Mackay Chapman January Building & Construction Update

Welcome back to Mackay Chapman’s monthly building and construction update.

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After the pace of reform in 2025, the first question facing industry in 2026 is simple: will the momentum continue, or is this the year change starts to bite on the ground?

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Early signals suggest the answer is both. 

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The government is still legislating, industry bodies are pushing back, and the biggest challenge may now be operational, turning sweeping policy announcements into workable frameworks for builders, developers and regulators.

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We’ve done the digging so you don’t have to.

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MMC focus grows, but regulatory settings still lag behind

One of the strongest themes emerging into 2026 is the Victorian Government’s push toward Modern Methods of Construction (MMC), including modular, prefabricated and off-site building techniques.

The Department of Jobs, Skills, Industry and Regions recently released Shaping the Future of Construction in Victoria, signalling a clear policy preference toward faster, factory-based construction models.

Industry has welcomed the direction, but the Housing Industry Association (HIA) has cautioned that policy encouragement alone won’t be enough. The biggest barriers now sit in the legislation itself.

Key concerns raised include:

• Planning and building laws that assume work is performed on-site
• Approval pathways that don’t accommodate off-site manufacturing
• Outdated regulatory frameworks that could slow adoption before it begins

HIA is calling for Building Act reform to be prioritised, warning that the MMC roadmap will deliver limited value if the approval system remains anchored to traditional construction models.

For builders watching MMC with interest, the opportunity is real, but compliance clarity remains a major missing piece.

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Proposed BPC powers point to a more interventionist regulator

New consultation released in December proposes significant additions to the powers of the Building and Plumbing Commission (BPC), signalling continued policy pressure on the residential construction market.

Under the draft framework, the BPC would gain:

• Rectification order powers allowing compulsory correction of defective work up to 10 years post-construction
  
  
• A first-resort warranty mechanism, shifting risk away from homeowners and toward builders and insurers
  
  
• A developer bond scheme for multi-unit builds to better protect apartment purchasers

The underlying message is clear: confidence in Victorian housing delivery is now a government priority, and the BPC is being equipped to step in earlier and with sharper tools where quality and compliance concerns arise.

Industry participants are encouraged to engage with the Regulatory Impact Statement, which remains open for submissions until 30 January 2026.

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Buyer protection regulations spark industry concern

While major reforms are progressing, not all elements of the Victorian Government’s program are being met with enthusiasm.

The Housing Industry Association has criticised the release timing and content of draft buyer protection regulations, noting that:

• Public consultation runs over the industry shutdown period
  
  
• The definition of eligible claims is overly broad and may drive disputes unnecessarily
  
  
• Builders could face delays and non-payment risks as consumers are funnelled into formal complaint pathways
  
  
• Victoria may be unable to stand up the resources needed to administer the new regime by July 2026

HIA has warned that the proposed regulations could inadvertently repeat past failures — including the lengthy backlog seen when Victoria last re-engineered its dispute resolution model in 2017.

With reforms scheduled to commence this year, builders and developers will need to prepare for longer regulatory interactions and more prescribed compliance obligations.

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Looking ahead for 2026

While 2025 was a year of design and decision-making, 2026 has the hallmarks of a year where:

• Reforms move from paper to practice
  
  
• Regulatory agencies adopt a more assertive posture
  
  
• The practical impacts begin to be felt on construction sites, project timelines and contractual risk.

For builders, this means navigating unfamiliar terrain – and doing so early, before the sector reaches stress point.

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We’re here to help

Whether you are preparing for MMC adoption, responding to regulatory powers under the BPC, or assessing the impact of buyer protection reforms, our team can assist in ensuring your business is ready for what’s next.

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The contents of this update and its linked articles do not constitute legal advice, are not intended to be a substitute for legal advice, and should not be relied upon as such. They are designed and intended as general information in summary form, current at publication, for general informational purposes only. You should seek legal or other professional advice concerning any particular legal matters you or your organisation may have.

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