Key changes that commenced on 24 June 2026

• Expanded enforcement powers
  • The Tax Relief Act expands the powers of building surveyors to address risks arising from “condition-altered land”.
     
  • “Condition-altered land” means land - 
    (a) on which a building is situated; and 
    (b) the condition of which has been affected by a condition-altering event.
     
  • These are events or activities that fundamentally compromise the integrity and stability of the land such as floods, landslides, earthquakes and coastal erosion. 
     
  • Previously, the power to issue emergency orders, building notices and building orders generally required a risk to arise from the condition or use of a building, not the state of the land on which a building is situated. 
• New power for Minister to designate flood-prone areas
  • The Minister responsible for the Building Act will now be able to determine that an area of land is a designated flood-prone area if there exists in relation to the land a 1% or higher risk of flooding in any 12-month period.
     
  • Previously, an area of land liable to flooding could (and currently still can be) designated by a local council, with other mechanisms available to identify or describe land as being liable to flooding. 
     
  • The new powers do not appear to affect the powers of the Minister responsible for administering the Water Act 1989, or the powers of water corporations under that Act.
• Amendments to the Security of Payment Act
  • The Tax Relief Act makes further amendments to the Building and Construction Industry Security of Payment Act 2002 (SOP Act). 
     
  • These amendments follow changes already introduced on 15 April 2026.
     
  • The amendments make corrections to the SOP Act, including to repeal a duplicate definition of ‘adjudicated amount’, to fix the matters an adjudicator can consider in an adjudication concerning performance security, and to allow an adjudicator to charge fees for their work before an adjudication is subsequently withdrawn. 
     
  • The Tax Relief Act also introduces regular reviews of, and reports on, the SOP Act, as well as a statutory immunity from civil liability for Authorised Nominating Authorities (ANAs) exercising their functions in good faith. 

Key changes that commenced on 1 July 2026

• Minimum financial requirements
  • A new provision introduced into the Building Act by the Tax Relief Act will empower the Building and Plumbing Commission (BPC) to determine the minimum financial requirements (MFRs) for certain builders from 1 July 2026 to 30 June 2028. 
     
  • The MFRs will apply to domestic building practitioners and anyone seeking to be registered as a domestic building practitioner. 
     
  • Domestic building practitioners will need to satisfy the MFRs to become registered, and must then continue to satisfy the MFRs to maintain their registration. 
     
  • The two year transitional arrangement is intended to enable domestic building practitioners to ensure they will meet the prescribed MFRs when those commence, expected to be 1 July 2028.
• Statutory insurance scheme
  • The First Resort Home Warranty Scheme (Home Warranty) commences, replacing the previous domestic building insurance (DBI) scheme of last resort. 
     
  • Home Warranty applies to domestic buildings 3 storeys and less, and to domestic building work over $20,000. Limited prescribed exceptions will apply. 
     
  • Builders will be required to pay insurance premiums and take out cover on behalf of building owners. 
     
  • The detailed new scheme under the Building Act is supported by the Building (Statutory Insurance Scheme) Regulations 2026 which also commence on 1 July 2026. 
     
  • Home Warranty will be capped at $400,000, and will cover home owners for defective, incomplete or non-compliant building work (which have corresponding definitions), as well as certain costs and expenses that are incurred when rectification is carried out, such as temporary accommodation and storage costs. 
     
  • Major defects and non-compliances will be covered under Home Warranty for 6 years, while all other defects and non-compliances will be covered for 2 years.
• Rectification orders
  • The BPC will receive new powers to issue rectification orders for defective, non-compliant or incomplete building work. 
     
  • Rectification orders will be able to be issued to a person who carried out the work as well as a developer. 
     
  • A rectification order can be issued up to 10 years after the work is completed (which can be extended by VCAT), and the power is retrospective, meaning the BPC can issue a rectification order for buildings completed before the commencement date, but within the 10 year period. 
     
  • The reasons for the issue of, and requirements for complying with, a rectification order are broad. However, the BPC must be satisfied relevant criteria is met before it can be issued. 
     
  • A rectification order can include a finding that work is defective, non-compliant or incomplete. This may have extended legal ramifications for builders and developers, and assist owners and owners corporations seeking to rely on the findings of the regulator. 
     
  • In addition, the BPC will be able to issue a rectification costs order, requiring the person to whom it is issued to pay the BPC’s costs of investigating, preparing and issuing a rectification order, as well as the costs of monitoring compliance. 
     
  • The BPC may cause rectification work to be carried and recover the costs of rectification. 
     
