Victorian building law is changing significantly in 2026. This year will see many changes to laws affecting domestic building work with the first batch due to come into effect on 1 July 2026 including:
A new building regulator: the Building and Plumbing Commission
- The confirmation of the Building & Plumbing Commission (“BPC”) in the place of the old Victorian Building Authority – already practically in place.
- Making the new BPC a “one-stop” shop for the registration of building practitioners, dispute resolution (formerly undertaken by the DBDRV) and domestic warranty insurance (issuing and processing claims previously carried out by the Victorian Managed Insurance Authority.
First-resort Home Warranty insurance replaces DBI
- The commencement of “first-resort” domestic warranty under the First Resort Home Warranty Scheme. This will allow owners to make immediate insurance claims for incomplete, defective and non-compliant work without having to wait for the builder to be insolvent, dead or disappeared. This system will give the BPC power to decide claims and make rectification orders against builders. There are new, reduced time limits for making claims which all owners must be familiar with. The Building and Plumbing Commission says the new Home Warranty insurance “will replace Domestic Building Insurance (DBI) from 1 July 2026 and provide much greater protection for homeowners”, with maximum cover of $400,000.
Developer bonds for buildings over three storeys
- Obliging developers to lodge a bond equal to 2% of the total build cost with the BPC before being able to obtain an occupancy permit for all buildings that are more than three storeys, payable to owners to rectify defects if refused by the developer.
- Under this regime, the developer must appoint a building assessor to inspect the building works after completion and to produce a preliminary report within 15 to 18 months of the date of the occupancy permit reporting defective building work identified during the inspection.
- The building assessor will also be obliged to provide a final report within 21 to 24 months of the issuing of the occupancy permit noting whether the defects identified in the preliminary report have been rectified.
- If the final report identifies reportable defects, then the lot owners or the owner’s corporation can make claims on the bond. If you are involved in an owners corporation dispute over building defects, get advice early.
- Interestingly, the final report must not identify defects that were not specified in the preliminary report, unless connected with the rectification of the original defects. It appears that the developer’s bond will not be available for defects not identified at the time of the first report by the building assessor.
- At the present time, the associated regulations are draft only but strongly indicate that this regime will not be applicable to developers until building permits are sought for construction on or after 1 July 2027. This will enable developers to plan for and accommodate these new and significant financial obligations.
What happens next
There are many details associated with all of the above matters plus a further round of changes to the Domestic Building Contracts Act 1995 (Vic) later in December 2026.
Please call our office on (03) 9629 2211 to speak to an experienced building and construction lawyer about any of these matters now.
Frequently asked questions about the 2026 Victorian building law changes
What is changing for Victorian building law on 1 July 2026?
Several reforms begin on 1 July 2026. The Victorian Building Authority becomes the Building and Plumbing Commission (BPC), which now handles practitioner registration, dispute resolution and domestic warranty insurance in one place. The new first-resort Home Warranty scheme begins, and the BPC can issue rectification orders against builders for incomplete, defective or non-compliant work.
What is the First Resort Home Warranty Scheme?
It is the new domestic warranty insurance that replaces Domestic Building Insurance (DBI) from 1 July 2026. It is compulsory cover that the builder takes out for the owner on domestic projects up to three storeys worth more than $20,000. “First resort” means you can claim straight away, rather than waiting until the builder has died, disappeared or become insolvent. The maximum cover is $400,000.
Can I claim on my warranty insurance if my builder has not gone insolvent?
Yes. Under the old DBI scheme you generally could not claim unless your builder had died, disappeared or become insolvent. Under the first-resort Home Warranty scheme you can also claim where the work is incomplete, defective or non-compliant and the builder will not or cannot fix it. The new scheme has shorter time limits for claims, so it is important not to delay.
Are the new rectification order powers retrospective?
Yes. The BPC can order a builder to fix incomplete, defective or non-compliant work for up to ten years from the occupancy permit, the certificate of final inspection or, if there is neither, the date of practical completion. This includes work completed before 1 July 2026.
What is the developer bond for apartment buildings over three storeys?
For buildings over three storeys, the developer must lodge a bond of 2% of the total build cost with the BPC before an occupancy permit can be issued. A building assessor inspects the completed building and reports on defects, and if reportable defects are not fixed, the lot owners or the owners corporation can claim on the bond. These rules are expected to apply to building permits sought on or after 1 July 2027.
This article is general information only and not legal advice. For advice about your situation, contact Hendersons Legal on (03) 9629 2211 or via our enquiry form.
