Building A New Home? You Should Read This!
Unveiling a New Building Regulator: The Building and Construction "Avengers"
Attention to everyone labouring in the building and construction industry, whether you’re homebuyers planning to build, builders, or superhero fans! We may finally have an insurance scheme in Victoria that works. Perhaps.
As you are aware, the building and construction industry in Victoria is going through some tough times right now. Recently, an independent government assessment of the Victorian Building Authority has revealed its shortcomings in safeguarding homeowners struggling with building defects. As a result, big changes may be coming in 2025.
What's happening?
The Victorian Government has announced its plan to establish a new regulatory body, the Building and Plumbing Commission – or as we at De Marco Lawyers like to call it, the Building and Construction Avengers.
You may wonder why we’ve named this body after a team of fictional superheroes. Well, for the first time, the regulator will bring together all aspects of building quality control – regulation, insurance and dispute resolution – into a single agency, much like the Avengers! The significant shifts toward a first-resort model akin to Queensland’s will merge the operations of the Victorian Building Authority, Domestic Building Dispute Resolution Victoria, and the Domestic Building Insurance function of the Victorian Managed Insurance Authority.
What powers will the regulator have?
The regulator's new powers will significantly enhance consumer protections and, the Victorian Government hopes, will (finally) hold rogue builders and plumbers accountable.
Key changes include:
• A new rectification order power, allowing the regulator to act on defects discovered after the occupancy permit is issued;
• A requirement for developers of apartment buildings over three stories to notify the regulator before occupancy, enabling a final inspection by the regulator;
• A strata bond for mid-to-high-rise apartments, ensuring funds are available to fix defects post-occupancy;
• Expanded DBI coverage, allowing claims even if the builder is still in operation, not only in cases of insolvency, disappearance, or death;
• A power enabling the regulator to direct builders to fix work not only before but also after move-in day;
• A $63.3 million investment to increase the regulator’s capacity, including a 50% boost in auditors and frontline inspectors; and
• A targeted inspection campaign focused on unregistered building and plumbing work.
Why is this happening?
Currently, claims can only be made through the state-run building dispute resolution scheme if a builder dies, disappears, goes bankrupt, or otherwise is incapable of rectifying structured defects. This forces owners into lengthy legal battles against operational builders for defect rectification—a model criticised for over two decades. With the introduction of the Building and Construction Avengers, lengthy and costly litigation will become a thing of the past (or at least the Government hope so).
The reforms around high-rise apartment buildings attempt to redress the problems experienced by Sydney owners whose buildings are so structurally defective that they require substantial and unaffordable rebuilds or even complete demolition.
What's the choke point?
The main choke point in the current system is the wait times at VCAT before a compulsory conference and the fact that builders can’t be compelled to rectify defects until a final order is issued by a VCAT member.
Don’t get us wrong. VCAT does a great job with building dispute resolution. The problem is the volume of disputes. Also, the problem isn’t with the majority of competent builders. Heck, we act for them as well as owners. The problem is the builder carpetbaggers and building professionals who “milk” the existing system to avoid responsibility for defective work by offering owners inadequate compensation to avoid the delays and expense of trials after unsuccessful compulsory conferences.
With the introduction of the new regulator, dodgy builders will no longer have the option to delay matters for years until a final hearing, buying time to disappear overseas or wind up their companies. Instead, for the first time, their defective work will undergo immediate scrutiny, with enforcement mechanisms promptly implemented by the new regulator.
However, as with any new system that seems too good to be true, there’s always going to be a choke point. It remains unclear whether an appeal process will be available for builders subject to rectification orders, or what actions will be taken if a builder ignores directions. Nevertheless, we anticipate that some form of appeal process will be in place for builders. Even if there is no appeal on the facts (a de novo appeal), an appeal for errors of law by the regulator seems likely.
Unfortunately, in some cases, litigation may still be the only recourse. While a perfect system may be unattainable, this new approach might be the closest we’ve come.
When will it happen?
Legislative changes are required for the new regulator and powers, expected to take effect in the first half of 2025.
At De Marco Lawyers, we’re excited about these changes, confident that our clients can look forward to greater peace of mind with insurance that truly delivers when they need it most.
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We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from De Marco Lawyers and other relevant experts.