Victoria's Buyer Protection Reforms
Introduction
On 1 July 2026, Victoria overhauled how home warranty insurance and builder capacity are regulated, under what has been branded the Buyer Protection reforms. For anyone building a home, working in the construction industry, or simply following consumer protection changes in Victoria, please consider the reforms as outlined below.
A New Home Warranty Scheme
The existing home warranty insurance system is being replaced by the First Resort Home Warranty Scheme. This is the insurance that protects homeowners if a builder cannot complete works or fix defects, typically because of death, disappearance, insolvency, or licence cancellation. Builders who are already registered will have their existing capacity roll over automatically, so the transition is designed to be seamless for industry.
For homeowners, the practical change is the threshold at which insurance becomes compulsory: contracts of $20,000 or more, signed on or after 1 July 2026, must be covered. This differs from the separate $10,000 threshold that determines when a contract is legally classified as a "major domestic building contract" with its own formalities. Builders must obtain the insurance within 10 days of signing, or before work starts, whichever happens first. The penalty for non-compliance is steep, up to 500 penalty units, currently more than $100,000.
Builder Capacity, Explained
Every registered builder has a cap on the total value of work they can have underway at once. This was previously called the Total Construction Limit and is now the Maximum Construction Capacity (MCC), overseen by the Building and Plumbing Commission (BPC). It is calculated against a builder's Adjusted Net Tangible Assets (ANTA), broadly their assets minus liabilities minus certain excluded items like crypto assets or unlisted shares. The formula requires ANTA equal to 5% of the MCC sought (or 3% plus $400,000 for MCCs above $20 million).
The old insurance certificate is also being replaced by a Notice of Cover, which takes effect automatically once a qualifying contract is signed.
New Powers to Order Rectification
The BPC has been given a new power to issue rectification Orders, requiring builders to fix incomplete, non-compliant, or defective work. A Ministerial Direction requires the BPC to prioritise the most serious cases, those affecting habitability, structural safety, or public safety, over minor or cosmetic issues. The BPC must also consider factors like homeowner conduct and whether a warranty claim could resolve the issue first, before issuing an Order.
Why This Matters
These reforms sit at the intersection of consumer protection and industry regulation, aiming to strengthen homeowner safeguards while streamlining builder compliance and affects everyone including builders, developers, and homeowners.
To learn more about any of the matters discussed here, or if you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 3 9521 7956 or chris@urbanlawyers.com.au.