Owner builders

Important note: From 1 August 2017, the following changes have commenced:

The threshold amount for a major domestic building contract increased from $5,000 to $10,000.
The threshold amount above which cost plus contracts are permitted has increased from $500,000 to $1 million.

Your builder must give you a copy of the Domestic Building Consumer Guide before you sign a major domestic building contract. For more information about this and other building law changes, view the Domestic Building Consumer Guide.

Warning for potential owner builders

Be wary if a builder or tradesperson asks you to sign a building permit as an owner builder, even though they will be doing the work.

This is risky for you and may end up costing a lot more than you expect. The builder may be unregistered and/or trying to avoid their legal responsibilities.

Even if you have signed as the owner builder on the building permit:

you and a builder, contractor or tradesperson must enter into a written contract for domestic building work more than $10,000
a builder, contractor or tradesperson must give you domestic building insurance for work more than $16,000. This insurance protects you if they die, disappear or become insolvent
warranties still apply.

Am I an owner builder?

You are an owner builder if you:

intend to use your own skills to build, extend or renovate your home
intend to manage sub-contractors to do the work
are a registered builder who builds, extends or renovates a home on your property.

As an owner builder, you take on many of the responsibilities of a registered builder and accept any associated financial risks. Responsibilities include:

doing all or part of the work yourself, except work that must be carried out by licensed tradespeople
contracting out all or part of the work to tradespeople, and checking they are registered and licensed if required
choosing whether to engage a building consultant to independently advise you during the construction period. A building consultant can check the quality of your work and the work of those you engage
arranging insurance
occupational health and safety of workers
obtaining permits and organising inspections.

Advantages may include:

more control over the project, including design
saving the cost of the builder’s margin
more flexibility.

spending more money and time than expected
taking responsibility for the work and finance
facing complex situations.

Legal rights and obligations of owner builders

Most laws that apply to registered builders also apply to owner builders.

Your rights and responsibilities as an owner builder are governed by the Domestic Building Contracts Act 1995 and the Building Act 1993. You must:

get relevant planning permits from your local council
be named as the owner builder on permits
engage a building surveyor to obtain building permits, including an occupancy permit or certificate of final inspection on completion of work
get a certificate of consent from the Victorian Building Authority (VBA) before carrying out domestic building works over $16,000. Note: From 1 September 2016, a range of updates affecting certificates of consent for owner builders came into effect. For more information on these and other building law changes, visit Owner-builders - VBA.
ensure that the work meets building regulations, standards and other laws
arrange for building inspections as required by law at particular stages of the building work.

We recommend you:

enter into major domestic building contracts with builders and tradespeople for work over $10,000
use registered builders for work over $10,000 or to reblock, restump, demolish or remove a home, regardless of the value of this work.
ensure any builder engaged for work over $16,000 has appropriate domestic building insurance. This insurance protects you if they die, disappear or become insolvent
always use licensed electricians, plumbers and asbestos removalists (if asbestos removal is required)
view Choosing a building team before engaging contractors
check whether you must undergo any applicable training. For more information, visit Induction training - WorkSafe Victoria.

You can get only one owner-builder permit for a single home and associated work on that property, once every five years. More information about the application process is available on Owner-builders - VBA.

What if I want to sell my owner-built house?

If you sell your property within six years and six months of completing your building work, you must:

provide a defects inspection report not more than six months old from a registered building practitioner for all work regardless of value, including extensions, renovations, garages and verandas
take out domestic building insurance for work over $16,000 to protect the person who buys your property. If a registered building practitioner carried out the work under a major domestic building contract, it should be covered by their domestic building insurance; but you also need your own domestic building insurance to cover your work. The insurance covers non-structural defects for two years and other defects for six years. After six years the property is no longer covered by domestic building insurance.

Domestic building insurance

Domestic building insurance, previously known as ‘builders warranty insurance’, protects the buyer if you (as the owner builder) die, become insolvent or disappear.

To get domestic building insurance, ask the insurance provider what documents they require. You will need:

the defects report
domestic building insurance certificates given to you by builders or tradespeople for work on your project.

The cover becomes effective once the contract of sale is signed. The buyer can only use the insurance when the owner builder has died, becomes insolvent or has disappeared. It covers costs up to $300,000 to fix:

structural defects, for six years
non-structural defects, for two years.

Domestic building insurance does not cover defects or incomplete work identified in the defects inspection report.