Mackay Chapman October Buiding and Construction Update
This month, we’re looking at the growing enforcement activity under Victoria’s new Building and Plumbing Commission, ongoing challenges with Domestic Building Insurance eligibility, and renewed industry calls for stronger housing policy leadership as the state’s ambitious targets remain out of reach.
As always, our goal is to keep our readers informed and up to date on the key developments shaping the sector.
Prosecutions on the rise as BPC steps up enforcement
The newly formed Building and Plumbing Commission (BPC) has wasted no time asserting its authority over Victoria’s construction sector.
Since its launch in July, the regulator has ramped up enforcement, with around 60 prosecutions currently underway (the highest in Victoria’s history).
Recent high-profile cases, including penalties imposed on builders for non-compliant works and failures to meet permit and inspection obligations, illustrate the new regulator’s appetite for decisive action.
This marks a significant change: one that signals to practitioners that non-compliance will no longer be tolerated or overlooked.
Importantly, new legislation expected to take effect in 2026 will further expand the Commission’s powers, including stronger oversight of defect rectification and broader insurance coverage under the new “first resort” model for DBI.
These reforms are designed to ensure homeowners can access meaningful protection without the procedural hurdles that previously left many exposed when builders failed to deliver.
DBI eligibility issues: a tightening landscape
This month, our team has observed several recurring themes in how the VMIA and BPC are assessing Domestic Building Insurance (DBI) eligibility – and not all are consistent or commercially reasonable.
1. Overemphasis on financial metrics
There’s more tendency for eligibility assessments to focus on liquidity ratios, net asset positions and other static financial indicators, often at the expense of a more holistic understanding of a builder’s actual business viability and project pipeline.
In some cases, regulators have raised concerns over work in progress (WIP) reporting, particularly when WIP appears on financials for the first time.
Builders have been asked to obtain an accountant’s certificate verifying WIP compliance with accounting standards, despite the fact that these figures already originate from accountant-prepared financial reports.
This adds unnecessary cost and complexity, notedly, without improving risk assessment accuracy.
2. Inconsistent treatment of related entities
Builders operating through group structures or trusts continue to face inconsistent treatment when eligibility relies on inter-entity support or guarantees.
Different officers within the VMIA or BPC may assess similar arrangements differently, creating uncertainty and delays in decision-making.
3. Impact of historic claims or disputes
Past insurance claims or VCAT proceedings (even where resolved) are being used as grounds to question current eligibility.
These considerations are sometimes applied retrospectively and without notice, typically after the VMIA or BPC becomes newly aware of an old matter.
The result is a patchwork assessment process that can disadvantage otherwise sound builders, particularly those with stable operations but complex corporate structures.
As the regulatory environment continues to evolve, it is critical for builders to ensure their financial and structural documentation is accurate, consistent and strategically presented.
Industry calls for stronger action on housing reform
As Victoria’s Housing Statement marks its second anniversary, the state’s peak construction body has renewed calls for government action to remove barriers slowing new home delivery.
When the Statement was launched in 2023, it set a bold target of 800,000 new homes over ten years, or an average of 80,000 annually.
Two years on, that benchmark remains distant.
According to Master Builders Victoria (MBV) CEO Michaela Lihou, progress toward those targets requires a sharper focus on regulatory clarity and policy alignment.
“If we are to get anywhere near that 80,000 homes-a-year target, we need to see some fundamental changes.”
MBV has urged the government to prioritise clear and workable reforms under the Buyer Protection Bill, the Domestic Building Contracts Act, and the forthcoming Statutory Insurance Scheme, including transparent financial requirements for builders.
Without these changes, MBV warns, the housing targets risk remaining aspirational rather than achievable – particularly as rising costs, eligibility challenges and complex compliance obligations continue to slow the pace of construction across the state.
The contents of this article 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.
