By Pinar Acay
The Building Legislation Amendment (Buyer Protections) Bill 2025 introduces substantial reforms to Victoria’s building regulatory framework by amending five key Acts, including the Building Act 1993 and the Domestic Building Contracts Act 1995. These reforms aim to improve consumer protection, streamline regulatory oversight, and increase accountability within the domestic building sector.
Centralisation of Regulation
A key feature of the Bill is the integration of various domestic building regulatory functions into the Victorian Building Authority (VBA). This includes transferring the administration of Part 4 of the Domestic Building Contracts Act 1995 from Consumer Affairs Victoria and consolidating the domestic building insurance (DBI) responsibilities of the Victorian Managed Insurance Authority (VMIA) under the VBA. This centralisation is designed to create a “one-stop-shop” regulator, simplifying the consumer experience and eliminating the confusion caused by fragmented responsibilities among multiple agencies.
Statutory Insurance Scheme
To further enhance consumer protections, the Bill establishes a Statutory Insurance Scheme (SIS) that provides “first-resort” domestic building insurance for buildings of three storeys or less. Unlike the current “last-resort” model (where insurance applies only if a builder dies, disappears, or becomes insolvent), the SIS allows consumers to claim insurance without participating in a dispute resolution process, regardless of the builder’s operational status. This ensures prompt rectification of defective, incomplete, or non-compliant work and shifts the burden away from homeowners.
The SIS will be administered solely by the VBA, linking insurance with its new enforcement, disciplinary and cost recovery powers. Builders who fail to comply with rectification orders may face suspension of registration or financial penalties. Consumers will also benefit from “deemed cover,” which ensures insurance applies even if a builder fails to obtain a policy, protecting against situations like the Porter Davis Homes collapse.
The Bill outlines a two-stage reform to domestic building insurance. Initially, the VBA will take over VMIA’s DBI business, including its assets and liabilities. A new insurance account will be established to manage DBI premiums and payouts, subject to prudential standards. In the second stage, the SIS will commence, applying to contracts over $20,000 and offering optional additional coverage as set by regulation.
Enforcement and Rectification Powers
To close enforcement gaps, the Bill grants the VBA new powers to issue rectification orders. These orders apply to any person who carries out the building work (including registered and unregistered builders, subcontractors and developers), and can be issued during construction or within 10 years after an occupancy permit is issued. These orders are binding, cannot be stayed and must be complied with within set timeframes. They strengthen the VBA’s ability to intervene directly and enforce compliance with building standards and insurance obligations.
Developer Bond Scheme
The Bill introduces a developer bond scheme for apartment buildings over three storeys, which are not covered by DBI. Developers will be required to lodge a 2% bond against the cost of building work prior to applying for an occupancy permit. If serious defects are found and remain unresolved, the owners corporation may access the bond to fund rectifications. An inspection regime will support this scheme, with assessments conducted 15–18 months and, if needed, 21–24 months after occupancy.
To reinforce these protections, restrictions will be imposed on occupancy permits, plan registrations, and off-the-plan sales for apartment buildings with unrectified serious defects. Developers must notify the VBA in advance of seeking occupancy permits, allowing for inspections and enforcement action where necessary. Buyers may also rescind contracts if an occupancy permit is not granted or a developer bond is not paid.
Miscellaneous Amendments
The Bill introduces miscellaneous and technical amendments, including the replacement of DBI eligibility with minimum financial requirements for builder registration. These requirements will support the VBA’s new insurance and underwriting responsibilities and be detailed in forthcoming regulations.
Lastly, the Bill expands the jurisdiction of the Victorian Civil and Administrative Tribunal (VCAT) to include reviews of decisions related to the SIS, rectification orders and developer bonds, offering a legal pathway for affected parties.
This information is general in nature and not a substitute for legal advice based on your individual circumstances. For tailored advice about your situation, speak with our senior property lawyer Pinar Acay on (03) 8621 1000 or (03) 9331 1144.
