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Victorian Building System Review – Stage Two Report Published

By Simone Holding, Vujan Krunic & Lucy Maclachlan

• 08 December 2023 • 4 min read
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The Stage Two Report on the Expert Panel’s review of the Victorian Building System has now been released. We wrote about the Stage One Report in June this year.

The Expert Panel chaired by the Victorian Commissioner for Better Regulation is undertaking a comprehensive review of Victoria’s building system. The Panel is undertaking its review in three stages, culminating in advice and recommendations to the Victorian Government for the development of a new Building Act 1993.

The key factors cited by the Expert Panel as the basis for the proposed reforms are:

  • the regulatory system has not kept pace with current industry trends and behaviours; and
  • high profile building failures have contributed to a lack of confidence in the regulatory system.

Expert Panel’s 14 key recommendations

The Panel has published its Stage Two Report which proposes 14 key recommendations for reform, focused around 5 key issues:

  • extending accountability, including to developers;
  • compliance, enforcement and discipline;
  • insurance;
  • dispute prevention and resolution; and
  • building maintenance, products, and technologies.

Extending Accountability Recommendations include, most significantly, a focus on developers. In particular, the recommendations relate to developers having an increased responsibility for oversight in respect of residential apartment projects and high risk buildings.

Compliance, Enforcement and Discipline Recommendations include:

  • an expansion of the regulatory tools and powers to address identified compliance and enforcement gaps in the building system, including post-occupancy; and
  • changes to how regulators communicate and report on their enforcement activity.

Insurance Recommendations centre on the establishment of a framework to implement a new, mandatory 10 year liability insurance scheme for certain residential buildings which better meets the needs of consumers and industry.

Dispute Prevention and Resolution Recommendations are numerous and include:

  • streamlining of information and reporting processes, development of a practitioner information portal and the encouragement of more local resolution of disputes by co-designing training and guidance materials with industry;
  • identification of potential immediate process improvements in dispute resolution by reviewing application and assessment processes and developing a triaging model for all building disputes; and
  • improvements in the effectiveness of dispute resolution services by increasing the use of technical assessments and rectification orders, including allowing single trade disputes to be heard at DBDRV and removing any process duplication with VCAT.

Building Maintenance, Products and Technologies Recommendations include the consideration of the adoption of new technologies practices and produces as well as strengthening:

  • compliance monitoring and enforcement of existing essential safety measure maintenance schedule requirements;
  • competencies and obligations of Owners Corporation managers and Owners Corporations in relation to Essential Safety Measures and maintenance requirements; and
  • regulatory requirements relating to complex plumbing work.

Focus on developers

Some of the most notable recommendations to emerge from the Stage Two Report include the proposal to bring developers into the legislative scheme and to impose statutory obligations on developers, in addition to those imposed on builders and other registered practitioners.

That recommendation reflects the view of the Expert Panel that developers have certain contractual powers to influence the quality and standard of building work performed. It is also generally consistent with the approach taken in NSW, where developer responsibilities are imposed under the NSW regime.

In particular, the Expert Panel recommends to the following to increase accountability for developers, builders and other parties under existing mechanisms:

  • first, to consider extending the warranties under section 8 of the Domestic Building Contracts Act 1995 to include developers; and
  • second, to introduce a statutory duty of care to strengthen building owners’ abilities to seek recourse through negligence claims; and
  • third, consideration of a ‘Developer Bond Scheme’, pursuant to which developers would be required to set aside a sum of money or have an alternative, like a bank guarantee, that would be available to pay for repairs, for defective or non-compliant building works.

What's next?

The next part of the review is Stage Three. That final stage of the Panel’s work will finalise the recommended reform package, including advice to Government on the development of a framework for a new Building Act, and changes to regulations to align with the outcomes of Stages One and Two. Stage Three will provide the scope to further refine the reforms to ensure they continue to give effect to the intended objectives and outcomes of the Review.

Read more from The Lot publication

The Lot is a quarterly bulletin on issues affecting the Australian development sector.

By Simone Holding, Vujan Krunic & Lucy Maclachlan

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