Victorian law currently gives homeowners substantial protections in a domestic building contract, covering deposits, variations, and defects. Significant reforms have been passed by Parliament, but as at 17 September 2026 they have not commenced and are due to take effect by 1 December 2026. A domestic building contract is one of the largest financial commitments most people make, so it matters to know which rules apply today and which are still on the way.
Last legally reviewed: 17 September 2026. The Domestic Building Contracts Act 1995 (Vic) currently governs residential building work in Victoria. The Domestic Building Contracts Amendment Act 2025 (Vic) received Royal Assent on 16 September 2025 and will change parts of that Act, but its default commencement date is 1 December 2026 unless an earlier date is proclaimed. Until commencement, the current law described below continues to apply in full.
Have a building contract to sign or a dispute with your builder? Get the contract reviewed against the law that currently applies. The protections only work if the contract is right.
Book a Free Client Assessment →What Are the Implied Warranties in a Domestic Building Contract? (Current Law)
Every domestic building contract in Victoria carries implied warranties that cannot be excluded. The builder warrants that the work will be carried out with reasonable care and skill; in accordance with the plans and specifications; using good and suitable materials; in compliance with the law; and that the completed home will be fit to live in.
Two features make these warranties powerful. First, they run with the building, so a later owner can rely on them, not just the person who signed the contract. Second, they cannot be signed away. Any term of a contract that tries to exclude or restrict them is of no effect. These warranties are not affected by the 2025 reforms and continue to apply now.
What Are the Current Deposit Limits for Domestic Building Contracts?
Under the current law, section 11 of the Domestic Building Contracts Act 1995 (Vic) caps a deposit at 5% of the contract price, or 10% if the contract price is under $20,000. If a builder asks for more than the allowed amount, that term can be unenforceable, and you may have grounds to query any overpayment. A builder demanding a large upfront deposit is one of the clearest warning signs to seek advice before signing. This current limit continues to apply now. The 2025 reforms are expected to move deposit limits into regulations rather than fixing them in the Act, which may allow different limits to be set in future, but that change has not yet commenced.
How Do Progress Payments Currently Work?
Under the current law, progress payments must be tied to stages of completed work, with a general proportionality requirement. You should not be paying substantially ahead of the work actually done. This protects you if the builder becomes insolvent mid-project. The less you have overpaid, the less you stand to lose. Insist that payment stages and percentages match the contract and the current Act, and that each claim reflects work genuinely completed.
The 2025 Reforms: Enacted But Not Yet in Force
The Domestic Building Contracts Amendment Act 2025 (Vic) was passed by Parliament and received Royal Assent on 16 September 2025. It has not commenced. The default commencement date is 1 December 2026 unless the Victorian Government proclaims an earlier date. Based on the enacted amendments, once the reforms commence they are expected to:
- Move deposit limits and progress payment rules into regulations, allowing them to be updated without amending the Act itself.
- Permit cost escalation clauses for major domestic building contracts above a set contract value, subject to a cap and additional consumer protections.
- Introduce a tailored definition of "developer" and adjusted contract content requirements for certain contract types.
The reforms are also expected to apply only to contracts entered into after commencement, so contracts signed before that date would generally continue to be governed by the current rules. The precise mechanics, including the final deposit and progress payment percentages to be prescribed by regulation and the exact transitional provisions, have not been finalised in publicly available regulations as at 17 September 2026. We recommend confirming these details against Consumer Affairs Victoria guidance and the final regulations closer to the commencement date, rather than relying on any specific figure now. Until commencement, the current law set out above applies to your contract.
What Happens With Variations and Disputes? (Current Law)
Under the current law, variations, changes to the scope of work, must be recorded in writing, subject to narrow exceptions. A builder cannot simply do extra work and add it to the bill without following the required process. If a dispute arises, Domestic Building Dispute Resolution Victoria and VCAT provide a pathway, but a certificate of conciliation is generally required before proceeding to VCAT.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, our construction team reviews building contracts against the law that currently applies, advises on your rights during a build, and acts for homeowners in disputes across Melbourne and Victoria. We are also monitoring the 2025 reforms and will update our clients as the commencement date and final regulations are confirmed.
A contract review before you sign costs a fraction of resolving a dispute after the build has gone wrong.
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Frequently Asked Questions
1. What does the Domestic Building Contracts Act protect right now?
Under the current law, it implies warranties into every domestic building contract: reasonable care and skill, compliance with plans, good materials, fitness for purpose. These run with the building and cannot be signed away, and are unaffected by the 2025 reforms.
2. What is the maximum deposit a builder can ask for under the current law?
Section 11 of the current Act caps a deposit at 5% of the contract price, or 10% if the contract price is under $20,000. If a builder asks for more, the term may be unenforceable and you may have grounds to query the overpayment.
3. Do progress payments have to match the work done?
Yes, under the current law. Progress payments must correspond to completed stages with a proportionality requirement. Overpaying ahead of progress reduces your position if the builder becomes insolvent.
4. Have the 2025 building contract reforms already commenced?
No. The Domestic Building Contracts Amendment Act 2025 received Royal Assent on 16 September 2025 but has a default commencement date of 1 December 2026, unless proclaimed earlier. Until then, the current rules described above apply. If you have a contract to review, book a free client assessment with Phan Campbell & Associates.