Jacinta Allan unveils beefed up home buyer protections, domestic building insurance to target dodgy builders

The state government has been accused of trying to quietly slug developers with an extra charge on home builds under an overhaul of consumer protection laws aimed at dealing with dodgy and bust builders.

The Allan government says it is creating a more powerful building watchdog. Picture: Ian Currie

The Allan government has been accused of lying to the property industry and attempting to quietly slug developers with an extra charge on home builds.

As part of a new overhaul of the state’s consumer laws, Premier Jacinta Allan on Tuesday announced that developers would be forced to pay a bond worth two per cent of the construction cost.

The fee would be held by the regulator for two years to safeguard against any faults in the build.

But in the Bill introduced to parliament on Wednesday, the government outlined a charge of three per cent.

Property Council of Australia chief executive Cath Evans said industry needed clarity from the government, noting that for larger builds the change in percentage could add tens of thousands of dollars to a development.

“Industry needs to know what the rate is,” she said.

“This is obviously an important change in the industry.

“We need clarity.”

The Allan government has been accused of lying to the property industry. Picture: David Crosling

Shadow treasurer James Newbury accused the government of lying to the property industry, warning that the 50 per cent cost increase would further drive up home prices.

“The government has lied to industry and to Victorians — having introduced new laws into parliament that will cost 50 per cent more than what they announced,” Mr Newbury said.

Shadow planning minister Richard Riordan said developers were already “walking away from Victoria because of excessive taxes, planning delays, and government interference”.

“Now Labor is adding another hidden cost that will make projects even harder to deliver,” Mr Riordan said.

A government spokesman claimed there was an error in the legislation, telling the Herald Sun that it should be two per cent.

The Bill has already been read in the chamber, meaning the government will need to move an amendment to fix it.

Shadow treasurer James Newbury says the government is lying to the property industry. Picture: David Caird

As part of the overhaul, Victorian homebuyers who fall victim to dodgy builders would have immediate access to insurance to fix shoddy builds.

Under legislation to create a “more powerful” building watchdog, to be known as the Building and Plumbing Commission, domestic building insurance will also transition to operate on a “first resort” basis.

This will mean homeowners can make a claim when a building issue is first identified.

Currently, the insurance can only be accessed as a last resort under limited circumstances, such as when a builder becomes insolvent, disappears or dies.

Domestic building insurance, also known as builder’s warranty insurance, must be taken out by builders for any work valued at more than $16,000.

Developers will have to tip money into a new bond. Picture: Mark Wilson

But on Wednesday, Victoria’s peak property bodies called on the Allan government to withdraw the proposed laws cracking down on dodgy builders, calling the plan “unclear and unworkable”.

In a joint statement on Wednesday, the Property Council of Australia and the Urban Development Institute of Australia Victoria (UDIA) said the Bill was developed too fast and without proper industry consultation.

Property Council of Australia Victorian executive director Cath Evans said while protecting consumers was important, many reputable developers and builders already had strong protections in place.

“The introduction of significant building reforms with inadequate detail and timeframes is concerning,” she said.

“The Property Council and UDIA have proposals in relation to developer bonds which we would like to see incorporated into the Bill.”

Property Council of Australia Victorian executive director Cath Evans says many reputable developers and builders already have strong protections in place. Picture: Jake Nowakowski

UDIA Victoria chief executive Linda Allison warned that rushing through reforms could have unintended consequences.

“It is vital that the new system is clear and transparent, to avoid further dampening the market for construction of new homes,” she said.

“Many details of the new developer bond scheme, including the specific building defects to which it applies, have yet to be released.”

Premier Jacinta Allan is overhauling consumer protection laws around builders. Picture: Valeriu Campan 3

In October last year, the Allan government announced it would replace the scandal-plagued Victorian Building Authority with the Building and Plumbing Commission.

Under that bill, the Building and Plumbing Commission will be handed tough new powers to compel builders to fix their shoddy work.

Premier Jacinta Allan said the new commission would be a powerful watchdog overseeing all domestic building and plumbing industries across the state.

“We’ve all heard those nightmare stories,” Ms Allan said.

“Building or buying a new home will be the biggest investment most of us ever make and Victorians rightly expect to get what they pay for.”

Victorian Building Authority Commissioner Anna Cronin said the reform marked a major milestone in the way consumer complaints will be handled.

“At the moment consumers get ping ponged from one entity to the other,” she said.

“Consumers have a pretty horrendous journey. Even if it works well, it’s a pretty complex journey.”

Housing and Building Minister Harriet Shing said significant work had been done to rebuild community trust.

“The VBA has had many issues that have created a trust deficit in the community,” she said.

“What i would say, however, is that since beginning in the role Anna Cronin’s work has been transformative.”

Originally published as Jacinta Allan unveils beefed up home buyer protections, domestic building insurance to target dodgy builders