New Building Commission Tops Victorian Reform Package

A new building commission along with reforms to state building legislation are among proposals slated for Victoria.

The Victorian Government has proposed a series of reforms to the Domestic Building Contracts Act 1995, a move welcomed by the industry.

“Put simply, the old legislation was no longer fit for purpose. It hadn’t kept pace with industry practice, market conditions, or builder and consumer expectations,” Master Builders Victoria chief executive Michaela Lihou said.

“Its rigid contract terms especially around payment stages, preliminary work requirements, and cost escalation clauses created cash flow pressures for builders, added complexity for consumers, and restricted flexibility in managing risk in a volatile market.

“It just wasn’t working.”

Key among the proposed reforms is the establishment of the Building and Plumbing Commission, with powers transferred from Consumer Affairs Victoria to the Victorian Building Authority. 

It is intended to bring all building quality control into one agency: regulation, insurance and dispute resolution.

The Victorian Government announced the renaming of the Victorian Building Authority as the Building and Plumbing Commission in October of 2024.

Other proposed reforms include updating rules about how builders are paid by setting out deposit limits, progress payment stages and limits.

“We also welcome the transfer of the prescribed payment stages from the Domestic Building Contracts Act ... we see it offering a more flexible and realistic solution to some of the cash flow strain many builders have previously been locked into,” Lihou said.  

▲ The Victorian Building Authority would be known as the Building and Plumbing Commission under the reforms.

They would also allow cost escalation clauses for domestic building works that cost more than $1 million for managing unforeseen costs with a 5 per cent ceiling for price increases. 

“While we consider this a significant win, we will continue to lobby ... for cost escalation clauses for contracts under $1 million, which represent the vast majority of contracts annually,” Lihou said.

Other proposed reforms include removing plan preparation, specifications and bills of quantity from what is considered to be domestic building work.

“This is a significant step forward because it provides clarity for builders about what must be included in a major domestic building contract and ensures they can be properly compensated for the time, expertise and costs involved in preparing plans and specifications,” Lihou said.

Addressing contract splitting and allowing contract cancellations if timelines blow out by more than 50 per cent or costs by more than 15 per cent are also proposed reforms.

Victorian consumer affairs minister Nick Staikos said the reforms would strengthen protections for consumers while supporting the building industry—helping get more homes built.

Several groups within the sector were consulted in the formulation of the proposals, the government said, including the Housing Industry Association, the Master Builders Association of Victoria and the Consumer Action Law Centre.