Developer bond scheme opens doors to better quality apartments
Opening the door to your new home should be a time of celebration – not one worrying about build quality.
Consumers currently have minimal financial protection for defective building work in apartment buildings that are four storeys and above. And that’s why we’re introducing a new developer bond scheme to help address the cost of fixing poor building work.
This new scheme takes the first steps towards introducing a 10-year insurance product for apartment buildings.
How will the developer bond scheme work?
Under the scheme developers must lodge a bond with the regulator, the Building and Plumbing Commission (BPC), before applying for an occupancy permit. In the two years following the issuing of the occupancy permit, defective building work will be identified through a two-stage inspection and reporting process. All inspections and reports must be completed by a qualified building assessor.
Developers will be provided with an opportunity to rectify defects identified through the preliminary inspection and report. If defects noted in the preliminary report are not rectified and remain noted in the final report, an owners corporation may make a claim on the bond to cover the cost of rectifying any outstanding defects.
The Building Legislation Amendment (Buyer Protections) Act 2025 establishes this scheme and sets the bond rate at two per cent of the cost of constructing the building.
This new scheme is in line with a similar scheme operating in New South Wales.
When will the developer bond scheme begin?
Regulations to support implementation of the developer bond scheme will be made by 1 July 2026. A transition period will apply to the scheme’s commencement and a bond will need to be lodged for projects with a building permit issued from 1 July 2027.
For more information, see Security for Victorians building or buying a home | Engage Victoria(opens in a new window)
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