ResCode Assessments

Victoria’s residential code assessment model giving councils discretion to approve compliant development, is not a level playing field.

Some compliant development is being blocked from entering the supply chain.

The VicSmart 10-business day decision pathway is also being underutilised.

• Overhaul the ResCode provisions from a discretionary to a ‘deemed to satisfy’ pathway, where compliant development must be approved.
• Amend the notification and third-party appeal rights process to raise the bar for ‘objections’.
• Introduce a VicSmart permit pathway for dual occupancy development.

Significant Housing Projects

The Development Facilitation Program (DFP) is currently open to major projects on “shovel ready” land near an activity centre.

There are other infrastructure ready sites where this program could be operational.

Decisions are also sitting in the range of 1-2 years, where the program objective is less than 12 months.

• Expand the DFP to include priority precincts, urban renewal and greenfield areas with major infrastructure provision in place.
• Commit to completion of an advisory committee process and an assessment decision in 6-12 months.
• Boost VPA staff resourcing to support the assessment and decision-making process.

Housing target commitments

Local government areas determine housing supply through their land use planning strategies, zoning and overlay decisions.

Tighter regulatory controls constrain housing supply, hampering the achievement of the state government’s plan to keep housing approvals at an average of more than 50,000 new homes a year.

• Monitor and publish local government housing supply 6-monthly.
• Benchmark actual ‘supply to targets’ published in the Victoria In Future 2023 projections. Link results to state government infrastructure/project funding in local areas.

Melbourne’s greenfield land supply pipeline will run out before 2041. That’s less than 18 years supply. A predictable and steady land supply is required to keep pace with demand.

Melbourne’s growth areas are currently contributing around 55 per cent of new housing growth because they offer housing choice, affordability a sense of place and therefore satisfy consumer needs.

• Undertake a full stocktake of Victoria’s greenfield land supply (short, medium and long term).
• Ensure a 15-year supply of greenfield land is available (with no less than 5 years of ‘build-ready’ land being ready for development).
• Bring land to market faster, requiring Precinct Structure Plans to be completed in under 2 years.
• Issue a directive to all government departments to identify surplus land to rezone for housing, including a share for public, community and affordable housing

Melbourne home buyers pay about 40 per cent of the cost of a new house and land package in taxes, fees and charges - locking thousands of Victorians out of home ownership.

Development/infrastructure contributions can collectively amount to between $37,000 and $77,000 per dwelling in Victoria.

Victorians pay the highest rate of stamp duty in Australia.

• Establishing a time frame for the abolition of stamp duty on residential property conveyancing.
• Until this occurs, index stamp duty thresholds annually.
• Reintroduce off-the-plan stamp duty savings, including for foreign buyers.
• Return the First Home Owner Grant to $20,000 for eligible participants building a new home in metropolitan Melbourne.
• Reform Homebuyer fund eligibility requirements so that all participants only require a 3.5 per cent deposit and are eligible for a 35 per cent shared equity contribution.
• Amend planning legislation to cap the percentage of government infrastructure taxes that can be sought under any infrastructure contributions scheme.

The Domestic Building Contracts Act 1985 is out of date and imposes several unnecessary or poorly targeted restrictions on both owners and residential builders.

The requirements around cost escalations, progress payments and timing of signing contracts are not fit for the purposes of builders or consumers.

In addition, should a building dispute arise between a consumer and a builder, both parties are poorly served by the existing measures to resolve matters through the mandatory domestic building dispute resolution process run by Domestic Building Dispute Resolution Victoria (DBDRV).

Immediate actions

• Have a notice approved to allow for cost escalation clauses in domestic building contracts where the contract price exceeds $500,000.
• Increase the threshold for a domestic building contract to be a major domestic building contract to at least $16,000 or whatever amount is required for domestic building insurance to be obtained for a domestic building contract.
• Increase the threshold for domestic building insurance to be taken out to $20,000.
• Decrease the threshold for the use of cost plus contracts back to $500,000, from their current level of $1 million.

Introduce a new Act to regulate home building contracts

• Have focused contract rules for the different types of home building projects, including small building projects, renovations, new detached homes, townhouse and apartments.
• Have separate contract rules for consumers and business clients.
• Allow for flexible pricing, with protection for consumers, to respond to delays in signing of contracts and commencement of projects.
• Include up to date rules for progress payments without prescribed progress stages but with payments linked to work in progress.
• Abolish DBDRV and have disputes heard in court, or VCAT.

The National Construction Code 2022 imposes significant changes to make housing more accessible, manage and prevent condensation and achieve higher levels of energy efficiency.

Businesses need time to understand the new requirements, make the necessary changes to their business practices, update home designs, build display homes and inform customers.

The Building System Review seems to have stalled. Its initial findings, and a report by Cladding Safety Victoria, have highlighted a number of concerns about the quality of class 2 buildings including waterproofing and fire separation as well as cladding.

• Ensure there is no departure from the Victorian Government’s revised adoption date of 1 May 2024.
• Ensure industry is supported to understand and prepare for the new requirements.
• Ensure consumers are given information and advice about what the changes mean in practical terms for housing design and liveability, recognising the changes will also add to the cost of building homes in Victoria.
• Continue the Building System Review and concentrate on identified issues with class 2 buildings to ensure that the quality of these buildings meets consumer expectations.

The nature of home building is changing due to technologies, processes, and innovations in building materials, as well as complex regulatory requirements.

Many older builders are retiring. Others are exiting the industry due to uncertainty and challenging economic conditions.

Shortages of skilled workers continue to place a brake on building industry capacity.

There is an urgent need to invest in workforce capacity and capability, including growing apprenticeships, to ensure home builders have the workforce they need to meet Victoria’s future housing needs.

• Keep talent and experience in the industry.
• Only introduce registration requirements for trades whose work is high risk.
• Avoid unnecessary licensing rules for workers who are not running their own business.
• Improve pathways for young people into industry and increase workforce diversity.
• Support higher apprentice intake, retention and completion rates.
• Upskill and reskill existing workers to ensure their technical knowledge and competencies keep pace with changing technologies and ways of working.
• Support worker career pathways, helping those who choose to progress to operating their own business, or become home builders.