Big Changes Coming to Domestic Building Contracts in Victoria
Domestic Building Contracts Amendment Bill 2025 – What You Need to Know
The Domestic Building Contracts Amendment Bill 2025 has now been introduced to the Victorian Parliament, bringing with it a suite of proposed changes that will significantly impact the rights and obligations of both homeowners and builders.
Once enacted, the Bill will overhaul key aspects of the Domestic Building Contracts Act 1995 (DBCA) - changing how contracts are formed, varied and enforced. The reforms are aimed at modernising the Act, improving transparency and better aligning with the Australian Consumer Law. However, the Bill also introduces carve-outs and risks, particularly for owners dealing with developers.
The Bill is expected to take effect from 1 December 2026, unless brought into force earlier.
Here are the key take aways:
1. Developers Excluded from the Act
A new definition of “developer” means those contracting for the construction of two or more homes for sale will no longer be subject to most of the DBCA. Only select provisions (such as warranties and registration requirements) will apply. This limits protections for owners who may be purchasing off-the-plan or from volume developers.
2. Preliminary Works Removed
The preparation of plans, specifications and bills of quantities will no longer be treated as domestic building work under the Act. This creates uncertainty around liability where plans form part of the building contract but are prepared separately.
3. Cost Escalation Clauses Legal (Over $1M)
Cost escalation clauses, previously prohibited, will now be allowed, but only where the contract value exceeds $1 million. Builders must meet strict disclosure requirements and increases are capped at 5% in total. Non-compliance means the clause cannot be relied upon.
4. Payment Claims and Variations Streamlined
Both owner- and builder-requested variations will now follow a single, unified process requiring formal written agreement. New rules around progress payments link amounts claimed more directly to actual construction progress, although enforcement may still be challenging without an independent superintendent.
Keep in Mind
These reforms add to significant recent changes in residential building law. For details on the latest insurance updates, read our blog here. For example, the Building Legislation Amendment (Domestic Building Insurance New Framework) Act 2024 is already scheduled to commence in July 2026, reshaping how domestic building insurance will work across Victoria.
Need Contract Advice?
Although these changes are not yet in effect, their impact is likely to be significant, especially in multi-unit developments or complex builds. If you’re a builder, developer, or owner entering into a domestic building contract before the new laws commence, it’s essential to get advice to ensure your rights are protected now and into the future.
Contact Oldham Construction Lawyers via info@oclawyers.com.au for clear and practical guidance on how these changes may affect your current or upcoming projects.