Earlier this year the Building Legislation Amendment (Consumer Protection) Act 2016 (Vic) was passed.
This legislation introduces a number of changes to the regulation of building work in Victoria and aims to enhance consumer protection for domestic building work. Some of these changes are already operational and others will come into effect on 1 September 2016.
Builders, building surveyors and others involved in the building industry in Victoria should be aware that the legislation also introduces other significant changes which have not yet come into effect, and that the Victorian government has flagged even further changes.
In summary, the key changes due to commence 1 September include:
- the abolition of the Building Practitioners Board and the transfer of its functions to the Victorian Building Authority;
- building practitioners now need to reapply for registration every five years and a building practitioner must be a "fit and proper person" in order to be granted registration;
- a new show cause disciplinary process for registered building practitioners with new grounds for disciplinary action;
- builders are required to provide owners with a prescribed contract information statement before entering into a major domestic building contract;
- builders must not appoint the building surveyor on behalf of the owner for works under a major domestic building contract, and building surveyors must not accept such appointments; and
- owner builders can now only build a home every five years and must demonstrate that they have knowledge of the duties and responsibilities of an owner builder.
Below, we discuss some of these changes in more detail.
- Abolition of the Building Practitioners Board
- New requirements for the registration of building practitioners
- New requirements for the regulation of building practitioners
- New requirements for builders undertaking works under a major domestic building contract
- Owner builders
- Other changes on the horizon for the Victorian building industry
- Further information
Abolition of the Building Practitioners Board
From 1 September 2016 the Building Practitioners Board (BPB) will be abolished.
The former functions of the BPB will be transferred to the Victorian Building Authority (VBA). The VBA will now be responsible for the registration of building practitioners, for the supervision and monitoring of conduct of registered building practitioners and for issuing certificates of consent for owner builder works. There are new provisions which enable internal reviews of decisions made by the VBA and the right to seek a review at VCAT.
The BPB will continue to be responsible for any disciplinary inquiries which commenced prior to 1 September 2016.
New requirements for the registration of building practitioners
Building practitioners now need to reapply for registration every five years after they are first registered.
There are transitional provisions for the renewal of current registrations. The first practitioners who will apply for renewal are those whose registrations were first granted in a year ending in zero or five. Those practitioners will be required to renew their registrations in the financial year commencing 1 July 2017. For example, if you were first registered in 2000 or 2005 you will need to renew your registration during the financial year commencing 1 July 2017.
If your registration was first granted in a year ending in:
- 1 or 6: you will be required to renew your registration in the financial year commencing 1 July 2018;
- 2 or 7: you will be required to renew your registration in the financial year commencing 1 July 2019;
- 3 or 8:you will be required to renew your registration in the financial year commencing 1 July 2020; and
- 4 or 9: you will be required to renew your registration in the financial year commencing 1 July 2021.
Under the new legislation, in order to obtain a renewal of registration, the building practitioner must be a "fit and proper person to practice as a building practitioner having regard to all relevant matters including the character of the applicant". This is considered to be a broader and more stringent requirement than the previous requirements. Practitioners will need to demonstrate competency through, for example, having complied with any prescribed professional development requirements. When granting registration, the VBA can now also impose any conditions on the registration that it considers appropriate.
A building practitioner will have the ability to seek internal review of registration decisions made by the VBA, along with a right to appeal to VCAT.
New requirements for the regulation of building practitioners
From 1 September 2016 there is a "new show cause" disciplinary process for registered building practitioners with new grounds for disciplinary action.
Registered building practitioners will no longer face a tribunal inquiry process for disciplinary matters. Under the new process, if the VBA reasonably believes after investigation that there are grounds for disciplinary action, it will be able to require a registered building practitioner to "show cause" why a particular disciplinary sanction should not be imposed.
The VBA will do this by issuing a notice and giving the building practitioner 14 days to respond as to why the proposed action should not be taken. Building practitioners receiving a "show cause" notice should seek legal advice quickly about whether they might avoid the sanctions referred to in the notice by providing an adequate response.
At the end of the "show cause" period, and following consideration of any response from the building practitioner, the VBA must decide within 28 days whether a ground exists to impose a disciplinary sanction. There are strict timelines to ensure that there are no unnecessary delays in the process.
Building practitioners will be able to seek an internal review of disciplinary decisions by the VBA, followed by a review at VCAT.
There are also new additional grounds upon which disciplinary action may be taken. These include:
- engaging in unprofessional conduct;
- failing to comply with an order to fix;
- failing to comply with a determination or direction of the VBA or VCAT;
- failing to comply with a provision that does not allow a builder to appoint the building surveyor; and
- not paying an amount adjudicated under the Victorian Security of Payment legislation.
New requirements for builders undertaking works under a major domestic building contract
Owners are to be given better information early in a building project to assist them to make more informed decisions, particularly about the appointment of the building surveyor.
Before entering into a major domestic building contract, a builder will be required to give the owner an information sheet (a copy is available on the Consumer Affairs Victoria website) that sets out the roles and responsibilities of each party to the building project, including the owner, builder and building surveyor.
As at 1 September 2016, a builder will be prohibited from appointing the relevant building surveyor on behalf of the owner in relation to domestic building work. This is designed to address the potential for a conflict of interest for building surveyors during the building process. A building surveyor will also be prohibited from accepting such an appointment from a builder. This measure is expected to reinforce the independence of the building surveyor and to give the owner more control over their building work.
For those owners who need certificates of consent to undertake works as an owner builder, the time period allowable between owner-builder jobs will be increased from the current three years to five years, which will bring Victoria into line with other jurisdictions.
Those owners will also have to demonstrate an understanding of the risks and responsibilities of being an owner-builder, and it appears that this will occur by way of an online test.
Other changes on the horizon for the Victorian building industry
The legislation also introduces other significant changes which came into effect on 4 July 2016, along with other changes which are not yet effective.
The timing for implementation on further changes is due on or before 1 July 2017. These changes include a new dispute resolution procedure for domestic building disputes to be established by Consumer Affairs Victoria under a body called Domestic Building Dispute Resolution Victoria.
We will provide further information about those changes once the commencement date of those changes has been announced.
The Victorian government has also indicated that it intends to introduce even more changes in a second tranche of legislation (expected sometime this year) which will include changes to the building permit system and the registration of corporations as builders.