Victoria’s Developer Bond Regime – A Step Forward, But Prevention Still Beats Cure
16 October 2025
The Victorian Government’s new developer bond regime, part of the Building and Plumbing Commission reforms, aims to give consumers stronger protection from building defects.
From 1 July 2026, developers of multi-storey residential buildings will be required to lodge a 2 per cent bond before obtaining an occupancy permit. The bond will be held for two years post-completion, and can be accessed if significant defects are identified. There is also an inspection regime attached. Less than a year out we are still low on detail on what the regulations will entail.
It’s a well-intentioned reform — but like most safety nets, it’s reactive. It seeks to fix what’s gone wrong, rather than prevent it in the first place.
The intent – consumer confidence and accountability
There’s no doubt the scheme will provide additional assurance to apartment owners and buyers. If a developer becomes insolvent or fails to address defects, the bond provides a pool of funds to cover rectification costs.
It also signals a shift in regulatory expectations: developers are now expected to demonstrate not only compliance, but responsibility for ongoing quality. In theory, this should lift standards across the sector.
The practical reality – who really pays?
The reality is that the cost of this regime will flow down the chain. Developers will either price in the cost of the bond or require contractors to absorb it. In the end it is another cost impacting ever-stretched project feasibilities in Victoria, and there’s no guarantee it will prevent defects from arising in the first place.
Why prevention matters more than protection
At Stonebank Group, we see the other side of the equation every day. Through our Construction Quality Advisory Service, we work with developers and builders to proactively manage quality throughout construction, not just audit it at the end. It’s having experienced people monitoring construction at the points we know latent defects are created.
Our approach is deliberately educational, not adversarial. We’re not there to catch people out — we’re there to lift capability.
And what we’ve seen is genuinely encouraging:
Builders who initially saw independent oversight as an inconvenience now value the clarity and support.
Supervisors and trades engage more openly when feedback is collaborative rather than punitive.
Developers gain confidence knowing that issues are identified and resolved early, long before they become disputes or defects lists.
Put simply — we’ve seen a real change in behaviour when quality is treated as a shared objective rather than a compliance exercise.
The hard sell – why this still meets resistance
We know it’s a difficult proposition: hiring someone to “make sure the builder is doing their job properly” can feel like paying twice for the same outcome.
But the truth is, independent quality oversight isn’t about mistrust — it’s about assurance.Just as developers engage independent certifiers, valuers or quantity surveyors, having a third-party advisory function focused on construction quality helps prevent defects, disputes, and cost blowouts.
It’s an investment in certainty and compared to the potential cost of rectification, litigation, or reputational damage, it’s a modest one.
A modern version of the old Clerk of Works
In many ways, what we’re doing is re-establishing the role once held by the Clerk of Works — an independent set of eyes and ears on site, protecting both the client and the integrity of the build.
That role disappeared over time, replaced by fragmented responsibilities and increased contractual complexity. But the outcome is clear: more disputes, more defects, more cost.
Bringing back structured, independent oversight through modern advisory models is how we close that gap — and it’s already working.
Our view
The new developer bond regime is a positive step for consumers and an important signal about accountability in the industry. But it shouldn’t become a substitute for genuine quality management.
Regulation can only react; good culture and good process prevents. And the most effective way to manage construction quality isn’t with a bond lodged at completion — it’s with eyes on the work, when and where it matters, ensuring that quality is built in, not litigated later.
If the industry embraces proactive quality oversight — not as a cost, but as part of doing things properly — we can shift from a cycle of rectification to one of continuous improvement.
That’s how we’ll deliver better buildings, reduce risk, and restore trust — not just through bonds and regulation, but through culture and collaboration.
Please reach out if you would like to discuss further.
Chris Adams
Director
0408 851 556