How to Regulate Smaller Domestic Building Contracts

Domestic Building Contracts Legislation & Insurance

In May this year, the Victorian government announced a review of domestic building contracts legislation and domestic building insurance.

It is expected that more information about the next stage of this review will be included as part of a Housing Statement expected in September.

The Domestic Building Contracts Act (“the Act”) and associated regulations are badly out of date and are only designed to protect consumers who have engaged a builder to build a house or complete major renovations to a house. They are not designed to apply to smaller renovation projects and other small home-building projects. When the Act is reviewed it is hoped that the new legislation will resolve these problems.

Any new legislation for domestic building contracts law is unlikely to take effect until next year at the earliest. In the meantime, there are some simple and quick regulatory changes that the government can make now that mitigate the misdirected legislation. The HIA recently provided the Victorian government a proposal for these quick fixes.

“Any new legislation for domestic building contracts law is unlikely to take effect until next year at the earliest.”

The proposals relevant to smaller home building projects and renovations are:

1. Increase the price threshold for major domestic building contracts to at least $16,000.
2. Increase the contract price threshold for a home building contract that requires a domestic building license to $20,000.

Together these proposals would allow for home builders and clients to avoid unnecessary expenses and complicated contracts when the price for the work does not exceed $20,000.

Builders can instead use simple quotes and avoid having to spend time explaining to confused consumers why their contract has a consumer guide and checklist relevant to having an entire home built.

“Builders can instead use simple quotes and avoid having to spend time explaining to confused consumers why their contract has a consumer guide and checklist relevant to having an entire home built.”

HIA members may contact our Workplace Services team to get further advice about the above issues. Our website and regular emails for members will also have updates.