into effect at the latest on 1 July 2026.
The bill is set to be one of the most significant consumer protection reforms to the building industry in years, with serious consequences for builders, contractors and developers.
Our summary below highlights some of the key changes that have been proposed.
The bill gives greater oversight and powers to the regulator
The bill introduces a new regulator, the Building and Plumbing commission (BPC), to replace the beleaguered Victorian Building Authority. The new regulator :
- will oversee a new developer bond scheme requiring developers of residential apartment buildings over 3 storeys to keep a 3% total build cost bond for about 2 years
- is being given greater powers to issue directions to fix defective or incomplete work before and after an occupancy permit is issued; and
- will become the sole provider of a new domestic building insurance scheme that is specifically not limited to payouts in “last resort” circumstances (ie where a builder dies, disappears or is insolvent), as is currently the case;
The Bill introduces sweeping changes to the Building Act 1993 (Vic), the Sale of Land Act 1962 (Vic) and the Domestic Building Contracts Act 2005 (Vic). Although much of the detail is left to the regulations, we have summarised some of the key changes below.
The introduction of a developer Bond Scheme
Currently, domestic building insurance only applies to homes in a building of 3 storeys or less.
The developer bond scheme is to work like a rental bond and introduce protection for apartment owners in residential buildings of more than 3 storeys. The bond rate is proposed at 3% of the total apartment building cost (unless changed by regulations) and is required to be given to the regulator before the occupancy permit can be issued and will be held for about two years.
The developer is required to appoint a building assessor to inspect the common property and apartment lots for defects and prepare a preliminary report identifying defects between 15 and 18 months after occupancy. The assessor is then to carry out a further inspection after 18 months post-occupancy and prepare a final report on the rectification of the identified defects.
Reports are submitted to the regulator, the owners corporation and the developer.
Owners can make claims on the developer bond through the assessor, or the regulator for the costs of rectifying defective work identified in the assessor’s reports.
The bond scheme also adds a level of protection for off-the-plan apartment owners, allowing the apartment owner to rescind the contract of sale if the bond is not properly paid by the developer.
Long term, the government has stated it wants to introduce a 10-year liability scheme for developers as further protection for apartment owners, but this is not in the current bill.
New powers to fix defects before and after occupancy
Unlike the current legislation, the Bill will grant the regulator enhanced powers to force builders to rectify defective after the occupancy permit has been issued – for up to 10 years.
In addition, the Bill allows the regulator to issue builders or developers with costs orders to compensate the regulator for costs it incurs in investigation and monitoring the rectification order.
Where disputes may arise in relation to building work that is incomplete, non-compliant or defective, the Bill proposes either:
- the regulator referring owners and builders to dispute resolution processes before issuing a determination (but this applies only where the regulator considers an owner hasn’t made reasonable attempts to resolve disputes); or
- for the builder or owner to refer the regulator’s decision to VCAT for review, within 28 days of the decision.
These powers will be introduced at the end of 2025. Builders who do not comply with these rules may be subject to disciplinary action including suspension of registration.
New minimum financial requirements for builders
The bill also introduces new financial probity requirements for builders. At registration and at prescribed times builders are required to report to the regulator to demonstrate they have complied with minimum financial requirements.
It remains to be seen what form this will take, including if it will follow the model of annual reporting that has been in place for some time now in QLD. The QLD model requires a builder to report on working capital, debt ratios and projected annual revenue.
If the regulator considers a builder has failed to meet the minimum financial requirements, the bill will mandate that the regulator immediately suspend a builder’s registration and may lead to the builder facing disciplinary action.
A new ‘first resort’ domestic building insurance scheme
Currently, domestic building insurance operates as a ‘last resort’ protection for consumers, limited to circumstances where the builder has died, disappeared or becoming insolvent, or orders have been made against them in VCAT.
The new bill dispenses with these limitations, and opens up the prospect of “first resort” insurance, although the details of the scheme are still be disclosed (the current domestic building regime is found in Ministerial Guidelines gazetted under the Building Act 1993). A recent State government announcement promises the introduction of the First Resort Domestic Building Warranty, a scheme that will allow owners to make a claim when a ‘building issue’ is first identified and will include cover for lost deposits.
Under the proposed bill, the regulator will be the only provider of the new domestic building insurance scheme, centralising what is now offered by the VMIA and a private insurer.
The introduction of the Building Legislation Amendment (Buyers Protections) Bill 2025 comes at a difficult time for industry when builders and developers alike are struggling to keep pace with rising costs and securing viable projects. Acknowledging that access to relief for defective work is currently cost prohibitive for consumers – and that the VBA as a regulator has been widely criticised as ineffective – the bill in its current form will put substantial further pressure on embattled builders and developers that are enduring one of the toughest periods in recent memory.
