New changes to the Building and Construction Industry: Key amendments to the Victorian Building Legislation and Regulations
Building Legislation Amendment (Buyer Protections) Act 2025
Significant reforms to Victoria’s domestic building legislation have taken into effect from 1 July 2025 under the Building Legislation Amendment (Buyer Protections) Act 2025 (Vic) (Buyer Protections Act). This legislation aims to enhance consumer protections and improve regulatory efficiency.
The Buyer Protections Act establishes the Building and Plumbing Commission (BPC), which consolidates the functions of the regulators:
- Domestic Building Dispute Resolution Victoria (DBDRV).
- Victorian Building Authority (VBA); and
- Victorian Managed Insurance Authority (VMIA).
The BPC is designed to minimise administrative delays and provide a unified approach to regulation within the building industry.
In this article, we will provide an overview of the key changes to the building regulations and legislation and will explain the new functions of the BPC.
Issuing occupancy permits
The Act introduces new preconditions applicable to developers that must be complied with before they can apply for an occupancy permit.
Developers will be required to notify the BPC of their intention to apply for an occupancy permit six to twelve months in advance of applying, in order to allow for an inspection to be carried out by the BPC.
Upon inspection, if a serious defect is found and if the BPC makes a rectification order, the developer will not be able to:
- apply for an occupancy permit;
- register a proposed plan of subdivision; or
- complete an off-the-plan sale of the building,
until the rectification order is complied with.
The BPC may apply to VCAT for an extension of time, beyond ten years, in which it may issue a rectification order.
Rectification Orders – effective 1 July 2026
The BPC will have the power to issue a ‘Rectification Order’ (RO) to builders or developer to:
- Complete incomplete building works;
- Rectify defective and or non-compliant works; and/or
- Fix consequential damage.
These powers allow orders against builders and developers for defective, incomplete or non-compliant work for up to 10 years after issue of occupancy certificate or practical completion.
A builder will be required to complete the works specified in the RO by the specified due date, typically at their own expense. Non-compliance may result in financial penalties, disciplinary action such as suspension of registration, or costs being recovered for completion of the rectification work by another builder.
A builder must ensure they promptly address and comply with a RO by the specified due date to avoid enforcement actions by the BPC. However, a builder may apply to the Victorian Civil and Administrative Tribunal (VCAT) for a review of the issuance of a RO.
If you receive an RO and require assistance on compliance and to understand your legal rights, please contact our office to discuss.
First Resort Statutory Insurance Scheme – effective from 1 July 2026
The new Statutory Insurance Scheme will be a “first resort insurance” product, enabling homeowners to make claims while the builder is still trading. This scheme covers losses arising or in connection with building work that is incomplete, defective or non-compliant.
The scheme aims to support consumers, with previously only being able to make a claim when the builder is deceased, becomes insolvent or has disappeared. Under this new framework, consumers will receive better coverage, including protection for lost deposits and earlier recourse to address defective building works.
New Developer Bond Regime – effective from 1 July 2026
Developers of residential apartments over 3 stories will soon be required to lodge a bond of 2% of the ‘total build cost’ with the BPC before applying for an occupancy permit.
Total build cost has been defined under the Buyer Protections Act as the estimated total cost of the building work carried out for or in connection with the construction of the residential apartment building.
The developer bond provides security to ensure any defective building works identified open completion of the works can be rectified and will be held by the BPC for 2 years following the issuance of an occupancy permit.
Domestic Building Contracts Amendment Act 2025 – effective from 1 December 2026
The Domestic Building Contracts Amendment Act 2025 (Vic) (Amendment Act) enacted on 11 September 2025 and are due to come into effect from 1 December 2026. This legislation introduces significant changes to the Domestic Building Contract Act 1995 (DBC Act), impacting domestic building contracts, obligations of builders and developers and consumer protections.
Key new provisions under the Amendment Act include:
- Defining who qualifies as a ‘developer’ and limitations on the application of consumer protection measures in contracts between developers and builders.
- The exclusion of the preparation of plans, specifications and bills of qualities from the definition of ‘domestic building work’. These services may be provided under preliminary service agreements and will not be covered by domestic building insurance.
- Amendments to to deposit and progress payment requirements, especially in contracts involving significant off-sit constructions.
- Allowance of cost escalation clauses only under specific circumstances:
- contract price being $1million or more;
- cost escalation in aggregate capped at 5% of the total contract price;
- builders must provide written notice to the owner; and
- the owner signs or initials the cost escalation clause.
Securities of Payment Act 2002 – effective from 1 September 2026
Under the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (Vic), significant reforms have been introduced to the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA). These amendments aim to enhance the efficiency of the payment claim process and affects both claimants and respondents.
Key changes include, but are not limited to:
- Payment claims to be made on the last day of the month, unless dated earlier in a contract;
- Default payment terms to be 10 days if there is no reference in a contract or limited to 20 days if stated.
- Changes to how payments and claims are to be addressed during the Christmas shutdown period.
- Improving lodgement options.
- Changes to how the adjudication process is administered.
Should you require any assistance regarding the matters set out in this article, please do not hesitate in contacting our office to discuss.
The KPA Lawyers Media articles aim to keep our readers informed with regular updates regarding legal developments. It is not to be taken as legal advice. Liability limited by a scheme approved under Professional Standards Legislation.
