On 1 July 2026, the most significant package of consumer-protection reforms in a generation commenced under the Building Act 1993 (Vic), as amended by the Building Legislation Amendment (Buyer Protections) Act 2025 (Vic).
The First Resort Home Warranty Scheme has replaced domestic building insurance, rectification orders are now part of the Building and Plumbing Commission’s toolkit, and new minimum financial requirements are in effect.
If you build, develop or own residential property in Victoria, the rules changed last month, and the BPC spent July demonstrating that it intends to use them.
Home Warranty: first resort, sole provider, new paperwork
Under the old domestic building insurance (DBI) regime, an owner could generally only claim if the builder had died, disappeared or become insolvent. From 1 July 2026, owners can claim directly on the policy for defective or incomplete work without having to prove anything about the builder’s circumstances first. The BPC is the sole, not-for-profit provider of Home Warranty, and the private domestic building insurance market closed from 1 July 2026, although existing DBI policies continue on their current terms until expiry. The detail sits in the Building (Statutory Insurance Scheme) Regulations 2026 (Vic). Cover applies to domestic building work over $20,000 on buildings of three storeys or less, is capped at $400,000, and extends to certain consequential costs such as temporary accommodation and storage. Major defects and non-compliances are covered for six years, and all other defects for two years. Builders must purchase the cover on behalf of the owner and pay the premium to the BPC before taking money under the contract.
Rectification orders: ten years, and retrospective
The reform with the longest tail is the rectification order: a formal direction requiring defective, incomplete or non-compliant work to be fixed. Previously, the regulator’s directions to fix effectively expired at occupancy. From 1 July 2026, the BPC can issue a rectification order for up to ten years after the occupancy permit issues, and the power applies retrospectively, capturing building work completed before the reforms took effect. Orders can be issued to the person who carried out the work and to a developer, and the ten-year window can be extended by the Victorian Civil and Administrative Tribunal (VCAT).
A Home Warranty claim by an owner is itself a trigger for the BPC to consider issuing an order, so defect complaints and insurance now feed the same enforcement pipeline.
Developers of taller apartment buildings: notification and assessors now, bonds next year
From 1 July 2026, developers of residential apartment buildings of four storeys or more must give the BPC advance notice before applying for an occupancy permit, and must at their own cost appoint a building assessor to inspect the completed building and report within specified periods of up to two years after the occupancy permit issues. The associated developer bond of 2% of build cost has effectively been deferred by exemptions under the Building (Developer Bonds) Regulations 2026 (Vic), with the payment obligation not expected to bite until 1 July 2027, but the notification and assessor obligations apply now.
Financial requirements and a rising enforcement tempo
The BPC has been empowered to determine minimum financial requirements for certain domestic builders from 1 July 2026 to 30 June 2028, a transitional arrangement designed to prepare practitioners for the prescribed requirements expected to commence on 1 July 2028. Builders should expect financial capacity to become a live registration issue, not a formality. July also showed the regulator’s appetite. The BPC fined a Roxburgh Park builder $30,000 over the incomplete and non-compliant construction of a double-storey townhouse and carport in Ferntree Gully, and is seeking a Supreme Court injunction to force a caravan park owner to pay for the rectification of homes allegedly constructed illegally on a Bellarine Peninsula site. A licensed plumber was also fined more than $21,000 for non-compliant drainage work.
With the Building and Plumbing Administration and Enforcement Act 2026 (Vic) having received Royal Assent on 19 May 2026, a further wave of enforcement tools (including director-level liability and anti-phoenixing measures) is on the way.
What this means for you
- Confirm your Home Warranty arrangements. If you are a builder, confirm your cover before signing any new domestic building contract over $20,000, because taking money without the required cover is now both an offence and a claim trigger.
- Review your defect-response procedures. A complaint that once went quiet at handover can now become a rectification order at any time within ten years, including for work completed before 1 July 2026.
- Plan for the developer obligations. If you are a developer of apartment buildings of four storeys or more, build the BPC notification and building assessor process into your completion programme and budget now, and plan for the 2% bond from mid-2027.
- Get your financial reporting in order. Builders should start assembling financial reporting that will satisfy the new minimum financial requirements, rather than waiting for the 2028 deadline.
- Consider the new claim pathway. Owners with unresolved defects should take advice on the new first-resort claim pathway, which may be considerably faster than litigation.
This article is intended as general information current as at 3 August 2026 and does not constitute legal advice. Specific legal advice should be obtained in relation to any particular matter.
This post appears in Strata News #809.
Jeremy Quah
Tisher Liner FC Law
E: jquah@tlfc.com.au
This article has been republished with permission from the author and first appeared on the Tisher Liner FC Law website.
Leave a Reply