If you build homes or apartments in Victoria, the single most important document about your business is no longer your insurance eligibility letter. It’s your registration, and as of 1 July 2026, that registration comes with a financial test.
The Minimum Financial Requirements (MFR) regime, administered by the Building and Plumbing Commission (BPC) under the Building Act 1993, replaced the old VMIA eligibility assessment. If you held an active domestic building insurance Letter of Eligibility at 30 June 2026, you transitioned across automatically and your approved limit became your Maximum Construction Capacity. Nothing arrived in the post demanding immediate action.
The danger: A lot of Victorian builders have concluded from the silence that nothing changed. What actually changed is that your financial position stopped being an annual insurance formality and became a continuous condition of holding your licence.
The four obligations that now sit behind your registration
Adjusted net tangible assets of at least 5% of your approved capacity
For capacity up to $20 million, you need adjusted net tangible assets equal to at least 5% of your approved capacity. A different calculation applies above that.
The word to focus on is adjusted. This is not the net assets line on the balance sheet your accountant prepared for tax. Intangibles, revaluations, and money owed to you by related entities and directors don’t necessarily count. A builder carrying $600,000 of “assets” that turn out to be a loan to a related development entity, some goodwill and a revalued ute has less real cover and BPC’s test is designed to see through exactly that.
If you’ve never had someone run the adjusted calculation on your numbers, you don’t currently know whether you pass.
A Maximum Construction Capacity (MCC) you cannot quietly exceed
MCC caps the total value of domestic building work you can have on hand at any one time. Exceeding it is a breach of your registration condition. Increasing it requires an application, supported by financials, before you take the work on.
This is the obligation most likely to bite. A strong year, an unexpected win, a client who brings forward a stage and you’re over the limit. A capacity breach is a compliance problem you can usually fix with an application; a misstatement to the regulator is a fit-and-proper problem you may not recover from.
MCC headroom is now a number you should know at the same frequency you know your bank balance.
Quarterly management accounts if your MCC is above $2 million
Above $2 million MCC, you need quarterly internal management accounts, with financial information prepared or reviewed by an independent qualified accountant. BPC can also call for profit and loss statements, balance sheets, cashflow statements and work-in-progress data.
Most builders in this bracket already produce something quarterly. The gap is usually that it’s an internal bookkeeper’s export rather than accounts an independent accountant has reviewed, and that WIP is estimated rather than measured. If BPC asks and you produce a spreadsheet nobody has signed off, that’s a bad first impression at precisely the wrong moment.
The five-business-day notification
You must be able to pay your debts as and when they fall due and if you become unable to, you must notify BPC within five business days.
Why the 5 day rule deserves your full attention
This obligation puts a regulator-facing deadline on a question directors have always had to answer internally: can we pay our debts as they fall due?
Three consequences follow.
It runs alongside your insolvent trading exposure, not instead of it. Section 588G of the Corporations Act already makes a director personally liable for debts incurred while the company is insolvent. The MFR notification doesn’t change that duty. What it does is create a dated record of when you knew or of a period where you plainly should have notified and didn’t. If things later go wrong, a liquidator, a creditor or ASIC will be reading that timeline.
The safe harbour is still available, but only if you move early. Section 588GA protects directors who, after suspecting insolvency, develop a course of action reasonably likely to lead to a better outcome than immediate administration while keeping employee entitlements and tax lodgements up to date. Safe harbour is not a form you file; it’s a documented process you start. The five-day notification is a signal you’re already at the point where that process should be underway, not something to think about after you’ve lodged.
Notification is not the end of the conversation. BPC’s stated approach on insolvency is to engage, ask what’s happening, and assess whether suspension is warranted. Practitioners who respond and put a credible picture forward are treated differently from those who go quiet BPC has said it doesn’t automatically suspend directors of companies genuinely working through difficulty. Practitioners who don’t respond get suspended and then get a notice proposing cancellation.
The registration class check you should do this week
Separate from financials, there’s a compliance gap that catches experienced builders.
A Domestic Builder (Unlimited) registration can carry a condition restricting you to Class 1 and 10 buildings, plus Class 2 and 4 buildings up to three storeys. Many excellent residential builders hold exactly that.
Victoria’s commercial classes, by contrast, are set by height in metres, not storeys:
- Commercial Builder (Low Rise) up to 15 metres
- Commercial Builder (Medium Rise) up to 25 metres
- Commercial Builder (Unlimited) no height limit
A four-storey Class 2 apartment building runs around 12–13 metres and sits inside Low Rise. Five or six storeys roughly 16 to 20 metres generally needs Medium Rise. Storeys and metres don’t line up neatly, and assuming they do is where builders end up working outside their class.
So before you sign the next one, confirm:
- Which class your registration actually is, and whether it carries a storey condition.
- The building’s height in metres not its storey count in the marketing material.
- Whether the contracting entity holds the registration, or whether it sits with a related company or with you personally as nominee.
- Whether a Class 2 job delivered under a major domestic building contract needs both commercial registration for the height class and domestic builder registration.
Working outside your class exposes you to disciplinary action and offence provisions, and can undermine the enforceability of the contract you’re relying on to get paid.
What to do in the next 90 days
This month. Get the adjusted NTA calculation done properly, with your accountant, on current numbers. Write down your MCC and your actual work-in-hand today, and calculate the headroom. Pull up your registration record and read the conditions on it rather than assuming.
This quarter. If your MCC is above $2 million, make sure quarterly management accounts are genuinely being prepared or reviewed independently, with WIP measured rather than guessed. Build a simple rolling 13-week cashflow. It’s the tool that tells you whether the five-day question is coming, weeks before it arrives.
Ongoing. Treat MCC headroom as a gate in your tendering process, not a number you check afterwards. If a job would put you over, apply first.
The point most people miss
Victoria has rebuilt its entire construction regulator merging the VBA, DBDRV and VMIA’s insurance function into BPC, introducing rectification orders reaching ten years back from occupancy, and legislating developer bonds and decennial liability insurance. MFR is the financial-stability leg of that structure, and it applies to everyone.
The builders who’ll struggle aren’t necessarily the unprofitable ones. They’re the ones who find out where they stand at the moment a regulator asks, rather than the moment they could still do something about it.
You now have a 5 day clock, a capacity cap and a solvency test attached to your right to trade. The reasonable response is to know those three numbers cold, and to get advice early enough that you still have options rather than obligations.
Olvera Advisors works with directors, boards and financiers on restructuring, turnaround and insolvency matters across the construction sector and beyond. Follow Olvera Advisors for more analysis on the regulatory and financial changes reshaping Australian building.
This article is general information only and is not legal, financial or accounting advice. Requirements and commencement dates should be confirmed against BPC guidance and the Building Act 1993 (Vic) before you act on them.
