Victoria's new Minimum Financial Requirements for domestic builders

From 1 July 2026, there are new Minimum Financial Requirements (MFR) mandated in the Building Act 1993 that apply to domestic builders in Victoria and will be administered by the Building and Plumbing Commission (BPC). The new regime sits alongside the usual financial requirements imposed by builders’ insurers.

For many domestic builders, the practical impact is the introduction of a new set of financial measures that must be monitored on an ongoing basis:

• Adjusted Net Tangible Assets (ANTA)
• Maximum Construction Capacity (MCC)
• ANTA Threshold
• Total Value of Domestic Building Work (TVDW)

Key requirements

The Minimum Financial Requirements (MFRs) introduced by the Building and Plumbing Commission are centred around two core concepts: Maximum Construction Capacity (MCC) and Adjusted Net Tangible Assets (ANTA).

A registered domestic builder must ensure at all times that the Total Value of Domestic Building Work being undertaken does not exceed its MCC, and that its ANTA does not fall below the ANTA Threshold required to support that MCC.

The regime also introduces a number of financial monitoring and reporting obligations for domestic builders. These include:

• Quarterly Internal Management Accounts where the builder's MCC is $2m or greater. These must be prepared within 30 days of each quarter-end and include a profit and loss statement, balance sheet, cash flow statement, and aged debtors and creditors report (unless waived by the BPC).
• Notification obligations to the BPC, requiring builders to notify the BPC within seven days if they become aware they are likely to breach, or have breached, the MFR requirements.
• Information requests from the BPC, with builders required to provide financial information and supporting documentation within 14 days of a request.

It is worth noting that the requirements to monitor and maintain the required MFR ratios are continuous. The quarterly reporting requirement does not mean compliance is tested quarterly. Builders must maintain MCC and ANTA requirements on an ongoing basis and as noted above notify the BPC within 7 days if they become aware they are likely to breach the MFR requirements.

Accordingly, the practical compliance requirements for most domestic builders are to understand their MCC, monitor their ANTA, ensure they remain within their approved construction capacity, prepare management accounts where required, and maintain sufficient records to demonstrate compliance if requested by the BPC.

Effective dates and transitional rules

Existing domestic builders with an active Letter of Eligibility (from their designated insurer) on 30 June 2026 automatically transitioned into the MFR framework. Their existing Total Construction Limit became their Maximum Construction Capacity and they were not required to reapply to the BPC on 1 July 2026. These builders automatically became subject to the ongoing MFR obligations administered by the BPC.

New applicants for domestic builder registration and existing builders seeking to increase their MCC must engage directly with the BPC under the MFR framework. This requires the submission of an MFR Application or Change Application, together with financial information that enables the BPC to assess the builder's financial capacity, determine its ANTA, and establish an appropriate MCC.

Builders seeking increased capacity must apply to the BPC before entering into contracts that would cause them to exceed their approved MCC. Where the requested capacity exceeds $2m, certain financial information must be verified by an independent qualified accountant.

Maximum Construction Capacity

Maximum Construction Capacity (MCC) represents the maximum value of domestic building work a builder can have underway at any point in time.

The legislation provides the following formula with two MCC thresholds:

MCC threshold	MCC formula
MCC of up $20m	ANTA ÷ 0.05
MCCs above $20m	(ANTA − $400,000) ÷ 0.03

Worked examples of MCC calculations

Maximum Construction Capacity	Minimum Adjusted Net Tangible Assets Required
$2m	$100,000
$5m	$250,000
$10m	$500,000
$15m	$750,000
$20m	$1,000,000
$30m	$1,300,000
$50m	$1,900,000

Adjusted Net Tangible Assets

Adjusted Net Tangible Assets (ANTA) is calculated as:

ANTA = Assets − Liabilities − Disallowed Assets

Examples of assets that can generally be included	Examples of Disallowed Assets
• Cash  • Trade debtors  • Inventory  • Plant and equipment  • Motor vehicles  • Real property  • Certain related party loans  • Listed shares	• Goodwill  • Intellectual property  • Customer lists  • Crypto assets  • Unlisted investments  • Inaccessible superannuation  • Personal-use assets such as recreational vehicles

Total Value of Domestic Building Work (TVDW)

A builder's Total Value of Domestic Building Work (TVDW) is calculated as the sum of:

1. The Contract Price under every Insurable Domestic Building Contract entered into by the builder, excluding contracts where either:

• the Completion Date has occurred
• the contract has been terminated.

Plus

2. The market value of all Speculative Domestic Building Work carried out by the builder where Home Warranty cover has commenced, excluding speculative projects that have reached Completion Date.

What happens if a builder breaches the MFRs?

Failure to comply with the MFR requirements may result in:

• disciplinary action under the Building Act 1993
• immediate suspension of registration
• requests for further information from the BPC
• entry into an MFR Agreement with the BPC to restore compliance.

The BPC must immediately suspend a builder's registration if it reasonably believes the builder has ceased to meet the MFRs.

Proposed requirements removed from the final framework

Several features discussed during the consultation phase were not included in the final framework. It is important for builders and advisers to distinguish between the consultation proposals and the requirements that ultimately commenced from 1 July 2026. 

In particular, the following proposed measures did not form part of the final regime:

Proposed feature	Final position
Three-tier classification system based on Net Tangible Assets:  Tier 1: $1–$50,000  Tier 2: $50,000–$1.5m  Tier 3: $1.5m+	Not adopted.  The final framework does not classify builders into NTA-based tiers.
Proposed commencement dates based on tiers:  Tier 3 - Reporting years starting on or after 1 November 2027  Tier 2 - Reporting years starting on or after 1 March 2028  Tier 1 - Reporting years starting on or after 1 July 2028	Not adopted.  The regime applies to every registered domestic builder now (since 1 July).
Mandatory current ratio requirement of at least 1:1.	Not adopted.
Notification obligations triggered by financial metric movements, including where the current ratio falls below 1 or Net Tangible Assets reduce by specified percentages.	Not adopted.
Broad mandatory ongoing reporting requirements proposed during consultation.	Not adopted in the proposed form.  Instead, BPC can request financial information and conduct reassessments where required.

Key takeaway

For many domestic builders, the MFR regime does not replace existing insurer, banking, or commercial reporting requirements. Instead, it introduces a new layer of financial compliance focused on:

• maintaining ANTA
• staying within MCC limits
• monitoring Total Value of Domestic Building Work
• preparing quarterly management accounts (where required)
• demonstrating ongoing compliance to the BPC.

How SW can help

The new MFR regime introduces a number of new financial concepts and compliance obligations for domestic builders, including MCC, ANTA, ANTA Thresholds, and ongoing monitoring requirements.

SW can help builders understand these requirements, calculate ANTA and MCC, prepare Internal Management Accounts, assess compliance risks, and implement practical reporting processes to monitor their position throughout the year. We can also assist with BPC information requests, capacity increase applications, and strategic planning to support future growth.

Our focus is on translating the technical requirements into practical business advice, allowing builders to focus on building while maintaining confidence in their compliance obligations.

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