Applying for a Maximum Construction Capacity (MCC): What New Builders Need to Know

Financial requirements determining your MCC

The BPC needs to see that you hold sufficient assets to pay your debts when they fall due. Based on this, the BPC will calculate your MCC – which determines the maximum total value of domestic building work you can undertake at any point in time.

The BPC calculates your MCC using your Adjusted Net Tangible Assets (ANTA), which is your assets (minus any items which BPC does not count) minus liabilities. The formula is:

• For an MCC up to $20 million: ANTA divided by 5%
• For an MCC above $20 million: ANTA minus $400,000, divided by 3%

In calculating your ANTA, the BPC will usually include assets such as cash, amounts owed to you, inventory, property, vehicles, plant and equipment, listed shares and tools of trade. It will not count items such as cryptocurrency, unlisted shares, personal furniture, recreational vehicles or superannuation you cannot access.

Trust assets and guarantees may also be considered if you provide the right supporting documentation.

If the domestic building company is part of a group of companies, you can choose whether your MCC is assessed at the individual entity level or across the group. The BPC does not require annual financial reports from every builder, but it can request such information at any time.

If your MCC reaches $2 million or more, you will need to maintain quarterly internal management accounts and provide them to the BPC, verified by a qualified accountant, within 14 days of any request.

If you suspect your workload is likely to grow beyond your approved MCC, it’s important to apply for an increase before you reach the limit. The BPC may direct you to reduce your workload, inject capital or submit a Financial Recovery Plan in these circumstances. Failure to comply and exceeding your MCC can lead to disciplinary action, including the immediate suspension of your registration.

Tip: Speak to an accountant before you apply to become a registered domestic builder. A clear picture of your ANTA from the outset will help you secure the right MCC.

Home Warranty

Home Warranty replaces the former Domestic Building Insurance model. The key differences are that the maximum coverage available under Home Warranty has increased to $400,000 and that your customers can now access cover while you are still actively trading, not only if you become insolvent, disappear, die or fail to comply with a court or tribunal order. Home Warranty may respond to claims for incomplete, non-compliant or defective work.

From 1 July 2026, Home Warranty applies to domestic building work under an insurable domestic building contracts entered into from 1 July 2026 over $20,000, except for work relating to a class 2 building with a rise of more than three storeys.

Cover automatically starts on either the date the applicable premium is paid by you, once you sign an insurable domestic building contract with the owner or start the domestic building work (whichever is the earlier).

You must apply for a Notice of Cover and pay the applicable premium to BPC within 10 business days of the earlier of signing the contract with the owner or commencing the work. Failure to do so, is a breach of the Building Act 1993 and may result in you facing disciplinary proceedings.

Home Warranty covers claims for assistance from owners up to a maximum of $400,000, with major defects covered for six years and all other defects covered for two years from completion of the work.

Rectification Orders

A Rectification Order is a formal written direction from the BPC under the Building Act 1993. Under the Order, BPC can require you to fix incomplete, non-compliant or defective work within a set timeframe.

Any builder, new or established, can receive a Rectification Order at any stage of a project, including during construction, during the defects liability period or after the work is completed.

A Rectification Order will set out:

• What work is considered incomplete, non-compliant or defective
• Require you to complete and/or rectify non-compliant or defective work at your cost
• Specify the timeframe within which you must complete the required actions
• Any other conditions which may be necessary to ensure the work is completed and/or rectified as required by BPC

If you receive a Rectification Order from BPC, you must complete the work specified within the required time frame, keep records and work with the BPC throughout the process. Subcontracting the work to a contractor will not absolve you from responsibility for complying with a Rectification Order.

Non-compliance can lead to fines, work stoppages, disciplinary action and reputational damage.

If you are planning to carry out domestic building work as an owner builder

If you are building or renovating your own home without being a registered building practitioner or architect, and such work requires a building permit, you will need to apply for a certificate of consent from BPC before undertaking any such work. In this case, the owner builder provisions under the Building Act 1993 will apply to you, and you will be responsible for any defective or non-compliant work in the same way as a registered building practitioner.

You become the Responsible Person for your build. This means you owe statutory warranties to the homeowner and any future purchaser, you must rectify defective, non-compliant or incomplete work, and you can be issued with a Rectification Order just like a registered building practitioner.

Before you start any work as a owner builder, make sure you:

• Obtain your Certificate of Consent from BPC if the domestic building work requires a building permit
• Confirm product and installation requirements early
• Keep records from day one for any supplies or materials purchased or subcontracts entered into by you and all documents provided to, or issued by, the relevant building surveyor for the project (these should be kept for 10 years after completion of the work)

If you plan to sell the property within 6 ½ years of completion of the work, you will also need to obtain an inspection report for the work and apply for Home Warranty through the BPC, paying the applicable premium before you enter into a contract of sale for the property.

Your inspection report should cover defective or non-compliant work, any second-hand materials used in construction, including colour photographs of all such work. Failure to include such items in the inspection report means that you will be responsible for rectifying the defective or non-compliant item at your cost.

Note: Defects identified in your inspection report are generally excluded from Home Warranty cover.

Next steps

The legislative changes which took effect on 1 July 2026 raise the compliance bar for everyone doing domestic building work in Victoria. Understanding your financial obligations, insurance requirements and compliance responsibilities will put you in the best position from day one to ensure that you meet your legal obligations.

If you are unsure about anything, speak to your accountant, a registered building practitioner, a building surveyor, your local council or contact the BPC directly before you begin.