CONSTRUCTION LAW REFORM IN AUSTRALIA: WHAT TO EXPECT IN 2026

19 January, 2026

Authored by Jennifer Raphael, Senior Legal Writer, Construction.

2026 is shaping up to be a pivotal year for construction law in Australia. Across multiple jurisdictions, governments are moving from reform design to implementation, with significant legislative changes scheduled to commence or progress.

This article outlines the key construction law developments expected in New South Wales, Victoria, Queensland, Western Australia and South Australia, and considers what these reforms mean for legal practitioners advising on commercial and residential construction projects.

New South Wales Construction Law Reforms.

The NSW Government has announced it will not proceed at this stage with the draft Building Bill 2024 (NSW) (Building Bill).

The draft Building Bill was part of a three-bill overhaul – alongside the Building Compliance and Enforcement Bill (NSW) and the Building Insurance Bill - to consolidate nine existing acts into a single framework.

The draft bill broadened the licensing regime, expanded the duty of care currently in the Design and Building Practitioners Act (NSW) (DBPA), overhauled certification, and introduced decennial-style insurance concepts.

The NSW Government will progress the draft Building Bill in a staged approach in the future, citing the critical nature of the housing supply shortage in NSW as a key reason for the postponement of these reforms.

Instead, the government has shifted focus to Building Productivity Reforms aimed at speeding up new home builds and modernising building approvals including:

removing barriers to prefabricated homes;
simplifying building approvals; and
introducing a clearer statutory conflict of interest test for certifiers and increasing penalties for breach.

The NSW Government will introduce these reforms in parliament in 2026.

Additionally, the expansion of the DBPA to remedial work on classes 3 and 9c buildings is expected to commence on 1 July 2026 along with the increase to the strata building bond percentage rate from 2% to 3%.

Victoria Construction Law and Security of Payment Changes

The Victorian Government has passed a raft of reforms aimed at strengthening consumer protection.

This includes the creation of a Building & Plumbing Commission (consolidating the Victorian Building Authority, the Domestic Building Dispute Resolution Victoria, and the domestic building insurance of the Victorian Managed Insurance Authority (VMIA))

The Building Legislation Amendment (Buyer Protections) Act 2025 (Vic) was passed in June 2025 and is phasing in 2% developer bonds for residential apartments, expanded rectifications, and transition towards a first-resort statutory insurance scheme administered by the new Building and Plumbing Commission.

Domestic building contracts reforms have also passed with a view to modernising the Domestic Building Contracts Act 2025 (Vic). The changes are to commence from 1 December 2026.

In addition to the building reform legislation, the Victorian Government has also passed the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 (Vic), which introduces significant changes to the Building and Construction Industry Security of Payment Act 2002 (Vic) (Vic SoP Act). These changes will come into effect on 1 September 2026.

Key changes to the Vic SoP Act include:

Repealing ss 10A and 10B of the Vic SoP Act, removing the excluded amounts and claimable variation regimes.
Removing the concept of “reference dates” and replacing with an entitlement to issue one payment claim on and from the date day of the month.
Prohibiting a claimant from including “new reasons” in the adjudication application.
Extending the time frame for service of the payment claim.
Introducing powers in s 13A allowing for notice-based time bars to be declared unfair, similar to the powers in the Western Australian security of payment regime.
Introducing provisions is ss 17A to 17G, allowing claims for the recovery of performance security.
Introducing s 17H requiring a party to issue a notice of intention to have recourse to the performance security at least five business days before doing so.

Queensland Building and Procurement Reforms

The Queensland Government has passed the Queensland Building and Construction Commission and Other Legislation Amendment Bill 2025 with the primary goal of modernising the existing regulatory framework by removing legislative impediments to digital service delivery, streamlining safety reporting procedures, and updating administrative procedures.

The Queensland Government also released its Queensland Procurement Policy 2026, commencing from 1 January 2026, replacing the Best Practice Industry Conditions (BPIC) framework.

The procurement policy introduces a streamlined and outcome-focused procurement framework under five strategic pillars, which are aimed at improving value for money, supporting local and diverse suppliers, simplifying procurement processes, encouraging innovation and driving sustainable economic, environmental and social outcomes.

Western Australia State Development Reforms

The Western Australian Government has released the draft State Development Bill 2025, which aims to reform the state development framework.

These reforms represent a landmark shift in WA’s development framework, modernising how major projects, especially those relevant to the energy transition and defence sectors, are approved and executed.

For the construction industry, the Bill promises faster, more predictable pipelines and potential new opportunities in large-scale strategic developments.

South Australia Building Compliance Reforms

The South Australian Government passed the Statutes Amendment (Building and Construction Industry Review - Stage 1) Bill 2025.

These reforms significantly strengthen compliance, consumer protection, and financial safeguards in South Australia’s building and construction industry.

They also modernise enforcement mechanisms and introduce higher penalties to deter misconduct.

Key aspects of the bill include:

New offences and increased penalties for:
- Performing unlicensed work.
- Hiring unlicensed subcontractors.
- Using another contractor’s licence number.
- Falsely claiming to be licensed or registered.
Increasing the minimum cover for Building Indemnity Insurance (BII) from $80,000 to $250,000 for new policies.
Increase the threshold for minor domestic work requiring BII from $12,000 to $20,000.
Increasing penalties for failing to take out BII up to $500,000.

Stage 2 of the reforms will involve consultation with the industry in relation to a proposed new registration scheme for residential building inspectors involving improved regulation of such inspectors.

Following that consultation, the South Australian Government will develop the proposed requirements for registration.

Key Takeaways for Construction Lawyers in 2026

The consistent theme across jurisdictions is discipline in contracting, documentation, and compliance.

While these concepts are familiar to Australian construction lawyers, the challenge in 2026 will be operationalising them across client portfolios and live projects.

Practitioners should ensure they are:

across commencement dates and transitional provisions,
reviewing contract templates and security of payment processes, and
advising clients on practical implementation, not just legislative change.

LexisNexis® supports lawyers navigating these reforms through Practical Guidance Construction, offering step-by-step guidance, legislation, case law, and practical tools for both commercial and residential construction matters.

FAQs: Construction Law in 2026

What are the biggest construction law changes in Australia in 2026?
The most significant changes include Victorian security of payment reforms, NSW productivity-focused reforms, Queensland procurement changes, and strengthened compliance regimes in South Australia.

When do the Victorian security of payment changes commence?
The Victorian security of payment reforms commence on 1 September 2026.

Is the NSW Building Bill still proceeding?
No. The NSW Government has deferred the draft Building Bill and adopted a staged reform approach instead.

How will these reforms affect construction contracts?
Many reforms will require updates to contract templates, payment mechanisms, performance security provisions and compliance processes.

Why is 2026 a critical year for construction lawyers?
Because multiple reforms move from policy to practice, increasing compliance risk across live projects and portfolios.

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