Victoria’s New Owner-Builder Insurance Regime: What Vendors Need to Know
Victoria’s owner-builder insurance regime changed substantially on 1 July 2026. The reforms affect owners who undertake building work, vendors selling properties on which owner-builder work has been completed, and purchasers of those properties.
Further disclosure requirements are expected to commence in December 2027, unless proclaimed earlier.
This article outlines the principal changes and the practical issues vendors should consider before selling a property affected by owner-builder work.
The First-Resort Home Warranty Scheme
From 1 July 2026, the First-Resort Home Warranty Scheme replaced the previous domestic building insurance scheme for new cover.
The new scheme is described as “first resort” because an eligible purchaser may access cover without first establishing that the owner-builder has died, disappeared or become insolvent. This differs from the previous scheme, under which one of those events generally had to occur before a claim could be made.
Existing policies issued under the previous scheme remain in effect. However, where insurance is obtained on or after 1 July 2026, the new scheme applies—even if the relevant building work was completed before that date.
Which Building Work Is Eligible?
The First-Resort Scheme applies only to eligible domestic building work. This may include:
repairs, alterations or extensions to a home;
construction of a new home;
work on residential buildings of up to three storeys; and
domestic building work associated with swimming pools.
Vendors should identify whether any such work has been carried out and ensure it is appropriately disclosed during the sale process.
The Single-Trade Exception
Work limited to a single trade is generally excluded from the definition of domestic building work for the purposes of the scheme. For example, work consisting solely of house painting may fall within this exception.
Whether particular work is properly characterised as single-trade work will depend on its nature and scope.
The $20,000 Threshold
To qualify under the First-Resort Scheme, the owner-builder work must have cost more than $20,000.
The cost calculation is not limited to amounts paid to contractors. It includes:
materials;
labour, including the value of the owner’s own labour; and
GST.
Owners should retain invoices, receipts, contracts and other records that establish the nature and value of the work.
Certificate of Consent
An owner-builder must obtain a Certificate of Consent before undertaking building work for which a certificate is required.
A Certificate of Consent is the written approval issued by the Building and Plumbing Commission authorising the applicant to carry out the relevant owner-builder work.
Failure to obtain the required certificate can have serious consequences.
No Retrospective Cover
Unlike under the previous scheme, a Certificate of Consent cannot be obtained retrospectively for the purpose of securing cover under the First-Resort Scheme.
If the owner-builder did not obtain the required certificate before commencing the work, that work may be permanently ineligible for cover under the scheme.
Potential Vendor Liability
The absence of a Certificate of Consent may prevent a purchaser from claiming under the First-Resort Scheme. It may also expose the vendor to personal liability and regulatory consequences.
The Legal Practitioners’ Liability Committee has indicated that failure to obtain a required Certificate of Consent may constitute a “material fact” for the purposes of a property sale. A material fact is information that may influence a purchaser’s decision about whether to buy the property.
Failure to disclose such information may expose the vendor to a claim or other consequences under Victorian sale-of-land laws.
What Does the Scheme Cover?
Subject to the policy terms and eligibility requirements, the First-Resort Scheme provides cover for:
major defects for up to six years after completion of the work; and
non-major defects for up to two years after completion.
The maximum available cover is $400,000.
What Happens to Existing Insurance?
The previous insurance scheme has not ceased to apply to policies already issued under it. Those policies continue according to their terms.
However, the First-Resort Scheme is the only form of new cover available from 1 July 2026. Accordingly, a vendor obtaining insurance on or after that date must satisfy the requirements of the First-Resort Scheme, even where the building work itself was undertaken before 1 July 2026.
This distinction may be particularly important for vendors who delayed obtaining insurance after completing owner-builder work.
Was a Registered Builder Involved?
It is important to determine whether the work was undertaken by a registered builder or building practitioner.
The First-Resort Scheme for owner-builders will generally not apply where the work was carried out by a registered builder in that capacity. Vendors should therefore confirm:
who performed or supervised the work;
whether that person was registered at the relevant time;
the registration class held; and
whose name appears on the building permit.
The Building and Plumbing Commission’s Practitioner Search can be used to check a practitioner’s registration.
When searching by registration number, a space must be included between the class code and the number—for example, “DB-U 1234”.
Check the Name on the Building Permit
Where a building permit was issued, the name recorded on the permit may determine how the work is classified.
The Legal Practitioners’ Liability Committee has advised that work may be treated as owner-builder work where the property owner’s name appears on the permit rather than the name of a registered builder.
The permit should therefore be reviewed at an early stage of any proposed sale.
Owner-Builder Defects Condition Report
A vendor selling a property on which owner-builder work has been undertaken must obtain an owner-builder defects condition report where the applicable statutory period has not expired.
This requirement applies regardless of:
whether a Certificate of Consent was obtained; and
the value of the owner-builder work.
The report must be prepared by an appropriately registered building practitioner.
When is a Condition Report Required?
The applicable period depends on the approvals and completion documents issued for the work:
Occupancy permit or certificate of final inspection issuedA condition report is required for 6.5 years after the completion date, being the date on which the occupancy permit or certificate of final inspection was issued.
Building permit issued, but no occupancy permit or certificate of final inspection issuedA condition report is required for seven years after the building permit was issued.
No building permit issued or requiredA condition report is required for 6.5 years after the certified commencement date. This is the date on which the owner declares, by statutory declaration, that the work commenced.
Accurate records of permits, inspections, commencement and completion are therefore essential.
Changes to Section 32 Vendor Statements
From December 2027, unless an earlier commencement date is proclaimed, additional information will need to be included in a Section 32 vendor statement where owner-builder work was completed within the preceding 6.5 years.
The vendor statement will need to include:
particulars of the applicable insurance cover;
the notice of cover issued under the First-Resort Scheme; and
the owner-builder defects condition report.
These documents should be identified and obtained before the property is marketed to reduce the risk of delays or disclosure issues.
Practical Steps for Vendors
A vendor who has undertaken, arranged or acquired a property affected by owner-builder work should:
identify the nature and scope of the work;
confirm when the work commenced and was completed;
calculate its value, including materials, labour, the owner’s labour and GST;
check whether the work involved one trade or multiple trades;
locate the Certificate of Consent;
review the building permit and identify the person named as builder;
check whether any builder involved was registered;
locate any occupancy permit or certificate of final inspection;
determine which insurance regime applies;
obtain the required defects condition report; and
ensure all material facts and required documents are disclosed in the sale documentation.
Early review is important because a missing Certificate of Consent cannot be remedied retrospectively for First-Resort Scheme coverage.
Key Takeaway
The reforms create significant consequences for vendors who fail to identify owner-builder work or obtain the required documents before sale. Particular attention should be given to the Certificate of Consent, the name appearing on the building permit, applicable insurance, the defects condition report and disclosure of material facts.
As further Section 32 disclosure requirements are expected from December 2027, careful record-keeping will remain essential for owners who undertake domestic building work.
This article provides general information about the Victorian owner-builder regime as at 14 September 2026. It does not address every exception or circumstance and does not constitute legal advice. Please contact our office on 03 9450 9400 if you would like to discuss the matter furhter.
