03.06.2019

Building Industry Reforms: What you need to know for 1 July 2019

In the May edition of Intersect an update on the matters relating to the issuing of a building permit number by the VBA were contained with the article title “Building Activity Management System” which covers the issuing of a building permit number by the VBA; and payment of building permit levy.

We take this opportunity to remind you of other reforms commencing 1 July 2019.

Changes effective from 1 July 2019 – At a glance

  • Issuing of a building permit number by the VBA
  • Review by VCAT of refusal to issue a building permit number
  • Offences relating to the issue of a building permit
  • Payment of building permit levy
  • Cost of building work
  • Relevant building surveyor must refuse permit in certain circumstances
  • VBA must be notified of increased building costs
  • Re-assessment of building permit levy
  • Penalty associated with re-assessment of building permit levy
  • Building permit levy for work carried out without a permit
  • Penalty levy and costs associated with work carried out without a permit
  • Relevant building surveyor must notify the Commissioner of State Revenue in certain circumstances

Review by VCAT of refusal to issue a building permit number

An applicant for a building permit may apply to VCAT for review of a refusal by the VBA to issue a building permit number for the building permit.

Offences relating to the issue of a building permit

The relevant building surveyor must not issue a building permit unless the VBA has issued a building permit number for that building permit.

Penalty: 500 penalty units in the case of a natural person / 2500 penalty units in the case of a body corporate.

The relevant building surveyor must not issue a building permit unless the permit specifies:

  • the building permit number issued by the VBA for that building permit; and
  • any other information required by the regulations to be specified in the building permit.

Penalty: 10 penalty units in the case of a natural person / 50 penalty units in the case of a body corporate.

Cost of Building Work

The building permit application must contain information about the cost of building work. It must specify the contract price for the building work (including the cost of labour and materials), if there is a contract for the building work; or in any other case, include sufficient information to enable the relevant building surveyor to estimate the cost of the building work (including the cost of labour and materials).

Relevant building surveyor must refuse permit in certain circumstances

The relevant building surveyor must refuse an application for a building permit if the relevant building surveyor is satisfied;

  • that the contract price for the building work specified in the application is substantially lower than the price normally payable under contracts for building work of that kind; or
  • that the application does not include sufficient information to enable the relevant building surveyor to estimate the cost of building work; or
  • contains a statement about the cost of the building work that is false or misleading in a material particular.

VBA must be notified of increased building costs

This applies if, after the issue of a building permit in relation to the carrying out of building work in or on a building or land, a variation has been made to the building work which has resulted in an increase in the cost of the building work estimated by at least $15,625.

  • If the variation to the building work is not related to an amendment of the building permit, the owner of the building or land must give written notice to the VBA of the revised final cost of the building work within 28 days after the owner becomes aware of the increase in cost.
  • If the variation to the building work is related to an amendment of the building permit, the applicant for the amendment to the building permit must give written notice to the VBA of the revised final cost of the building work within 28 days after the applicant becomes aware of the increase in cost.

Re-assessment of building permit levy

The VBA may re-assess the amount of building permit levy required to be paid in relation to building work after a building permit for that work has been issued because;

  • of a variation made to the building work which has resulted in an increase in the estimated cost of the building work; or
  • the estimate by the relevant building surveyor of the cost of the building work was incorrect; or
  • the VBA considers that the information provided by the applicant in the application for the building permit required was incorrect or misleading.

An amount of building permit levy re-assessed is to be calculated on the cost of the building work.

If a re-assessment for building permit levy exceeds the amount of levy already paid, the VBA must give a notice of re-assessment to the person liable to pay the additional amount.

The VBA may re-assess an amount of building permit levy no later than five years after the later of the following:

  • the issue of an occupancy permit required by the building permit;
  • a certificate of final inspection for the building work;
  • the date of practical completion of the building work.

In re-assessing a building permit levy, the VBA must take into account the following:

  • the information included in the application for the building permit under section 205H of the Act;
  • any other information given to the VBA by the applicant for the building permit or the relevant building surveyor relating to the cost of the building work;
  • any other information relating to the cost of the building work that the VBA considers relevant.

