Master Builders Victoria (MBV) is among many building bodies to welcome a revised Domestic Contracts bill.
The bill was introduced to Victorian Parliament at the end of June.
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“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,” MBV CEO 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.
“We are pleased to see that the Government has listened to the concerns of our members and now made a number of significant changes that we have been lobbying for over the past several years.”
Changes introduced:
- Different rules for developers and consumers: Home builders will face less restrictive rules when entering into contracts with developers compared to contracts with individual consumers.
- New payment stages: The existing standard payment stages outlined in the Act will be replaced with new stages that will be specified in upcoming regulations.
- Flexibility with deposits: Regulations to be released later will provide more details on this aspect.
- Cost escalation clauses: These clauses will be permitted in home building contracts, but only for contracts with developers or those valued over $1 million. There will be limits on their use, which might make cost-plus contracts a more attractive option.
- Simplified variation process: The process for agreeing to variations will be streamlined, although builders will still need to document and clearly communicate changes to avoid disputes.
- New enforcement powers: The Building and Plumbing Commission, which will replace Consumer Affairs Victoria, will be granted new compliance and enforcement powers to oversee the industry.
- Preliminary agreements: Contracts to prepare plans and specifications will no longer be subject to domestic building contract laws.
“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,” Ms Lihou added on the final point.
Should the bill be passed, its expected for the laws to be implemented in late 2026.
