First Resort Home Warranty Insurance

The introduction of Building Legislation Amendment (Buyer Protections) Bill 2025 introduces reforms to the way home owners warranty insurance operates and directly impacts property owners intending to sell their properties with recent building works. The bill introduces First Resort Home Warranty Scheme (FRHWS). This replaces Domestic Building Insurance in order to protect home owners from loss incurred by incomplete, defective or non-compliant work. As of 1 July 2026, Domestic Building Insurance will transition to the First Resort Home Warranty Scheme.

From 1 July 2026 the following will apply:

1. First Resort Home Warranty Scheme applies to residential buildings up to three storeys. This is consistent with the old scheme;
2. Once the cost of residential construction works exceed $20,000 warranty insurance is required;
3. Structural works over $20,000 require warranty insurance for a period of 2 years;
4. The BPC will be the sole provider of warranty insurance and will take over administration of insurance and dispute resolution from Domestic Builders Dispute Resolution Victoria;
5. Claims can be enacted for incomplete, defective or non-compliant domestic work. The builder or owner builder no longer needs to be dead, have disappeared or have gone bankrupt or into liquidation. If a claim is made, the Building and Plumbing Commission (BPC) can now issue rectification orders which order the builder or owner builder to rectify major defects for a period of up to 10 years from completion and will have the power to take disciplinary action;
6. Applications will only be through the BPC online application portal;
7. Warranty insurance will have a cover limit of $400,000; and
8. Warranty insurance may take 4 to 12 weeks to process after the completion of the online application.

What are the types of defects/claims?

9. Incomplete works

This covers situations where the building works to be carried out under a contract are not completed. This will apply mostly to builders with a building works contract to a person to work for a property owner.

10. Major defects

This relates to the structural stability, safety and integrity of the building and includes waterproofing and weatherproofing defects and consequential damages from these defects. This will be covered for a period of 6 years.

11. Non major defects

This related to defects that do not affect a home’s structural integrity, safety or habitability and includes defects such as doors not closing properly, plastering or tiling issues. This will be covered for a period of 2 years.

What is not covered?

The normal deterioration and issues unrelated to workmanship are excluded from cover including wear and tear, pests and accidental damage.

It is important to note that buyers will not be able to claim for defects that they knew about or should have known about before purchasing a property. Therefore, if you are purchasing property, it is imperative to make your Contract subject to obtaining a satisfactory building and pest report.

How does the First Resort Home Warranty Scheme interact with the warranties in the Building Act?

The Building Act 1993 imposes statutory warranties where builders and owner builders are required to guarantee their work. These warranties include that the building works:

• have been completed in a proper and workmanlike manner;
• use good and suitable materials;
• are in accordance with the plans and specifications;
• are in compliance with the law, including the Building Act 1993;
• are undertaken with reasonable care and skill; and
• are fit for its intended purpose.

The First Resort Home Warranty Scheme is designed to work alongside the existing statutory warranty framework. It does not replace a builder’s legal obligations. Instead, it provides an additional and earlier pathway for owners to obtain assistance where domestic building work is defective, incomplete or non-compliant and the builder does not rectify the issue.

If you are thinking of purchasing property, an owner builder selling property or even need advice on a building and pest report, please contact our office on 03 9707 1155 to get in touch with our experienced property team.