Linkedin
Facebook
Email
more
New financial obligations for domestic builders in Victoria
What you need to know and why you need to consider your options early.
Following a consultation period, the Building & Plumbing Commission has finalised the regulations to its financial assessment criteria (previously referred to as minimum financial requirements) for domestic builders in Victoria, based on stakeholder feedback.
These reforms represent a significant shift in financial reporting and compliance obligations for domestic builders. While the original draft regulations were considered overly onerous, particularly for small to medium domestic builders, the updated framework introduces a more balanced and practical approach.
The overarching aim of the framework is to improve consumer protection by ensuring builders are financially viable, liquid and capable of completing domestic building projects.
Understanding the final requirements, and preparing early, will be critical to maintaining compliance and supporting sustainable business growth.
Key proposed changes:
| Draft obligations | Proposed changes |
|---|---|
Building classification based on net tangible assets (NTA)
| Net tangible assets: Under the updated framework, NTA requirements are now linked to construction capacity (CC), replacing the previous revenue-based approach. The required NTA thresholds are:
Example NTA requirements based on construction capacity:
This tiered approach introduces a more scalable method of assessing financial capacity for builders of different sizes. |
Revenue cap introduced
| Assessment based on CC or total construction limit (TCL).
|
Quarterly financial reporting
| Quarterly financial reporting:
|
Compliance reporting & notifications Builders must notify the Victorian Building Authority if any financial metrics fall below required thresholds, including:
| Compliance reporting & notifications Builders must notify the regulator if they fail to meet financial requirements, including:
|
Asset valuation requirements
| Asset valuation requirements:
|
Enhanced reporting for tier 2 & 3 Builders
| Enhanced reporting for tier two and three builders:
|
Treatment of trust structures
| Treatment of trust structures:
|
Other considerations
While the updated framework introduces a number of refinements, several elements remain unchanged and continue to form part of the compliance landscape:
- Guarantees – The authority may permit certain guarantees to support a builder’s asset position (excluding sole traders), providing additional flexibility in meeting financial requirements
- Group structures – Where building businesses operate within a corporate group, assessments may be undertaken at either a group or individual entity level, depending on which approach best reflects the financial position
- Valuations and audits – The authority retains the right to request independent valuations or audits where financial information is considered unreliable, incomplete or potentially misleading
Implementation
For builders registered as of 30 June 2026, there is a transition period. Based on their construction capacity (per their ‘letter of eligibility’), the transitional period allows existing registered builders the following time frames to conform to the new criteria:
| TCL | Criteria apply from |
|---|---|
| Less than $2m | 1 July 2029 |
| $2m – $20m | 1 December 2029 |
| Over $20m | 1 March 2030 |
It is essential that domestic builders understand the potential implications of this proposed legislation and begin planning early.
Whilst these regulations are not final, they are expected to be finalised with a 1 July 2026 commencement. New applicants from 1 July 2026 will be required to comply with the new regulations upon registration.
What builders need to do now to best prepare for the proposed changes:
- Calculate your current Net Tangible Assets (NTA / ANTA)
Ensure your asset position meets the update thresholds based on your construction capacity. - Assess your construction capacity (CC / TCL)
Understand your current TCL and how it compares to your project pipeline and future work in progress. - Align NTA to construction capacity requirements
Confirm that your NTA meets the required percentage thresholds (5% up to $20m, 3% thereafter) and consider strategies to strengthen your balance sheet if required. - Review solvency and cash flow position
Ensure you can meet debts as they fall due and implement regular monitoring processes to identify risks. - Review your business structure (including trusts)
Given trust assets are now recognised, reassess whether your current structure remains appropriate or if optimisation opportunities exist. - Implement or refine quarterly management reporting
Ensure you can produce accurate and timely financial reports, ready to be provided to the regulator within 14 days upon request. - Engage with your adviser early
Work with your accountant to model scenarios, assess compliance under the new framework, and identify any required funding or restructuring strategies.
We recommend speaking with one of our local specialists to discuss how these changes may affect your business and to develop a strategy that ensures compliance while supporting sustainable growth.
For more information
If you would like to learn more about the topics discussed in this article, please contact your local RSM office.
