Victorian apartment buyers in buildings higher than four storeys may soon be able to benefit from the proposed new buyer protection legislation.
It’s a move in the right direction, says former NSW Building Commissioner David Chandler, but the proposed legislation would not provide the same oversight and visibility that the ePlanning portal that he led the delivery of in New South Wales.
The Building Legislation Amendment (Buyer Protections) Bill 2025 could soon end the legal limbo over defects that some strata owners have endured for years.
It could solve the problem of the absence of latent defect insurance that is unavailable in the state because insurers say the risks are just too high. This may be set to change, with the Victorian government’s new regulatory reforms.
The bill aims to establish a Building and Plumbing Commission (BPC) that will have enforcement powers, including the ability to halt works and force rectification.
It will have a remit across all aspects of building quality control regulation, insurance and dispute resolution and will act as a first port of call for homebuyers who find a quality fail at their new property.
Currently, the Victorian Building Commission can act to halt work pre-completion, and it can order rectification.
The new powers will include enforcement powers for pre-completion and post-completion. For example, if a builder does not rectify serious defects, the regulator can prevent an occupancy permit from being issued or halt the completion of off-the-plan sales.
The new BPC will also have the power to order rectification up to 10 years after an occupancy permit is issued.
What does the proposed legislation look like? There are developer bonds for a start
The proposed legislation incorporates developer bonds and first-resort insurance for serious defects.
It includes developer bonds, which are set at 2 per cent of the total cost of constructing the building, with the sum to be paid before construction and held by the BPC to pay for the rectification of serious defects. The balance is to be returned to the developer after the two years.
Victorian minister for consumer affairs Nick Staikos said the proposed bill would amalgamate the various functions of the current environment.
“We’re bringing together building insurance, dispute resolution, and compliance monitoring and enforcement functions under one regulator, making it easier for Victorians to access vital services and resolve issues,” he said.
This scheme is expected to commence at the end of this year.
Insurance to protect buyers from dodgy construction is set to be improved.
Currently, domestic building insurance applies only to developments of four storeys or less and can only be accessed by owners in strictly limited circumstances, including the builder becoming insolvent, vanishing or becoming deceased.
The new scheme contained in the bill is a “first resort” scheme that enables owners of a building of any height to make a claim immediately after a serious defect or non-compliance is identified.
Victorian finance minister Danny Pearson said, “These are important reforms that will protect homeowners and give prospective homebuyers the confidence they need to invest in new construction developments – this is good regulation that makes business sense.”
Reducing the risk of defects
The government has opened consultation on a proposal to introduce two additional mandatory inspections for high-risk building types, including multi-residential buildings, boarding houses and special purpose residential accommodation such as aged care and disability accommodation.
The goal of the inspections is to pick up on potential quality failure points before subsequent works make it almost impossible to visually identify any flaws, such as waterproofing prior to tiling and wall assemblies prior to plastering.
The regulatory impact statement says yes
The regulatory impact statement, which incorporated extensive consultation with the industry, found the inspections would be extremely likely to reduce the frequency of major defects and deliver a net gain in terms of benefits for owners through rectification costs avoided.
It noted that where a builder is aware that substandard work may be noticed, they are more likely to meet the required level of quality and compliance to relevant standards.
A second proposal out for consultation is for the introduction of building manuals that compile all the relevant documentation, including as-built data, materials and building systems details, warranties, approvals and certifications and any information collated during construction that is relevant for maintenance.
The concept of the manual is aligned with one of the core recommendations of the 2018 Shergold and Weir Building Confidence report.
It would be the responsibility of the builder or occupancy permit holder to create the manual and keep it up to date with details on ongoing maintenance, inspections, repairs and changes to the building throughout the life of the building.
- Consultation on the two proposals is open until April 30. Read the regulatory Impact Statements and have your say here.
Victoria steps up to better outcomes but could go further, David Chandler says
Former NSW Building Commissioner David Chandler told The Fifth Estate that the Victorian regulatory environment for building and development has had a “culture of largely reactive, not proactive, regulation and oversight.”
As a result, Victoria has been a “fair way behind” the progress made in recent years in New South Wales with the Design and Building Practitioners Act and the establishment of the NSW Building Commission.
When the Victorian government was developing the legislation, Chandler was one of the experts consulted, delivering a “what did I learn” session.
He says the data in NSW on strata defects has shown a reduction in the frequency of defects in multi-residential since oversight, accountability and regulations were strengthened.
The developer bond is something he says will now encourage insurers to come into the Victorian market to provide latent defects insurance.
LDI covers serious defects in common property rather than consumer-level problems, such as smudges in paintwork or scratches on benchtops, which are covered under federal consumer protections.
While he acknowledged that the proposed building manuals are a positive move, he says that they may not give the building regulator the same degree of oversight and visibility that the NSW ePlanning portal delivers.
The NSW system collates all declared designs and as-built documentation in the portal, and the NSW Building Commission can inspect these documents to verify compliance. This also enables the Building Commission to track developers and their record on quality and compliance.
“NSW saw (the ePlanning portal) as an opportunity for this to be a single source of truth,” Chandler says. “Victoria doesn’t have that, so they need a workaround on that.”
“It’s a great leap forward that builders and developers will have to document everything for the building manuals.”