house-second-headeraa1jpg-1Consumers who attempt to build, extend, renovate or do repairs are totally unprotected and we can prove that this has been the case for the last 23 years. Many independent inquiries have confirmed this fact, but no government will listen or act to stop what is essentially ‘legalized’ building fraud. Just read some of the stories of those whose lives have been ruined, Then come join us and be part of bringing about genuine change. 

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To all the people out there who are (or are a relative of, or who know anyone) thinking of building a new home or unit, (OR anyone thinking of buying an under-warranty house, or a house with under-warranty additions or a new apartment)... for their sake...

Help us to spread this message for the sake of those about to build or buy a new home or unit (and for the sake of our Australian economy)... that:


Scroll down to read articles that may concern you or a friend.

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Term Distortion 2 :
DOMESTIC BUILDING WARRANTY INSURANCE (It is only 2% insurance and 98% rip-off).

When taking out a building contract in the residential building industry, there is a requirement that the builder takes out building warranty insurance to cover the owners against what can go wrong.

In Victoria it is compulsory… and there is only one insurer… the Government’s own VIMA… so the HIA & MBA brokers are merely adding to the cost.

This insurance covers home owners (from the earlier date of signing of the contract or building permit)… for loss or damages resulting from incomplete or defective works when the builder has died, disappeared or become insolvent… or failed to comply with a Tribunal or Court Order where DBI was issued by VIMA after 30 June 2015…

So the home owner has to pursue the builder to bankruptcy in order to claim on insurance for poor workmanship and incompletion.

Insurance is supposed to cover people against what can go wrong, but…

Building Warranty Insurance also does not cover the following:-
• An excess that applies to claims for defects after the expiry of 1 year.
• Incomplete works over 20% of the contract price.
• Structural defects after 6 years up to the end of the policy.
• Non-structural defects after just 2 years.
• For subsequent buyers, defects of which you should have been aware before you purchased the home.
• Legal fees relating to any dispute with the builder.
• Loss of rental income or additional interest charges.
• Liquidated damages for unfinished works at contracted
completion date.
• Any payment you made to the builder over and above what
was required to be paid by the contract.

We at VBAG think that this government-owned insurance is the biggest rip-off of any insurance in Australia BY FAR… and it is compulsory... AND IT STINKS.

Without the insurer being in charge of the de-registration of builders, there is virtually no policing of re-offender poor quality builders or of those who blatantly breach regulations.

AND by the way... total payouts are < 1.5% of total premiums.
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These figures are deliberately conservative... and the true figures are likely to be (not a little more, but) considerably more that stated here.

This article is about the staggering value of the large number of defects left in new homes for a variety of reasons including:-
1. The definition(s) of defect used by building consultants are at best only half definitions... covering only half of the implied warranties,
2. The large number of disclaimers attached to building consultant reports preclude the building consultants even getting to over half of the defects including most structural defects,
3. The repairs (by builders allowed to return to ‘fix the agreed defects’) are mostly band-aid repairs which repeat the defect, or treat just the symptoms caused by some underlying defects,
4. Some serious defects (such as those caused by future heave) are a serious lack of resistance built into the construction right at the beginning and can result in the necessity for re-builds,
5. Some serious defects are caused by blunders by builders due to a lack of building science knowledge and /or caring (and are often subsequently missed by building consultants for similar reasons plus employer-imposed unreasonable disclaimers... as explained...

Building inspections should be carried out only by sole traders, because employees are hamstrung by employers complying with workers compensation insurance conditions that severely restrict their access during their inspections… to the point that they only look at about 50% of the house at best because of these disclaimers.

Now to the cost estimates relating to the alarming number of defects which are left undiscovered and/or untouched in close to an average 100 000 new homes in Australia each year… and that have continued to accumulate since about 1994.

We conservatively estimate the value of (properly rectifying) defects left in new homes and units (after builders attend to what they must during the contracted warranty time) as being an average figure of $25 000 per home.

We think the above figure is likely to be far greater when long-term issues come to light... such as the effects of long-term heave already affecting thousands (and likely to affect thousands more) of homes in Melbourne’s far west: AND the issue of failed tiled roofs caused by a lack of bracing which causes far worse creep and deformation of trusses than the trusses were designed to cope with.