Penalty associated with re-assessment of building permit levy

The VBA may impose an amount of penalty levy of up to twice the difference between the re-assessed amount of levy and the amount of levy if;

  • the person liable to pay the additional amount of levy failed to notify the VBA within the specified period about a variation to the building work that resulted in an increase in the cost of the building work by at least $15,625; or
  • the VBA considers that the applicant for the building permit gave false or misleading information to the relevant building surveyor or the VBA about the cost of the building work.
  • the VBA may decide not to impose a penalty levy if the VBA is satisfied that the person liable to pay the additional amount of levy held an honest and reasonable belief that a variation to the building work did not increase the cost of the building work by at least the prescribed amount.

A person who is given a notice must pay the additional amount of building permit levy and any penalty levy to the VBA within 14 days after the notice is given to the person.

The VBA may recover an amount of building permit levy and penalty levy from the person required to pay the levy and penalty levy in a court of competent jurisdiction as a debt due to the VBA.

A person who is given a notice may apply to VCAT for review of the following decisions of the VBA:

  • the decision by the VBA to re-assess an amount of building permit levy;
  • the re-assessment of the amount of building permit levy by the VBA;
  • the decision by the VBA to impose penalty levy;
  • the amount of penalty levy imposed by the VBA, payable by the person.

Building permit levy for work carried out without a permit

If a person is found guilty of an offence for carrying out building work without a building permit, the VBA must assess an amount of building permit levy required to be paid in relation to the building work that was carried out without a building permit. The VBA must make the assessment no later than five years after the finding of guilt for the offence.

If the VBA believes on reasonable grounds that a person has carried out building work without a building permit, the VBA may decide to assess an amount of building permit levy required to be paid in relation to that building work. The VBA must make the assessment no later than five years after the alleged contravention.

The VBA may appoint an appropriately qualified registered building practitioner to investigate the building work and make a report to the VBA that includes an assessment of the cost of the building work.

Penalty levy and costs associated with work carried out without a permit

If the VBA has made an assessment of building permit levy, the VBA may impose an amount of penalty levy of up to twice the amount of levy assessed.

If the VBA has assessed a building permit levy, the VBA may charge the person that owned the building or land at the time at which the building work was carried out in or on that building or land the reasonable costs incurred by the VBA in determining the cost of the building work.

The VBA must give a notice of the levy, any penalty levy imposed and any costs charged by the VBA to the person that owned the building or land at the time at which the building work was carried out in or on that building or land. This must be paid to the VBA within 28 days after the notice is given.

A notice must state that the person given the notice has the right to apply to VCAT for review of the decision by the VBA to assess the building permit levy, the amount of levy assessed by the VBA, any penalty levy imposed by the VBA or any costs charged by the VBA.

The VBA may recover the amount of building permit levy, penalty levy or costs required to be paid in a court of competent jurisdiction as a debt due to the VBA.

A person may apply to VCAT for review of the following decisions of the VBA:

  • the decision by the VBA to assess a building permit levy for building work carried out in relation to a building or land owned by the person at the time at which the building work was carried out;
  • an assessment of building permit levy by the VBA, payable by the person;
  • the decision by the VBA to impose an amount of penalty levy;
  • an amount of penalty levy imposed by the VBA, payable by the person;
  • an amount of costs charged by the VBA, payable by the person.

Relevant building surveyor must notify the Commissioner of State Revenue in certain circumstances

In certain circumstances, the relevant building surveyor is required to notify the Commissioner of State Revenue (CSR) within 10 business days of receiving a notice from the VBA that the estimated cost of building work relating to an application for a building permit has increased. The notification must include the description of the land and building work that is being carried out and other details relevant to the application for a building permit.

This requirement to notify the CSR will apply where:

  • the relevant building surveyor has previously given notice to the CSR under section 18B(2) of the Act relating to an application for a building permit for work to be carried out on land where there is a Growth Areas Infrastructure Contribution (GAIC) recording under the Planning and Environment Act 1987
  • the increase in the estimated cost of building work means that the application for a building permit is no longer an excluded event under section 201RB of the Planning and Environment Act 1987; and
  • none of the circumstances described in section 201SA of the Planning and Environment Act 1987 applies to the land on which building work is to be carried out.