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New calculations for cost of building works in Victoria
The Building and Plumbing Commission has released a new Form 1 (Application for Building Permit) which must be used for all applications from 26 November 2025. The Form 1 is needed so the relevant building surveyor (RBS) can calculate the building permit levy. The changes aim to ensure that the building permit levy is only charged for actual building work.
Cost of works
Before a building permit can be issued the owner or their builder (as agent) is required to provide the Registered Building Surveyor (RBS) with a calculation of the cost of the building work on the Form 1 provided to the RBS.
The new Form 1 will require the calculation of the cost of the building work to include the contract price between the builder and client, or an estimate of the amount the builder is to receive under a cost-plus contract, and the cost of any ’chattels’ supplied under that contract which the RBS will be expected to deduct.
What is a chattel?
A chattel is a moveable item that may be provided to the homeowner as part of a home building contract, as opposed to a fixture that is effectively built into and forms part of the building.
Examples of chattels include fridges, televisions and washing machines, which can be easily removed. By comparison, fixtures may include built-in air conditioners, light fittings, ovens and rangehoods, which cannot be easily removed and would be expected to remain in the home if it is sold.
Impact on builders
If the builder supplies any chattels as part of the contracted works, it will now be necessary for the builder to identify the cost of the chattels. The builder may elect to do this in the home building contract or provide the information by other means.
As the cost of the chattel is the cost to the owner, it may not be the same as the cost the builder pays to a supplier. The builder is entitled to include their margin in the cost of chattels charged to the owner.
Similarly, chattels should be excluded from the contract price and therefore the cost of building work if the homeowner elects to purchase them directly.
Key considerations
The RBS may reject an application for a building permit if they believe:
- the contract price appears substantially lower than normal.
- chattel costs appear substantially higher than normal.
- the contract contains false or misleading information.
The changes to the Form now include Parts A, B, and C that need to be completed.
E.g. for a single Class 1a and attached Class 10a building:
Extract from Form 1
Cost of the building work
Note: All costs specified in an application are to be inclusive of GST.
If the application for a building permit is made by a person other than an owner-builder:
Part A
Is there a contract or agreement (other than a cost-plus contract or agreement) with a builder for carrying out the building work?
[Yes/No]
If yes, specify the contract price or agreed amount to be paid to the builder (including for the cost of labour and materials) under the contract or agreement:
[$ Insert contract price]
If no, is there a cost-plus contract or agreement with a builder for carrying out the building work?
[Yes/No]
If yes, specify the builder's estimate of the total amount that the builder will receive or is likely to receive (including for the cost of labour and materials) under the contract or agreement:
[$ Insert estimate]
Specify the cost of any chattel under the contract or agreement:
[$ Insert cost of chattels]
Specify the cost of any prescribed excluded item under the contract or agreement:
[$ Insert cost if applicable]
Part B
Specify the class or classes of building to which the building work relates: Class 1a and Class 10a
Does the building work relate to both:
- one or more buildings in a Class 2, 3, 4, 5, 6, 7 or 8 building; and
- one or more buildings in a Class 1, 9 or 10 building?
[Yes/No]
If yes, specify the information required under Part A and under Part C (if applicable) according to whether the building work relates to:
- buildings in a Class 2, 3, 4, 5, 6, 7 or 8 building; and
- buildings in a Class 1, 9 or 10 building.
Part C
All stages of staged building work
Does the application relate to a stage of the whole of the building work?
[Yes/No]
If yes, specify the extent of the stage:
[Insert information]
Is there a contract or agreement (other than a cost-plus contract or agreement) for carrying out the whole of the building work for all the stages?
[Yes/No]
Calculating CoW – the new formula
The BPC has provided formulas that must be used for calculating CoW from 26 November 2025. GST must be included in all amounts. In their simplest form, the formulas can be expressed as:
| Types of contracts | Formula for calculation (all amounts include GST) |
| Contract price | Calculated cost of the building work = (equals) Contract(s) amount (including labour & materials) - (minus) chattels |
| Cost-plus contract |
Calculated cost of the building work = (equals) |
There are similar calculations for owner builders.
Further details on calculation methods, chattels and forms are available from BPC.
To find out more, contact HIA's Building Services team.
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