Victoria’s building regulator has promised to be prudent and sensible in its use of new powers to direct builders to fix defective work for up to ten years.

(Top image: photo of Anna Cronin presenting at the breakfast. Supplied by HIA)

But builders remain frustrated about a ‘disorganised’ approach in implementation of new building reforms by the Victorian Government overall.

Speaking last week at the HIA Industry Outlook Breakfast hosted by Housing Industry Association (HIA), key figures from the state’s Building and Plumbing Commission (BPC) presented an overview of upcoming changes to the state’s building regulatory regime.

During the presentation, BPC Commissioner and CEO Anna Cronin stressed that a new power that will be given to the regulator to issue rectification orders against builders for up to ten years after an occupancy certificate has been issued will be used ‘judiciously and strategically’.

“The new rectification order … is a very powerful tool,” Cronin told the breakfast.

“It has significant ramifications if it is not complied with.

“But in all my conversations with industry and with individual builders, I’ve made It very, very clear that the BPC will only use this tool in the context of serious structural and incomplete work and will do so judiciously and strategically.

“(It will) Not (be used) for cosmetic, minor defects. It won’t be thrown around like confetti.

“I see it as a tool that will be used (only) when it’s really necessary to use it, when the defect or the non-compliance is so serious that none of the other tools in the toolkit that I showed you before (for the BPC to use in order to get a satisfactory outcome) are going to work.”

New building reforms

Cronin’s comments come as Victoria’s building regulation is undergoing significant change.

The reforms aim to address widespread concerns about gaps in consumer protection and to improve buyer confidence in building new homes.

They are being anchored by two pieces of legislation known as the Building and Plumbing Administration Enforcement Act 2026 and the Building Legislation Amendment (Buyer Protections) Act 2025.

Some changes are set to come into force from 1 July.

These include:

• New powers to enable the BPC to issue orders to direct builders to rectify defects for up to ten years after an occupancy certificate has been issued.
• A new Home Warranty Insurance scheme that will replace the existing domestic building insurance scheme.
• New requirements for developers of new apartment complexes to notify the BPC of their intention to apply for an occupancy certificate six months prior to applying for such a certificate.
• A new financial assessment that will apply to builders who seek registration.

Other changes are set to come into force later.

These include:

• Changes to domestic building contracts to be implemented in October.
• A new developer bond scheme that will apply to new apartment projects of four or more storeys from 1 July 2027.

(Note: whilst several of the changes are due to start next month, many of the regulations, gazettals, directions and other details which are needed to put these into practice are still being finalised.

This, Cronin acknowledges, means that the government and the regulator are ‘tight for time’. However, she stresses that the new insurance system at least will be ready to go from July 1.)

A big new power

Of the changes, one of the most powerful involves the new ability for the Building and Plumbing Commission to order builders to rectify defects which are associated with a building’s construction for up to ten years after an occupancy certificate has been issued.

The new power aims to address a gap in existing regulation whereby the BPC is currently only able to issue rectification orders in cases where defects are uncovered during construction. This leaves consumers who discover defects after they move in to pursue their builder through the Victorian Civil Appeals Tribunal (VCAT) – a long and costly process.

Precise details in respect of how the new power will work are not yet known as regulations that will decide the specifics are yet to be finalised.

However, the Act will require the regulator to consider several points when determining whether or not to issue an order.

These involve whether the work is defective, incomplete or non-compliant; the degree of seriousness of any defects; who is responsible for the defective work; and whether or not it would be fair and reasonable to issue such an order.

For builders, the costs involved in post- occupancy rectification are substantial. As such, the new regulatory power has caused some concern.

Consequences associated with any failure to comply are serious and can include immediate suspension of the builder’s registration.

As mentioned above, however, Cronin stresses that the regulator will use this new power wisely and sensibly.

For starters, the orders will be used only when matters of a serious nature are at play, such as structural integrity or occupant health and safety.

As also mentioned above, the orders will be used as a last resort only.

At any rate, builders will be afforded many opportunities to engage with the BPC even before receiving a ‘notice of intent’ that the regulator might consider making an order.

Indeed, Cronin says she would prefer not to issue orders but will do so if necessary.

“I’d rather not issue any (post occupancy rectification) orders, to be honest,” Cronin said.

“If there’s a zero in that column next year, I’m just going to assume that everyone’s been building the right stuff and doing the right thing.

“But when they don’t do the right thing and you know exactly who I’m talking about – I’m talking about the types of builders who let everyone down – … the (post-occupancy) rectification order is a very significant power.

“So I won’t hesitate to use it when it’s absolutely necessary.”

