This article is about the introduction of Victoria’s new Developer Bond Scheme under the Building Legislation Amendment (Buyer Protections) Act 2025 to enhance consumer protection for apartment buyers.
The Victorian Government has recently introduced the Building Legislation Amendment (Buyer Protections) Act 2025, which includes a new developer bond requirement aimed at enhancing consumer protection for certain multi-storey residential apartment buildings. This legislation will take effect from 1 July 2026. While the legislation is designed to protect purchasers, it may have considerable financial implications for developers.
Key Provisions:
- Developer Bond Requirement Developers of residential apartment buildings exceeding three storeys must lodge a financial bond equivalent to 2% of the total construction cost prior to applying for an Occupancy Permit. The bond will be held by the Building and Plumbing Commission (“BPC”) (formerly the Victorian Building Authority) for two years post issue of the Occupancy Permit to cover defect rectification and will be subsequently returned to the developer if no outstanding defects remain.
- Scope and Applicability This scheme specifically targets residential apartment buildings over three storeys.
- Occupancy Permit Conditions Developers must notify the BPC of their intention to apply for an Occupancy Permit between six to twelve months in advance and ensure that their developer bond is lodged prior to the issue of the Occupancy Permit.
- Penalties Non-compliance may attract substantial financial penalties up to nearly $100,000 for individuals and $500,000 for corporations.
- Off the Plan Purchasers In addition to the significant financial penalties and potential delay of settlements, failure to comply with the developer bond and notification requirements may entitle Purchasers under off the plan contracts to rescind the contract if an Occupancy Permit is issued without the developer bond in place.
- Transitional Arrangements: It remains uncertain whether developments already under construction as at 1 July 2026 will be exempt from this scheme as there are currently no transitional arrangements in place. Developers should closely monitor transitional provisions and regulations once available (anticipated in late 2025) to evaluate potential impacts on both existing and future contracts. For further information on how these changes may impact your development and to discuss further please contact our property and developments team.
Disclaimer
The above does not constitute legal advice, but is information which may be of general interest. Tisher Liner FC Law will not be held liable or responsible for any claim, which is made as a result of any person relying upon the information contained in this publication.
Julia Thermos Tisher Liner FC Law E: jthermos@tlfc.com.au P: 03 8600 9345
This post appears in Strata News #768.
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Read next:
- VIC: Is this the death of short stay accommodation in apartment buildings in Victoria?
- VIC: Q&A How to fix strata building defects
- VIC: The Building Legislation Amendment (Buyer Protections) Bill 2025 (Vic): A Step Towards Stronger Consumer Protection in the Building Sector
This article has been republished with permission from the author and first appeared on the Tisher Liner FC Law website.
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