Victoria considers new building insurance checks – but at a cost

Prospective home buyers and conveyancers could be charged to check if a house has valid domestic building insurance under a plan Victoria’s state-managed insurance agency put to the Allan government.

New documents, obtained by the opposition under freedom of information, show a proposal from the Victorian Managed Insurance Authority to commercialise the data was put to Assistant Treasurer Danny Pearson in April.

Home buyers could access more information on domestic building insurance – at a cost.Credit: Oscar Colman

The ministerial brief was not signed, with the government yet to make a final decision on the proposal despite it being pitched as operational by mid-2024.

“Home buyers that are about to purchase a recently built or renovated home cannot currently access information on any existing DBI [domestic building insurance] policy for that dwelling, which could lead to financial harm if the builder leaves defective building work,” the brief says.

The VMIA said it had come up with a feature to address this gap, called DBI Property Search, in which consumers could access this information through their conveyancers.

Because the proposal involves the commercialisation of government data, it requires ministerial consultation.

“If DBI Property Search is widely adopted, and net revenue exceeds what is invested in harm prevention measures, VMIA will consult with you on the best use options of any surplus funds,” the brief says.

“VMIA expects to set the price at a level comparable to other reports typically sought as part of a home buying process (i.e. at a small percentage of the overall cost of buying a home).”

The expected revenue from the change was redacted from the report. However, under Victorian guidelines, the state government must be consulted on price if the revenue is expected to be more than $500,000 – a threshold the VMIA forecast would be met.

When contacted about the proposal, the government confirmed the search function had been proposed and would be similar to comparable services provided by councils or planning bodies.

But a spokesperson said the idea did not apply to existing home owners, who can check on their DBI by entering their policy number on the VMIA’s website.

“We have no plans to introduce a fee for home owners to check if they have domestic building insurance – anyone can find out if they have DBI with the VMIA for free,” a spokesperson said.

The government has described it as a way for “interested parties” such as lawyers and conveyancers to receive detailed information on properties, including when the policy was issued, contract value, builder details and any history of claims.

The VMIA has been under financial strain following the recovery effort from the October 2022 floods and the collapse of Porter Davis and other domestic builders.

In June, the agency increased domestic building insurance premiums by 65 per cent for new homes. All DBI charges were also increased by an average of 43 per cent in 2023.

Opposition finance spokeswoman Jess Wilson called on the government to rule out imposing the charge.

“Labor’s new home buyer insurance charge is a desperate attempt to increase revenue for an agency on the financial brink at the expense of aspiring home owners,” she said.

“In the middle of a cost-of-living crisis, the last thing Victorians need is another property charge simply because Labor cannot manage money.

“Confirming a recently built or renovated home has legally required domestic building insurance is basic information that should be provided to prospective home buyers at no cost.”

Housing Industry Association Victorian executive director Keith Ryan said it should be easy for consumers to get confirmation a home had domestic building insurance in place.

“Whether it should be chargeable, I think I would be a little bit worried about, but I think it’s not a bad idea to look at having DBI being linked into the vendor statement process,” he said.

Ryan said fees could sometimes serve a purpose if they created extra transparency for consumers. He said there were also loopholes in the current system around disclosure of building work that doesn’t require permits.

Victoria’s net debt is forecast to hit $187.7 billion by the middle of 2028 – equivalent to about one-quarter of the state economy.

The government has announced an extra $1.5 billion for health services this year on top of what was already in the budget, prompting a warning from Treasurer Tim Pallas about putting a lid on spending.

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