Victoria pushes forward on modern methods of construction reform

The Victorian Government has launched a significant new discussion paper aimed at removing regulatory barriers to modern methods of construction (MMC), inviting feedback from industry and consumers on how to better support the use of prefabrication and offsite manufacturing across the state’s housing pipeline.

Titled Enabling Modern Methods of Construction through Effective Building Regulation, the discussion paper forms part of the broader 2024–25 State Budget reforms to accelerate housing supply and modernise Victoria’s construction sector. Its release marks a major step toward regulatory parity between traditional and modern construction techniques.

“Innovation must be at the heart of solving the productivity challenge in the construction industry — we need to build more homes, more quickly and more affordably,” said Jonathan Reichwald, Director of Industry, Construction and Manufacturing at the Department of Jobs, Skills, Industry and Regions.

“Having a contemporary regulatory environment for Modern Methods of Construction (MMC) is a non-negotiable way to bring about much needed change,” he said. “This discussion paper seeks to level the playing field and support broader uptake of MMC, make the decision to build using MMC less daunting and increase consumer confidence in the offsite construction industry.”

Victoria targeting 800,000 homes as government reviews MMC regulation, licensing gaps and finance barriers

Victoria’s Housing Statement sets a target to build 800,000 homes over the next decade. The government sees modern methods of construction as a key mechanism to help meet this target — but acknowledges the current regulatory environment has not kept pace with the shift towards prefabricated, modular and offsite construction.

The discussion paper identifies several legacy barriers. Among them is the lack of clear licensing requirements for offsite work. While onsite plumbing and electrical work must be performed by licensed professionals, the same standards do not always apply to components manufactured in factories — despite those components containing critical building systems.

Insurance and finance models are also under review. The existing domestic building insurance framework was developed for traditional construction methods and does not consistently cover prefabricated or modular elements made offsite. Similarly, lending policies have traditionally required progress payments only once structures are fixed to land, complicating project cash flow for MMC suppliers. Recent reforms from Commonwealth Bank — including progress payments for offsite works — suggest this is beginning to shift.

The discussion paper also flags the need for clearer compliance pathways. Prefabricated elements can be closed for inspection before reaching site, raising challenges for surveyors and certifiers. Proposed reforms could introduce new classes of building practitioners authorised to inspect and sign off on MMC elements both in factories and post-installation.

Feedback now open
Stakeholders across Victoria’s construction and manufacturing sectors are encouraged to contribute feedback on the proposed MMC reforms. Submissions will inform future regulatory development, with the aim of enabling faster, more affordable and higher quality housing across the state.

To review the paper and have your say, visit engage.vic.gov.au/enabling-modern-methods-of-construction