The Building Legislation Amendment (Buyer Protections) Bill 2025 introduces significant reforms affecting developers of residential apartment buildings in Victoria. The reforms which are currently progressing through the legislative process are designed to protect consumers by providing for a developer bond scheme in relation to residential apartment buildings with a rise in storeys of more than 3.
The key impacts and obligations for developers and vendors under the proposed new legislative framework are:
- Who is the “developer” – for the purpose of the reforms, a “developer” is the owner of land on which the residential apartment building is affixed on the date of registration of the plan of subdivision.
- Introduction of Developer Bond Scheme – The developer must arrange for the issue of a developer bond before:
- applying to register the plan of subdivision; or
- applying for an occupancy permit (the penalties for a breach of this requirement alone are nearly $100,000 for an individual or $500,000 for a body corporate).
The bond must secure an amount equal to 2% (or another prescribed percentage) of the total build cost of the residential apartment building.
- Restrictions on Possession – Vendors under off-the-plan contracts for lots in residential apartment buildings cannot require or permit purchasers to take possession unless an occupancy permit has been issued.
The penalties for breach are hefty – 120 penalty units (or $23,710.80) for an individual or 600 penalty units (or $118,554) for a body corporate.
- Rescission Rights under the Sale of Land Act – Purchasers may rescind off-the-plan contracts if the developer fails to arrange the required bond or secures less than the required amount (even if inadvertently). In such circumstances, a purchaser will have the right to recover from the developer not only its deposit, but also penalty interest on the deposit.
- Defective Building Work and Rectification
Building Assessor Appointment: Developers must nominate and, subject to owners corporation approval, appoint a qualified building assessor to inspect and report on defective building work. The nomination must occur at least 14 days before the first meeting of the owners corporation. However, if no person other than the developer is present at the first meeting (as its nearly always the case), then the developer must notify the VBA and request the VBA to appoint the building assessor.
Rectification Process: The building assessor will conduct a preliminary inspection 15–18 months after occupancy, and a final inspection 21–24 months after occupancy. If reportable defective building work is identified, the owners corporation may claim against the developer bond to fund rectification.
Cost Liability: Developers are liable for the costs of the building assessor.
These reforms (if passed) are expected to come into effect on 1 July 2026. We will continue to provide updates on the progress of this Bill.
