The Building Legislation Amendment (Buyer Protections) Bill 2025 introduces significant reforms to Victoria’s building industry, strengthening consumer protections and tightening regulatory oversight. The Bill establishes a statutory insurance scheme, mandates developer bonds, consolidates consumer dispute resolution under the Victorian Building Authority (VBA), and expands enforcement powers against defective or incomplete construction work. It also introduces the Building and Plumbing Commission, a new regulatory body responsible for compliance and enforcement.
Whilst it is important to remember that this is a Bill (and not an Act yet), and therefore must go through scrutiny and debate in both houses of the Victorian Parliament before receiving Royal Assent, it important the key impacts if the Bill is passed in its current form. There is much lobbying by industry bodies to see the Bill either repealed or amended prior to passing through both houses of Parliament.
The Bill amends several key pieces of legislation, including:
- Building Act 1993
- Domestic Building Contracts Act 1995
- Sale of Land Act 1962
- Subdivision Act 1988
- Victorian Civil and Administrative Tribunal Act 1998
Statutory Insurance Scheme (Part 4, Sections 43–56)
A central feature of the Bill is the introduction of a first-resort statutory insurance scheme for domestic building work, incorporated into new Part 9A of the Building Act. Under this scheme, builders must obtain insurance directly from the VBA (Section 137AAB, Part 15).
The scheme applies to single-home construction and multi-home buildings up to three storeys. It covers contracts exceeding $20,000 (Section 44) and requires a notice of insurance coverage before a building permit is granted (Section 46). Builders who fail to obtain the required insurance will face penalties (Section 51), with the VBA granted expanded enforcement powers to ensure compliance (Sections 57–68).
The key concern is how this scheme will be funded within an already strained insurance system. Will the first-resort model lead to increased claims, and if so, is there sufficient financial capacity to sustain this approach?
Developer Bond Scheme (Part 6, Sections 92–102)
The Bill introduces a developer bond scheme under new Part 9B of the Building Act, requiring developers of buildings exceeding three storeys to lodge a financial bond with the VBA. Set at 2% of the total build cost, this bond must be held for two years after completion to ensure defects are addressed.
Non-compliance attracts penalties of up to 2,500 penalty units (approximately $500,000) (Section 93). Occupancy permits cannot be issued until compliance is confirmed (Section 94), and buyers have the right to rescind contracts if developers fail to meet bond obligations (Sale of Land Act 1962, Section 101). The scheme is expected to transition into a 10-year liability model.
Transfer of Consumer Dispute Resolution to the VBA (Part 2, Sections 3–30)
Consumer dispute resolution responsibilities will be transferred from Domestic Building Dispute Resolution Victoria (DBDRV) to the VBA.
The VBA will oversee dispute resolution, appointing a Chief Dispute Resolution Officer (Section 23), conciliation officers, and assessors (Sections 24, 25). The Bill grants the VBA the authority to issue Rectification Orders to address defective or incomplete construction work (Section 85).
A new definition of ‘residential apartment building’ is introduced, covering Class 2 apartments and buildings with two or more homes exceeding three storeys (with some exemptions). Rectification Orders will be enforceable for up to 10 years after occupancy (or longer under VCAT Section 75C). A Domestic Building Dispute Resolution Victoria Trust Fund will be established to support these changes (Section 19).
The key question is whether this is merely a shift in responsibility without an increase in resources to handle disputes effectively.
Strengthened Enforcement & Disciplinary Actions (Part 5, Sections 81–89)
To improve accountability, the Bill grants the VBA additional enforcement powers, including:
- Issuing Rectification Orders against builders (Section 84)
- Refusing occupancy permits for non-compliance (Section 83)
- Immediate suspension of builders who fail financial checks (Sections 37–39)
- Penalties for builders falsely claiming insurance (Section 52)
- Penalties for developers selling properties without an occupancy permit (Section 100)
Rectification Orders can now be issued up to 10 years post-occupancy, providing stronger consumer protections.
Minimum Financial Requirements for Builders (Part 3, Sections 33–42)
The Bill imposes new financial probity requirements for builder registration to ensure financial stability in the industry. These include:
- Mandatory submission of financial statements and insurance proof (Section 35)
- Immediate suspension of financially unstable builders (Sections 37–39)
- Annual compliance audits for registered builders (Section 33)
Consumer Protections in Off-the-Plan Sales (Part 3, Sections 79–80)
Consumer protections in off-the-plan property transactions are enhanced, preventing buyers from being forced to settle before an occupancy permit is issued (Sale of Land Act, Section 79). Buyers can also withdraw from contracts if the developer fails to comply with the Developer Bond Scheme (Sale of Land Act, Section 101).
VCAT & Legal Amendments (Part 4, Sections 80, 91)
The Bill introduces key legal amendments, including:
- VCAT will no longer be able to delay VBA enforcement actions (Section 80)
- Legal appeals will not stay VBA enforcement, ensuring regulatory decisions are executed promptly (Section 91)
Establishment of the Building and Plumbing Commission
A new regulatory body, the Building and Plumbing Commission, will oversee building quality control, insurance administration, and dispute resolution. The Commission will have the authority to:
- Enforce compliance and rectify defects
- Withhold occupancy permits and prevent property sales if serious defects remain unresolved
Additional Consumer Protections
- Mandatory Building Manuals – Builders must provide detailed manuals outlining materials, warranties, and maintenance history
- Increased Construction Inspections – Additional pre-waterproofing and pre-plastering inspections
- First-Resort Insurance Access – Homeowners can claim insurance immediately without waiting for builder insolvency
Transitional Provisions (Part 2, Sections 290–315)
- Victorian Managed Insurance Authority (VMIA) insurance policies will transfer to the VBA (Section 292)
- Ongoing disputes and claims will now be handled by the VBA (Section 294)
- VMIA staff will transfer to the VBA (Section 314)
- Full implementation by 1 July 2026 (Section 2)
Repeal of the Act (Part 8, Section 106)
The Act will be repealed upon full implementation, with its provisions consolidated into the Building Act 1993 (Section 106).
Conclusion
The Building Legislation Amendment (Buyer Protections) Bill 2025 represents a major reform for Victoria’s building industry. By consolidating insurance, dispute resolution, and enforcement under the VBA, the Bill aims to enhance consumer protections, ensure greater accountability, and strengthen regulatory oversight. While these measures provide much-needed safeguards for homeowners, the real test will be whether the industry has the resources to support these reforms effectively. The success of these changes will ultimately depend on how well they are implemented and enforced.
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