Victorian builders forced to fix shoddy work in industry overhaul

Home builders would be ordered to fix poor work after families have their keys and move in, under new powers for the industry watchdog and the establishment of “a one-stop shop for consumers”.

Homeowners would have easier recourse to make builders fix shoddy work under the industry overhaul.

Home builders would face orders to fix defective work after families have their keys and move in, under sweeping new powers for the industry watchdog.

Under current laws, the Victorian Building Authority can only issue rectification notices while construction is ongoing, meaning homeowners have to battle their builders and plumbers directly – or go to court – if flaws are found.

The changes are part of an overhaul of the watchdog, which will be replaced with a body that oversees regulation, insurance and dispute resolution, through what the Allan Government calls “a one-stop shop for consumers”.

The building watchdog will be replaced with a body that oversees regulation and dispute resolution.

However, past victims of dodgy home builders will not be given compensation under new changes by the state government, with the planning minister offering an apology instead.

Planning Minister Sonya Kilkenny apologised to all Victorians who had been “let down” by the system on Thursday.

“I am so deeply sorry for the pain that they have experienced over these years, because the system has not met expectations,” she said.

She, however, refused to commit to any compensation for past victims or retrospective powers.

“The announcements today are about what we will be doing to protect Victorians who buy a house or build a home,” Ms Kilkenny said.

“With most changes and significant changes like this, it is about future forward.”

She said the government was currently reviewing recommendations from the VBA report.

The announcements form part of the government’s week-long housing blitz, and coincides with the release of a scathing report into the VBA’s complaint resolution, ordered by its recently-appointed chief executive and commissioner Anna Cronin.

That report exposed weak handling of customer grievances and builders ripping off customers with shoddy and unfinished jobs, and had prompted an apology from Ms Cronin.

Seven complex cases were probed by Weir Legal and Consulting for the report, showing ineffective responses to builder and plumber misconduct and lawlessness that created “financial and emotional stress” for those ripped off.

Few technical assessments were carried out, paperwork was lost, and consumers were described as “stirring up trouble”.

In one case, a family who was hit with a $2 million increase in their contract cost midway through construction, never had their property finished.

They had to pay a further $2.6m for another builder to fix defects and finish the job.

Another case includes a family that complained to the VBA five years ago but is yet to move in, after legal proceedings against builders remain unresolved.

The report makes 20 recommendations on how to fix a broken system, including powers for forcing rectifications post-occupancy — today pledged by the government.

Home builders would face orders to fix defective work under a new scheme.

Ms Kilkenny said a new industry watchdog would get tougher powers to require builders to fix substandard work, prevent the sale of apartments without serious defects being fixed, and provide Victorians with better access to insurance if things go wrong.

The reforms will also force developers to provide a bond to cover the cost of fixing poor work for apartment buildings taller than three-storeys.

Ms Kilkenny said the new bond scheme would be the first step towards a 10-year insurance product for apartment buildings, with a working group to develop a proposed model.

“For most of us, building a home will be the biggest investment we ever make, and Victorians rightly expect to get what they pay for – a properly built, affordable home,” she said.

“These reforms will make sure Victorians can have more confidence when they build, renovate or buy a home.”

To help police the new powers, there will be a 50 per cent increase in the number of auditors and frontline inspectors, funded through this year’s budget.

There will be consultation with industry and consumer groups to guide the process.

Consumer Affairs Minister Gabrielle Williams said “this is about better protecting Victorians building or renovating their home”.