(HIA Executive Director – Victoria Keith Ryan interviews BPC staff Anna Cronin (Commissioner and CEO), EFy Karagiannis (Chief Insurance Officer) and Steve Baxas (State Building Surveyor). Image supplied by HIA)

Insurance and minimum financial requirements

In addition to the rectification orders, Efy Karagiannis, Chief Insurance Officer at the BPC, gave an overview of the new home insurance scheme and the new financial requirements for builders.

Set to be provided by the BPC, the Home Warranty Insurance scheme will provide ‘first resort’ insurance that will enable consumers to make a claim as soon as defects are identified.

It will replace the existing domestic building insurance scheme, which provides ‘last resort’ insurance and can be accessed only in cases where a builder disappears, dies, becomes insolvent or fails to comply with a court or tribunal order.

Compared with DBI, the new scheme will provide expanded coverage for consumers. This includes higher levels of maximum cover, higher levels of cover for incomplete work and new protection to cover building site security, accommodation and relocation costs.

As with DBI, the new scheme will apply to residential work valued at $20,000 or more in relation to buildings which are three storeys in height or less.

In addition to benefiting consumers, Karagiannis says that the new insurance will have flow on benefits for builders through greater consumer confidence and investment in new residential building.

Further, the insurance will be available only where registered builders are used in construction whilst any rectification work will need to be carried out by a registered builder.

This will help to minimise unfair competition which builders face from unregistered builders.

Meanwhile, the new minimum financial requirements aim to ensure that builders hold sufficient actual and verifiable assets to pay their debts as and when they will fall due in a more transparent way than is currently the case.

As things stand, builders who wish to be registered need to provide the regulator with a letter of eligibility from their insurer as part of the registration process.

This confirms that they hold a valid domestic building insurance policy and specifies the amount of work which they are approved by their insurer to take on in terms of total construction limits and individual job limits.

Under the new system, however, the BPC will conduct an assessment and then provide builders with an approved construction capacity that will be based on their net tangible assets.

To improve transparency, the regulator will publish information about how these capacities are calculated and will make this information available to builders.

For current builders, existing caps will remain in place for a two-year transition period.

Beyond that, those existing builders who do not meet the relevant financial criteria for their current level of building projects will not face a ‘cliff edge’ and will instead have transitional pathways available to them.

To minimise industry disruption, the BPC will replicate existing assessment processes possible.

Karagiannis stresses that the regulator aims to support builders to grow their businesses and build more homes but to do so in a manner which is financially sustainable and does not jeopardise consumer protection.

Applauding good builders

When speaking about the reforms, Cronin stresses that most builders operate in good faith.

Rather, she says that the changes are aimed at rooting out those who fail to do the right thing.

“There’s been a myriad of reports and inquiries which have recommended reforms to the building system,” Cronin said

“But I want to acknowledge that the design of these reforms has been based on the fact that we know that most of the industry are good players.

“The people in this room, you are proud of the work you do, you do it well and you should be supported.

“And I want to make sure that as a regulator we recognise that. We don’t come at industry as going all terrible. No way.

“But I am determined to root out the ones that are bad and the unregistered ones because they do us all a disservice.”

(image: AI generated via magnific)

Builders frustrated by ‘disorganised’ government overall

Speaking at the breakfast, Keith Ryan, Executive Director – Victoria at HIA, expressed frustration with the broader Victorian Government about the processes through which new laws have been introduced.

In terms of the BPC specifically, Ryan commends the regulator for what he says has been constructive engagement.

But he says that the overall Victorian Government has been ‘pretty disorganised’.

“I think it’s fair to say also that we are dealing with a new law starting on the 1st of July, where the government – and I mean government in the broad sense- has been pretty disorganised, particularly at the department level,” Ryan said.

“(For example,) It’s now less than a month before we have to have new contracts ready for our members to use. And there’s two key things that have to be done for that contract.

“One is the work that my team has to do and to change the contract, make sure it complies with the new laws.

“Done. Done over a week ago in fact.

“Just one thing missing. Under the existing system, Consumer Affairs Victoria has to publish a couple of notices which must be included with our contracts.

“Now the work they have to do to fix these contracts is pretty intensive (sarcastic tone). They’ve got to replace the word VBA with BPC, they have to replace ‘16,000’ with ‘20,000’, they have to remove a reference to VMIA and they’ve got to change ‘domestic building insurance’ to refer to the new home warranty scheme.

“It’s obviously a stretch for them. Obviously, they don’t know how to ‘find and replace’. We’re still waiting for it.

“That’s the sort of thing we’re dealing with when it comes to departments at the moment.

“And it’s extremely frustrating.”

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