Recent reviews into Victoria’s building sector found the old system was not doing enough to protect consumers. There was poor oversight of building work, limited and confusing pathways for fixing defects, and domestic building insurance was often difficult to access. After major builder collapses and high-profile industry failures following COVID-19, it became clear that reform was needed. In response, the Victorian Government passed the Building Legislation Amendment (Buyer Protections) Act 2025 and the Domestic Building Contracts Amendment Act 2025 to overhaul the domestic building system.
These Acts have already created the legal framework. The recent public consultation on the proposed Buyer Protections Regulations 2025 focused on how these reforms will work in practice, with the supporting regulations expected to commence from 1 July 2026. The aim is simple: stronger consumer protection, better oversight, and fewer homeowners being left to deal with expensive defects on their own.
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Buyer Protections Regulation explained
The Building and Plumbing Commission
A major part of the reform was the creation of the new Building and Plumbing Commission (BPC), which began operating on 1 July 2025. The BPC brings together domestic building regulation, dispute resolution, and domestic building insurance into one regulator for the first time. This replaced the old fragmented system where responsibilities were split across multiple bodies. The goal with the reconfiguration was to make the system easier to navigate and give the regulator stronger powers to step in earlier when problems arise.
The Key Reforms Coming Into Place Soon with New Regulations
Rectification Orders
The BPC can issue rectification orders requiring builders, subcontractors, and in some cases developers, to fix defective, incomplete, or non-compliant work. These orders can apply during construction and up to 10 years after completion, helping homeowners avoid paying for defects first and then trying to recover costs through litigation later.
First-resort Home Warranty Scheme
This replaces the old “last-resort” domestic building insurance model for homes up to three storeys. Previously, homeowners could usually only claim if the builder died, disappeared, or became insolvent. Under the new scheme, homeowners can claim for defective or incomplete work even if the builder is still trading. Cover also increases from $300,000 to $400,000. The BPC will first try to enforce rectification before the insurance scheme steps in.
Developer Bond Scheme
For apartment buildings four storeys and above, developers must provide a bond worth 2% of the total building cost before receiving an occupancy permit. If serious defects are found after completion and are not fixed, owners corporations can claim against the bond to fund rectification works. This gives apartment owners far greater protection from major defect costs.
Minimum Financial Requirements
The reforms also introduce Minimum Financial Requirements for builders. This creates clearer financial reporting and capital requirements, replacing the old insurer-driven system that was often inconsistent and unclear, and the aim is to reduce the risk of financially unstable builders collapsing mid-project and leaving homeowners exposed.
Final Thoughts
These reforms shift the system from reacting after problems happen to preventing them earlier and giving consumers clearer protection from the start. Whilst the legislation has already come into place and outlined these new changes, the focus now is on the supporting regulations that will bring these schemes fully into operation from 1 July 2026.