  • It will be a grounds for disciplinary action for a building practitioner to fail to comply with a rectification order or rectification costs order, and it will be an offence to fail to comply with an order. Penalties apply. 
• Transfer of functions from CSV to BPC
  • The BPC will inherit the residual functions of Cladding Safety Victoria (CSV) to finalise the administration of the cladding rectification program. 
     
  • This means the BPC will finalise the administration of rectification work on buildings affected by non-compliant combustible cladding.
• Changes to building permit levy
  • Certain levy payable under the Building Act, colloquially termed the ‘cladding rectification levy’ will cease to apply (subject to transitional arrangements). 
     
  • In its place will be a new levy in relation to building permits for a non-regional building if the cost of building work is $1.5 million or more and one of the stated ‘levy events’ and their respective timeframes apply. 
     
  • A ‘non-regional building’ is one that is not located in regional Victoria, and that is a Class 2 to Class 8 building (that is, excluding houses, garages and public buildings like hospitals, aged care and assembly buildings among others). 
     
  • The levy will be set at 0.37 cents in every dollar of the cost of building work, which is significantly less than the top cladding rectification levy rate, but significantly more than the standard building permit levy rate of 0.064 cents in every dollar of the cost of building work. 
• Developer notifications (but developer bonds will not commence until effectively 1 July 2027 due to proposed exemptions)
  • Notwithstanding the delayed commencement of developer bonds due to exemptions, from 1 July 2026 developers of residential apartment buildings 4 storeys or more will be required to give the BPC notice in advance of an occupancy permit application. The BPC has provided guidance here. 
     
  • Developers will also, at their cost, need to nominate and then appoint a building assessor to carry out inspections and prepare reports after completion, within specified periods up to 2 years after the occupancy permit is obtained. The Building (Developer Bonds) Regulations 2026 do not currently specify that this requirement, like the requirement to pay the developer bond, is exempt until 1 July 2027. However, assessor reports are required to be prepared in the manner required by the BPC as set out in its guidelines, to be made by the BPC in the future. Accordingly, practically, this obligation will not commence until those guidelines are made.
     
  • While developers remain exempt under the Building (Developer Bonds) Regulations 2026 from the requirement to provide a bond, it appears that developers will also be exempt from the requirement to obtain an assessor’s report – the precursor to a bond’s payment or release.  

Other key changes commencing at a later date

• Developer bonds
  • Due to an exemption in the Building (Developer Bonds) Regulations 2026, the requirement to provide a bond does not, in effect, commence until 1 July 2027 where a building permit is issued on or after that date. From this date, developers of residential apartment buildings 4 storeys or more will be required to give a bond before obtaining an occupancy permit. 
     
  • The bond will be set at 2% of the total build cost and is an alternative to decennial insurance. 
     
  • Owners will be able to make claims to the BPC for release of part or all of the bond for the rectification of defects. 
     
  • Purchasers of an off-the-plan apartment will be entitled to rescind their contract if the developer has not paid the bond or has paid a bond that is less than the required amount.
     
  • The Building (Developer Bonds) Regulations 2026 exempts certain developers from the requirement to provide a bond, including: 
    • a developer of an eligible BTR development (that is, build to rent development, as defined in the Land Tax Act 2005);
    • where a residential apartment building is being constructed by or on behalf of Homes Victoria if the developer does not intend to offer a majority of lots for sale; 
    • where the developer is a registered agency and does not intend to offer a majority of lots for sale; and
    • if the building permit for the building work carried out for or in connection with the construction of the residential apartment building was issued before 1 July 2027.
• Decennial insurance for residential apartment buildings
  • Commencing on or before 1 December 2027, the Tax Relief Act will introduce a new decennial insurance scheme for residential apartment buildings of 4 or more storeys, giving home owners protection from “relevant defects” in “relevant building elements” for 10 years. 
     
  • The policy would be taken out by the developer on behalf of the owners corporation (i.e. future owners of apartments). 
     
  • Decennial insurance is intended to be an alternative option to the 2% developer bond scheme. 
     
  • The policy operates as a no-fault, first resort insurance product, meaning an owners corporation can make a claim without establishing who was responsible for the defect.
     
  • Decennial insurance will be limited to defects in major building elements or other prescribed building elements which may cause damage to the building or part of the building, or a risk of death or serious injury to a person.
     
  • An insurer of decennial insurance will have typical subrogation rights, allowing it to pursue builders, designers, engineers or other consultants who may be responsible for the relevant defect.