A large percentage of Victorian domestic building projects are completed to a high quality standard. There are however reported instances when things do go wrong, and when they do, it is predominantly the consumers that are left to suffer the consequences.
It is for that very reason that the Victorian Government has passed the Building Legislation Amendment (Consumer Protection) Act 2016 (“the Act”), which is set to bring about unprecedented changes to the Building Act 1993 (“Building Act”) and the Domestic Building Contracts Act 1995 (“Domestic Building Contracts Act”) affecting residential construction in Victoria.
The primary objective of these changes is to strengthen consumer protection so as to ensure that builders may be held accountable for the building work they conduct. Furthermore, the changes are set to provide owners with new and effective ways to make claims for incomplete or defective building work. The first tranche of changes for owner-builders, building surveyors and building practitioners came into effect on 4 July 2016. If you fall within one of these categories, it is imperative that you familiarise yourself with your legal obligations under the new legislation.
1 Investigation of Owner-Builders
The Victorian Building Authority (“VBA”) may appoint a performance auditor to examine any work conducted by an owner-builder, in order to ensure that the work has been completed competently. The justification behind this legislative update is to prevent builders from utilising the Owner-Builder provisions of the Building Act in an attempt to avoid regulation and registration requirements.
The time that is allowed for owner-builder job intervals will be increased from the current three (3) years to five (5) years, so as to ensure that the Victorian legislation is in line with other jurisdictions.
2 Certificates of Consent for Owner-Builders
From 1 September 2016, the amount which determines if a certificate of consent is required to conduct domestic building work as an owner-builder will be increased to $16,000 or more. A certificate of consent to owner-builders expires after 12 months, unless it is used to obtain a building permit. The certificate will be issued only once every five years, unless it is in relation to multiple extensions to the same house. Details regarding owner-builder projects are going to be published on a public register. It is important to note that before certificates of consent are issued, owner-builders will have to complete an online test to prove that they have the requisite knowledge of the relevant duties and responsibilities.
3 Owner Regulations
The legislative update also introduces new offences against persons who carry out building works where no building permit has been issued. If a landowner instructs another person to carry out works prior to having obtained a building permit, the maximum penalty for the landowner, if they are an individual, is approximately $75,000. The maximum penalty for a body corporate landowner for the same offence is approximately $377,000. Please note that penalties do not apply to landowners who engage an architect or building practitioner to carry out the work.
4 Directions to Fix Work
The VBA, Building Surveyors and other authorised individuals have been granted with new powers to issue directions to builders to fix any building work that has not been completed competently. A direction may be to carry out building work that wholly or substantially complies with the Building Act, and may be given in writing or orally and require compliance within the specified time. In the absence of a prescribed timeframe to comply with the direction, the direction must be complied with within seven (7) days. The affected Builder may apply to the VBA to extend the time for the compliance request, but please be aware that non-compliance with a written direction is a prescribed offence of the Act and that carries a maximum penalty of approximately $75,500.
5 Appointment of Building Surveyors
The Building Act now establishes a restriction that prevents a domestic builder from appointing a building surveyor on behalf of an owner. Whilst the builder may recommend a building surveyor, the decision solely rests with the owner. This prohibition only applies to domestic building work.
A new ‘related person’ test establishes that building surveyors are prohibited from carrying out their function, if there is a conflict of interest. Relationships out of which a conflict of interest may arise are partnerships, body corporates of which the building surveyor is a director or employer/employee relationships. The practical implication of this prohibition is that building surveyors will need to be mindful of who they do business with and whether there is a potential conflict of interest in accepting work.
6 The VBA Approved Checklist
Under the legislative update, building surveyors are required to comply with a checklist, which is to be provided to the Council. Failure to do so is an offence and the maximum financial penalty will be in the vicinity of $1500. A copy of the VBA checklist can be found here:
The VBA will be accepting and maintaining a register of practitioners’ undertakings, which identifies the specific action that practitioners undertake to do or not do. Failure to comply with such an undertaking will allow the VBA to either;
- apply for a court order to compel the builder to comply with the undertaking; or
- require the builder to pay a fine for noncompliance.
8 Abolition of the Building Practitioners Board
From 1 September 2016, the VBA will be responsible for;
- registration of building practitioners;
- monitoring practitioners’ capacity and conduct; and
- issuing certificates of consent to owner-builders.
9 Building Practitioner Registrations
Several changes to practitioner registration requirements will come into effect in the beginning of September.
A summary of the main changes can be found below:
- The ‘good character’ test will be abolished and replaced with a new ‘fit and proper person’ test. A practitioner may be disciplined if the VBA finds that she or he is not a fit and proper person to practise. Additionally, the VBA will have the power to impose specific conditions on registration, so as to ensure that the building work is carried out according to quality standards.
- All practitioner registrations will have a duration of five (5) years. Practitioners will need to re-apply for registration at the end of the five-year period, if they wish to continue to practise. Practitioners who were registered prior to 1 September, will gradually transition to the new registration system over the coming years. The VBA will advise all registered building practitioners as to the new registration requirements.
10 The Internal Review and Disciplinary Process
The legislative update also introduces a new internal review process. This process allows the VBA to suspend the practitioner’s registration, until the outcome of the review is known. The significance of this change is the introduction of a ‘show cause’ disciplinary process. This means that if the VBA believes that there are grounds for disciplinary action, it has the power to ask the builder to ‘show cause’ why such disciplinary action should not be imposed.
11 Exiting the Industry
All registered building practitioners will have the right to surrender their registration upon retirement. This is a welcome change, as until now, builders were marked as ‘suspended’ after not renewing their license, which may imply that they were suspended as a result of disciplinary action, when that was not the case.
With the introduction of these necessary measures that are required to strengthen consumer protection and ensure quality of building projects in Victoria, the Victorian Government has showcased its’ commitment to resolving well-known issues in the Building and Construction industry.