Victorian building reform legislation that is part of a broader program to improve protections passed state parliament last week.

“The reforms will protect Victorians while delivering safer, more compliant and more durable buildings,” Consumer Affairs Minister Nick Staikos said.

“For many families, their home is the single largest investment they will make in their lifetime, which is why it’s critical that domestic building contracts are clear and fair.”

The legislation supports establishment of the Building and Plumbing Commission, which is bringing together all aspects of quality control including regulation, insurance and dispute resolution.

Updates include allowing cost escalation clauses for domestic work with $1 million or more contract prices, with a 5% ceiling on increases and consumer protections. Processes for ending contracts will be simplified, making it easier for consumers.

Legislation that passed parliament earlier this year paved the way for a developer bond scheme to provide protection against defective work in buildings four storeys and higher.

Domestic building insurance is also being expanded so a claim can be made when non-compliant, defective work is identified and the builder refuses to fix it, whereas previously claims could be made only when the builder became insolvent, died or disappeared.

The reforms will take effect in stages, with final implementation scheduled for December next year.

Longer term, the government plans to introduce a 10-year decennial liability program to cover apartment owners.