Just these two issues could well double our average rectification figure.

So with (say) 35 000 homes per year in VIC, the total figure for defects left in homes is $875 Million per year... AND so for the 115 000 homes Australia-wide (based on Australian Bureau of Statistics 8752.0 Building Activity figures) the defects total is conservatively $2.875 Billion per year.

X 23 years since the poor quality started in earnest is just over $66 Billion...

X 75% (allowing for those defects actually properly attended to during the warranty period) = $49.5 Billion worth of defects out there since 1994 just waiting to create havoc in future (or cost almost twice as much if continually band-aided).

Add to this other long-term issues such as storm damage caused by massive numbers of roof tiles coming off in 20 / 50 year-return storm events that were inadequately catered for, garage ceiling collapses already starting, balcony rot collapses, and so on... on top of the bathroom floors rotting in most houses and the list goes on. The figure must then be well over $70 Billion.

And that's without the apartment disasters happening or waiting to happen... Alucobest cladding X 500 buildings, water entry from outside particularly near the beach, water entry from apartments above (will be commonplace) and so on.

So the total conservative figure for defects left to create future havoc (all up) for residential dwellings (given that some problems in commercial apartments are more recent and also far more expensive) would then be well over $100 Billion.

If nobody fights (with our new conciliation knocking the stuffing out of home owners)... and just band aiding occurs, (because of the lack of a thorough definition of defect and inadequate specifications), you can conservatively add 50% to the cost estimates above (because band-aiding defects instead of rectifying the defects in the long-term costs 1.5 times as much ... so that the total blight of outstanding defects rectification for the whole residential building industry would conservatively be in excess of $150 Billion.

VBAG has been trying to tell Australia that the potential for a blighted (wasteful of materials) economy is enormous and growing, and actually worsened by recent reforms in Victoria.

We are concerned that Australia will sink rapidly into Poor Nation Status unless something is done to rid us of the tragic debacle that is our Residential Building Industry.

We simply must stop the band-aiding of defects in our new homes via better definitions in building contracts of DEFECT and SPECIFICATION.

We must also upgrade our Domestic Building Warranty Insurance scheme to what it was pre 2002... a First-Resort Insurance where the insurer polices builder registrations and regularly audits financial status of builders and new contracts to drastically decrease the number of larger builders going into liquidation. Poor quality builders and repeat offenders will once again be weeded out as they should be.

What home owners (and their negating builders) spend fighting in disputes over poor workmanship is just as astounding.

At approximately $6 Billion in 2013 in Victoria ($3B home owners / $3B builders), this is likely more than $20 Billion per annum Australia-wide.

We think you’ll agree that something has to be done about this massive problem NOW.

And the political parties and the media argue for months over $3 Billion extra taxes and the like!

Original figures have been altered in line with the break-up of dwelling types in accordance with The Bureau of Statistics 'Building Activity' document 8752.0.

You read it first here at the VBAG site.
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About 25 years ago, a timber (particleboard) floored house with just 2 sub-floor vents… on one side only (instead of the required minimum 54 evenly spaced all round for that house) was given a runner-up HIA award. The floors were likely to rot before the house was 15 years old.

Termites like darkness and a moist environment… and a lack of sub-floor ventilation increases both considerably. (photo 2)

Most timber floors since about 1980 are sheeted with particleboard, which has some tolerance to moisture, but not in the medium to long term if there is inadequate sub-floor ventilation... or inadequate clearance above the ground. Allowance should also be made for heating ducts which often block the air flow considerably under houses, particularly larger houses, where supply air ducts are sizeable and often jammed under bearers.

Mould discovered in a 3 year-old shop in a Melbourne hillside suburb sub floor was staggering… with at least 3 types of mould 20 mm long in places. (An item of the shop-keeper’s furniture went through the particleboard flooring… which was why an inspection was called for).

There was no sub-floor ventilation at all!!!

But the shop had been approved by a certifier building inspector and by the building surveyor when the drawings (which did not show any sub-floor vents) were submitted… with outside footpaths above or just below floor level to two sides and party walls on the other 2 sides. Both were negligent as was the ignorant owner-builder (owner builders must also know the regulations).

