LCPA 26/2868
Introduction of the New Home Warranty Scheme
From 1 July 2026, the existing Domestic Building Insurance (DBI) scheme for new eligible domestic building work will be replaced by the new Home Warranty scheme. Existing DBI policies issued before 1 July 2026 will continue to be administered under the current framework.
The home warranty scheme will be administered by the BPC and aims to provide financial protection for homeowners in circumstances covered under the legislation.
Key enhancements include:
- Maximum cover of up to $400,000 for eligible claims.
- Coverage for incomplete works of up to 30% of the contract value (subject to applicable scheme limits and legislative requirements).
- Additional benefits may be available in certain circumstances, including temporary accommodation, relocation and site security costs, subject to legislative requirements and scheme limits.
Further details regarding eligibility, coverage and claims processes will be provided by the BPC as implementation approaches.
Expanded rectification order powers
Paragraph: From July 2026, the BPC will have expanded powers to issue rectification orders for defective, non-compliant or incomplete building work after completion of a project.
These powers may apply for up to 10 years following completion of residential building work and are intended to support the resolution of building issues by requiring responsible parties to rectify identified defects.
The BPC may consider the use of rectification orders when assessing matters that could otherwise result in a home warranty claim.
The rectification order framework is intended to support the resolution of defective, non-compliant and incomplete building work and may, in some circumstances, operate before a homeowner becomes eligible to pursue a home warranty claim.
New financial eligibility requirements for builders
Paragraph: The BPC is introducing a new financial assessment framework for domestic builders, focusing on a builder’s financial capacity matching construction activity.
The existing builder eligibility framework will transition to a new financial assessment model based on maximum construction capacity (MCC) and adjusted net tangible assets (ANTA).
Existing registered builders will have a transition period to meet the new requirements, while new applicants will be assessed against the revised financial criteria from commencement, July 1st 2026.
Looking ahead
Paragraph: The Victorian Government’s building reforms aim to strengthen consumer protections, improve regulatory oversight and support confidence in the residential construction sector.
As the reforms are implemented, homeowners, builders and industry participants should familiarise themselves with the new requirements and seek professional advice where appropriate to understand the impact on their specific circumstances.
This article provides a general overview of proposed reforms. The final operation of the Home Warranty scheme and Minimum Financial Requirements framework will be governed by the legislation, regulations, guidelines and directions in force from time to time.
Next steps
To learn more about the New Home Warranty Scheme, contact the BRIC team.
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