The Cook Labor Government has introduced legislation giving the Building Commissioner authority to act before a builder collapses. This is what changes, who it affects, and what builders operating well have to understand.
The story of a troubled builder is rarely a surprise by the end.
Financial stress builds quietly. Subcontractors notice late payments. Variations go unresolved. Then one day, the phones stop being answered. Clients are left mid-build, trades are owed money, and everyone scrambles for answers.
Western Australia’s new legislation is designed to interrupt that story before it reaches its most damaging chapter.
The Building Services Legislation Amendment (Financial Oversight) Bill 2026, introduced to the WA Parliament in May 2026, gives the Building Commissioner and the Building Services Board the power to intervene earlier when a builder is showing signs of financial strain. The change is significant, and builders across the state need to understand what it actually means in practice.
What the bill does
Under the existing framework, regulators generally have to wait until a builder is formally insolvent before meaningful action can be taken. By that point, the damage is already done. Clients are exposed. Subcontractors and suppliers are chasing unpaid invoices. Home indemnity insurance claims begin.
The new powers change the timing of intervention.
Under the Bill, the Building Commissioner will have authority to scrutinise the financial capacity of registered builders more closely and at an earlier stage. If a builder cannot demonstrate they meet financial requirements, the regulator can respond in one of two ways: impose conditions on the builder’s registration or, in more serious cases, cancel it altogether.
Importantly, if a registration is cancelled because of financial insufficiency, the homeowner can access their home indemnity insurance and engage a new builder to complete the work.
The new powers change the timing of intervention, not the destination for builders who are genuinely solvent.
Why the home indemnity insurance connection matters
WA’s home indemnity insurance scheme already provides a safety net for homeowners when a builder becomes insolvent, dies or disappears. The existing scheme requires compulsory coverage for all residential building work valued at more than $20,000, with maximum payouts of up to $40,000 for lost deposits and up to $200,000 for incomplete or defective work.
What the new legislation adds is a trigger point that does not require a formal insolvency event. If the regulator cancels a registration on financial grounds, that now qualifies as a relevant circumstance under the insurance framework, meaning clients can access protection before the business formally collapses.
This is a meaningful shift. It closes a gap that has previously left some homeowners in legal and financial limbo, financially exposed but unable to make a claim because the builder had not yet technically failed.
The contract law review running alongside the bill
The legislation does not stand alone. Alongside the bill, the WA Government has also opened public consultation on a broader review of the state’s home building contract laws, led by Parliamentary Secretary Dan Caddy MLC.
The proposed reforms under consultation include:
Improving consumer access to information and support services about their rights under home building contracts. Applying existing protections to higher value contracts. Allowing deposits of up to 10 per cent but capping that at $40,000. Clarifying when price increases can be applied. Modernising dispute resolution processes. Updating penalties and financial thresholds for remedy orders. Prohibiting caveats in home building contracts. And introducing an accreditation scheme for building inspectors.
The consultation is open until 24 June 2026, with the discussion paper and survey available through the WA Department of Mines, Industry Regulation and Safety.
Builders who already manage their finances properly have little to fear from oversight that actually works.
What this means for builders doing the right thing
The honest answer is that for the majority of WA builders who manage their finances properly, maintain adequate working capital, and keep their books in order, this legislation changes very little about how they operate day to day.
But there are two things worth understanding clearly.
First, the scrutiny is real. Builders can expect that financial capacity checks will be taken more seriously at the registration and renewal stage. Demonstrating financial health will matter in a way it perhaps has not in recent cycles.
Second, the reforms benefit the industry’s reputation. One of the consistent challenges builders face is public perception shaped by the minority who trade while insolvent and leave clients stranded. Stronger regulatory intervention at the early warning stage removes some of those operators before they cause widespread harm. That is ultimately good for everyone who builds with integrity.
The same logic applies to the contract law review. Clearer rules around deposits, price increases and dispute resolution are tools the industry’s best operators can use to build trust with clients. Ambiguity in contract law has historically been more useful to the operators willing to exploit it than to those building genuine long-term businesses.
What to watch next
The Bill is before Parliament and subject to the normal legislative process. The contract law review closes at the end of June, with reform proposals expected to follow after that consultation period.
The WA reforms sit within a broader national pattern. In 2026, multiple jurisdictions are strengthening the powers of building regulators, including NSW’s Fair Trading and Building Legislation Amendment Bill which expanded disciplinary powers and closed re-entry loopholes for poor operators. The direction of travel is consistent: tighter financial oversight, stronger consumer protection, and less room for troubled businesses to continue trading while clients carry the risk.
For builders operating in WA, the sensible response is to treat this as a prompt. Review your financial position. Understand what demonstrating financial capacity looks like under a more active regulator. Make sure your contracts are clear, your deposit structures are defensible, and your documentation is solid.
Builders who already manage their finances properly have little to fear from oversight that actually works. In fact, they have something to gain from it.
General information only. This article does not constitute legal or financial advice. Builders should seek independent professional advice regarding their specific circumstances.
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