The owner opted to install the suggested temporary exhaust ventilation to dry out the sub-floor space, BUT did not install the suggested inlet vents on the opposite side… so it was extraction only… and a total failure. So the situation would continue (at a slightly slower rate) until the flooring… and the floor framing (some already rotted at my first inspection) became quite dangerous… when a complete re-do of the floor and framing would soon be necessary at a cost of nearly $50 000 (plus lost rent).

The owner (owner-builder) only replaced the very worst parts of the flooring … ALARM BELLS… he was going to sell to an unwary buyer.

After the second report, the tenant sensibly left.


Many houses are in a situation similar to this… where some will need their floors replaced well before a reasonable life expectancy has been reached. Some have additional pooling water under the house often from pipe leaks.

It would cost something like $200 000 to raise a house after it was built too close to the ground for its particleboard floor to be able to handle the excessive moisture forming in the sub-floor zone as a result of this bungle. It would probably need the house to be totally re-built.

But that would not be ordered in VCAT because alternatives would be considered passable given the costs involved in a re-build… based on a principle in the Building Act that ensures that money is not ‘wasted on excessive repairs’ that would be required to reinstate a building to the way it should have been built… ‘when alternatives are cheaper’.

That’s our legal system...

And so the increasing of sub-floor ventilation, the excavation of soil under the house and placement of plastic over the ground to prevent moisture rising from the soil under the house, the lowering of paving and soil and re-landscaping some gardens around the house (sometimes with agricultural drainage needed as a result of these measures), would all be considered appropriate alternatives, because they cost far less… estimated at something like $15 000.

The non-compliance of the reduction of required minimum soil cover of footings as a result of what was dug out under the house may be considered, but paltry compensation would probably be the outcome based on the same principle.

Builders often did this to avoid the additional cost of 2 rows of bricks all around the house plus extra stump height plus an extra step to all external doors with the likelihood of at least one entry point also needing a landing and handrails. In the past, builders often avoided this extra height to save money, particularly in the days when heating was via gas wall furnaces and / or fire places; so that heating ducts were not required under the floor.

There are thousands of homes that were built this way… homes that often cannot be inspected underneath at all… and termites love this environment.

Fortunately the drier climate sine the extraordinary 14-year drought from about 1996 – 2010 has slowed down the excessive moisture process for these homes, but when the moisture is again excessive, mould will form and rot will again recommence with sometimes costly results.
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How do we get the message through to would-be new home owners and would-be new apartment owners... that many of them are potentially facing serious problems with their new homes if they do not take the necessary precautions and become better informed.

We need to cut to the quick, and insist on the government insurer being in charge and responsible for the builder-caused calamities that beset so many building consumers; so that they (the governments) will once more directly regulate the registration of builders via the warranty insurance scheme.

That needs to be our main target.

Domestic Building Warranty Insurance has to be become the same as other insurances... 3 strikes and you're out... with higher premiums after first and second strikes. And it needs to include grossly poor workmanship.

And in the meantime, alternative professional (builder) indemnity insurance may be needed to fill the enormous gap in cover; until the governments see the light and actually reinstate warranty insurance that actually helps protect building consumers against what can go wrong.

After all that is precisely what insurance is for. At present we have virtually no protection at all… AND IT STINKS.

VBAG keeping building consumers informed.
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September 3, 2016

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                        The Truth Behind the                        ‘Consumer Protection Reform Strategy’ Anne Paten in Sourceable 6 July 2015 109 shares 23 Comments https://sourceable.net/the-myth-and-reality-of-the-consumer-protection-reform-strategy/ After the damaging Auditor-General’s Report of 2011 and the Ombudsman’s Report of … Read more


Over the last fifteen years, there have more than one hundred (100) Inquiries into the building industry and its governance. These have included parliamentary inquiries and investigations by the Auditor-General, the Productivity Commission, the Ombudsman and other independent organizations. 

The Victorian building industry has suffered from systematic and systemic failure for decades. We now have overwhelming evidence to confirm that this ‘system’ has been malfunctioning for the last 22 years.

After decades of criticism of  the Building Commission’s failure as the ‘industry regulator’, and following damning Reports from the Victorian Auditor-General (2011 and 2013) and a scathing Report from the Victorian Ombudsman in 2012, the Government decided that the Building Commission’s record was so tarnished that it had to be abolished.